We Read RBCx's 2025 Canadian VC Report So You Don't Have To
Five funds captured 83% of capital raised in Canada last year.
$1.74B went to 5 funds. The other 16 split $360M.
If you don't fit those 5 funds' pattern, you just lost access to most Canadian VC.
The Numbers
21 Canadian VC funds raised $2.1B in 2025.
Fewest funds since 2018
Lowest dollars since 2016
Down 75% from 2021
RBCx: "A perfect storm."
What Happened
The VC funding cycle stalled.
VCs raise from LPs → deploy to startups → wait for exits → exits return capital → LPs commit to new funds.
What broke: Almost no exits.
Only 7% of Canadian unicorns exited in 2024. Median exit: $30M (lowest since 2020). No IPOs. Limited M&A.
LPs face capital calls. Receive zero distributions. No returns = no new commitments.
Why 83% Concentration Matters
The Five Funds
The top 5 funds that captured 83% of capital in 2025:
For founders: understanding these funds' theses, portfolios, and investment criteria matters more than ever. They control access to most Canadian VC capital.
Beyond Money
50 funds = 50 theses, 50 risk appetites, 50 definitions of "pattern."
5 funds controlling 83% = those 5 determine access for most.
Their biases become market biases.
Their gaps become market gaps.
Their networks become the networks that matter.
Who Faces Higher Barriers
If those 5 funds invest in:
AI/ML, SaaS, fintech → other sectors starve
Previous exits → first-timers struggle
Toronto/Vancouver → regional founders invisible
The data on VC pattern-matching:
Women: 2% of funding
Black founders: <1%
Indigenous: nearly invisible
40+: age bias
Concentration widens gaps.
Consensus Investing
RBCx warning: 83% creates "consensus investing."
Fund 1 backs AI. Fund 2 follows. Fund 3 follows. Everyone funds AI. Other sectors can't get meetings.
Result:
Hot sectors: overcrowded
Other sectors: starved
Herd mentality wins
Boom-bust accelerates
You're either in consensus (overcrowded) or out (invisible).
Numbers That Affect Planning
42% Reserved
Only 42% of VC capital goes to NEW startups.
58% reserved for existing portfolio.
Historic shift. 2015-2024: initial capital exceeded reserves. Not anymore.
Breaking into a portfolio? Compete for 42%. Existing companies get 58%.
Implication: First investor choice matters more than ever.
7+ Years to Exit
Top 50 Canadian exits: median 7+ years from founding.
Means:
7-10 years to liquidity
Below-market salary for years
Multiple funding rounds
Capital efficiency required
Quick flips are over. 2026 start = decade commitment.
$93M vs $467M
All exits median: $93M
Top 50 median: $467M
GP with 10%:
$9.3M at $93M exit
$46.7M at $467M exit
VCs need Top 50 potential.
Can your market support $400M+ exit?
Yes: Maybe VC-backable.
No: Consider alternatives.
7% Life Sciences
Life sciences dominate Top 50 exits. Only 7% of capital goes to life sciences funds.
Supply-demand imbalance = opportunity for biotech, medtech, healthtech, diagnostics.
Caveat: Longer timelines. Deeper expertise. Regulatory navigation.
Who This Hurts Most
First-time founders: 58% capital reserved for existing portfolio. Breaking in is harder.
Underrepresented founders: When 5 funds control 83%, those 5 pattern-matching determines access. Gaps widen.
Regional founders: Capital concentrates in Toronto/Vancouver. 5 funds = 2 cities.
Profitable, capital-efficient builders: Don't fit "Top 50 exit" pattern. Less visible in concentrated market.
What to Consider
Assess VC Fit
Can your market support $400M+ exit?
Building for 7-10 years?
Fit the 5 funds' pattern?
Compete for 42% of new capital?
Several "no"? Consider alternatives:
Revenue-based financing
Government programs
Strategic partnerships
Profitable growth
Alternative capital
Non-VC capital isn't failure. It's choosing what fits.
If Pursuing VC
Don't spray-and-pray.
Identify which of 5 concentrated funds fit
Understand portfolio and pattern
Research other 16 funds
Build strategic relationships
Demonstrate pattern through traction
Cross-Border Option
US VC: larger, less concentrated.
If you fit US investors (large TAM, fast growth, US market), may be more viable than competing for Canadian 42%.
Not abandoning Canada. Strategic capital allocation.
Build Capital Efficiency
Contracted market favors efficiency over growth-at-all-costs.
Optimize:
18-24 month runway minimum
Working unit economics
Early revenue
Sustainable burn
7-10 year journey needs capital efficiency.
Small Bright Spot
RBCx: "Past two years = one of most opportunistic periods to invest in VC in a decade."
Raising now? You're building something compelling.
Bar is higher. Clearing it means something.
Context
RBCx: "What's happening in Canada is happening globally."
VC contracted everywhere. LPs cautious everywhere. Exits slow everywhere.
Canada's smaller ecosystem = concentration hits harder.
Bottom Line
5 funds control 83%.
Options for those outside pattern:
Build their pattern
Find other 16 funds
Pursue alternatives
Capital exists. Access is concentrated, selective, harder than in a decade.
Source: Capital Under Pressure: 2025 Report on Canadian VC Fundraising
