Monday Market Minute | Mar 03, 2025

Canadian AI venture deals surge as global capital chases northern talent

What Moved

CVCA data for the first two months of 2025 showed Canadian venture capital deal volume up 34% year-over-year, driven almost entirely by AI and machine learning companies. Toronto and Montreal emerged as global magnets for AI talent, with several Series B and C rounds exceeding $100 million. US-based VCs were particularly active, drawn by the weaker Canadian dollar (which made talent costs attractive in USD terms) and Canada's deep AI research ecosystem anchored by institutions like the Vector Institute and Mila.

Why It Matters

For private markets investors, the AI venture boom offered both direct opportunity and indirect benefits. Direct participation required access to institutional-quality deal flow — increasingly available through Canadian VC funds and co-investment structures. Indirectly, the AI investment wave supported commercial real estate demand in tech corridors, created high-income employment clusters, and attracted complementary infrastructure spending. The weak CAD was, counterintuitively, an accelerant for this sector.

Signal to Watch

Federal budget season was approaching. Any expansion of the SR&ED tax credit or new AI-specific incentives would further catalyze venture deployment into Canadian AI.

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