In a recent report published by PitchBook, a financial data and software company, venture capital investment in Canadian startups surpassed $13.6 billion in 2021, more than double the previous high of $5.8 billion in 2019. $3.5 billion was also raised in the first quarter of 2022 which is slightly higher than the amount raised in Q1 2021. 

The report indicates the average deal size among Canadian tech startups has increased to $15.5 million, compared to $6.8 million in 2020. As of 2021, funding rounds of $25 million or more accounted for three-quarters of all capital invested, down from 51% two years prior.

According to the WSJ, however, the sharp rise was due to the fact that U.S. investors pumped cash into Canadian information-technology startups. In recent years, major tech companies like Meta, Google, and Amazon have either opened new offices or expanded their already-existing ones. As such, the IT landscape has been facing rapid growth. 

Tech workers have also been on the rise. At the same time, they have become increasingly scarce in the U.S., and engineers, coders, and software developers are leaving tech companies to work remotely.

“Canadian startups have historically struggled to raise capital and have been comparatively underfunded compared to their peers south of our border,” said Scott MacDonald, co-founder and managing partner at Toronto-based investing firm McRock Capital as reported by WSJ.

Mr. MacDonald added that, Over the last three years or so, global venture-capital investors—especially U.S.-based investment firms—are taking notice of the country’s maturing startup ecosystems, clustered within large metro areas across Ontario, Quebec and British Columbia, among other provinces

Matt Cohen, founder and managing partner at Toronto-based Ripple Ventures told PitchBook that Canada’s startup ecosystem also benefits from immigration policies that are attractive to foreign-born entrepreneurs and an affordable education system for students coming from abroad.