Angel investment in Canada has now surpassed $1.92 billion since 2010, but the country saw a decline in deal count and in capital deployed year-over-year, according to a report by the National Angel Capital Organization (NACO).

Canadian angels deployed $113.79 million across 490 investments in 2025, with Northern Ontario leading the country on a per capita basis and women’s participation in angel networks reaching a record high.

Women now represent 40 percent of members in reporting Canadian angel networks. The number of women investors increased by approximately five percentage points over 2024. Women's representation has nearly tripled since 2017.

However, the angel investment deal count across Canada declined by 20.1 percent (the second-lowest in five years) and the capital deployed year-over-year declined by 22.1 percent – marking a five-year low, the report said.

Average investment size per deal across all reporting organizations was approximately $232,000 in 2025, also the lowest of the past five years. Fewer deals and smaller average cheques together signal compression at multiple dimensions of the angel-stage market, NACO noted.

“If this trend continues into 2026, the pipeline of companies moving to the growth stage will continue to erode,” NACO said.

NACO said the report bolsters its argument that $750 million in new federal money to support venture capital should go to the pre-seed and seed stage funding rounds, rather than to later-stage rounds.

Five year trends demonstrate an investor base with consistent national scale and demographic depth, but one whose deployment in 2025 is operating well below what Canadian early-stage company formation requires, NACO noted.

“It is critical that this gap at the earliest stages, quantified by NACO and Startup Genome’s report on Canada’s [investment] funding gaps at $1.6 billion over five years, is addressed.”

“Without dedicated attention at the pre-seed and seed stages, Canada will continue to see a year-over-year decline in early-stage investment, which will significantly weaken the venture pipeline, and compound into wider gaps and fragility across the full capital continuum,” NACO said.

Addressing the situation will require complementary federal policy infrastructure for early-stage capital, including matching mechanisms that mobilize additional private capital alongside angel investment, and support for the infrastructure through which early-stage capital is deployed, NACO said.

Compared with the five year high in 2021, capital deployed in 2025 was down approximately 57 percent from $262.1 million, and deal count was down approximately 23 percent from 635 investments, according to the report.

Colin Mason (photo at left), professor emeritus of entrepreneurship at the Adam Smith Business School at the University of Glasgow, said organizations reporting investment data gave the early 2026 investment climate the lowest average rating since 2015 when the data first started being collected.

The macroeconomic headwinds are impacting investors making them more cautious – writing the check sizes are smaller, the time to do deals is smaller, they're looking for more metrics on businesses before they will invest to minimize risk and so on, he said.

“Where venture capital is important is helping these businesses to scale up, but without the angels doing the seed investing, the venture capital is one of the businesses that they can invest in to scale up. So we have to see angels and [VC firms] as being complementary,” Mason said.

“VCs do the big scaling up but angels provide the seeding, provide the investment opportunities for VCs,” he said.

The founder, the family and friends will do the initial funding, then the angels come in and do the next round and then the VCs come in and do the bigger deals and ultimately it's an initial public offering, Mason said.

The number of angel investments made is the important metric, rather than the dollar size of the deals, which are much bigger for venture capital investment at later-stage funding rounds, he noted.

More “shots on goal” needed at the pre-seed and seed funding stages

Claudio Rojas (photo at right), CEO of NACO, pointed out that the more robust the investment funnel, the “more shots on goal. The more shots on goal you have at pre-seed and seed, the more you're going to hit the mark in certain areas.”

That will produce outcomes like what Canada has seen with large, successful firms such as Wealthsimple, Hopper, Shopify and Kepler Communications, he said.

“But if you take away those first angel checks that each of those organizations received, and that's the challenge with this environment that we find ourselves in, there won't be a Kepler Communication in the dataset at some lag, at some future time period,” he added.

“You need a lot of deals in order for those really, really successful outcomes to emerge,” Rojas said.

Investment in companies consists of a capital continuum, “so every stage is interdependent on the other. Series E [a later-stage growth funding round] is dependent on a robust pipeline of companies moving through the earlier part of the continuum,” he said.

Angel investors need a return on their capital, which tends to come from secondaries at a later stage so that they can plow that money back into the ecosystem, he added.

“So I think we're at a point where our policy needs to be much more sophisticated, understanding the interplay between all of these different dynamics,” Rojas said.

When venture capital is committed at later-stage growth funding rounds, “that capital will find the best deals,” he said.

“So if there's not a robust number of deals, if there's not a robust pipeline of companies moving from pre-seed, seed, series A to series B, that capital is going to find its way south of the border to the extent that it's able,” Rojas said. “And no matter what restrictions we put in, we'll get to a suboptimal outcome.”

However there are different perspective in Canada’s investment community on where the federal government should spend the $750 million allocated in Budget 2025 to support venture capital.

The Canadian Venture Capital & Private Equity Association (CVCA) argues that the $750 million should be spent to support scaling companies at later-growth stages – Series B and beyond – to help those companies scale and keep them in Canada.

According to the CVCA’s latest quarterly market overview report, new venture capital investment for growth-stage companies in Canada fell to near zero in the first quarter of 2026.

The quarter saw the lowest deal count of any quarter since 2017 in Q1 of this year, the CVCA said. Q2 2026 closed with $936 million in venture capital invested across 104 deals, which is 41 percent fewer deals than the previous quarter.

Still, capital deployment remained above pre-pandemic levels, and average deal size increased six percent compared to this time last year.

The biggest beneficiaries of Canada’s Q1 concentration were earlier-stage deals, which “hasn’t really happened before,” as capital is typically concentrated in the later and growth stages, the CVCA said.

Instead, pre-seed through Series B rounds accounted for $651 million, or nearly 70 percent, of total investment last quarter. The average seed-stage deal size also rose to nearly $4.5 million, a 37-percent increase compared to the five-year average and the highest the CVCA has ever seen. On the flip side, later-stage rounds brought in just over $248 million across nine transactions, at an average size of $27.6 million. That is well below the five-year Q1 average of almost $55 million.

CVCA said the data supports its proposal for the federal government’s $750-million envelope for “early growth-stage funding gaps” to be pointed at providing more domestic capital to growth-stage firms at the Series B level and beyond, rather than at the pre-seed and seed stages.

Pre-seed and seed capital has actually contracted, according to NACO

NACO said its analysis shows pre-seed and seed capital actually has contracted based on the CVCA’s four-year published data.

Pre-seed average deal size has fallen from $1.20 million in 2022 to $0.98 million in 2023;$0.83 million in 2024;and $0.90 million in 2025. “This is below the 2022 level in every subsequent year,” NACO noted.

Seed capital fell from $903.6 million in 2023 to $650.0 million in 2024, a 28-percent year-over-year decline, and recovered modestly to $669.9 million in 2025. “This is still about $234 million below the 2023 peak.”

In the CVCA’s Q1 2026 report, Dominion Dynamics at $21 million was an outlier round that elevated the seed stage average as it was classified as a seed round, NACO said. Removing this round produces a combined pre-seed and seed average of $3.09 million and a seed-stage-only average of $4 million.

Rojas pointed out that one company alone, Wealthsimple, raised $750 million last year at a later funding stage.

“That's the size of the entire [federal funding] envelope. So that just doesn't really make any sense,” he said.

“I can understand the allure of going after the [$750-million envelope], but it's just not at the appropriate level of ambition to the size of companies at Series B, Series C and beyond, he added.

Also, investing the $750 million at the earlier pre-seed and seed stages is “ much more bold in the sense that it would fill the [investment] gap,” Rojas said.

The $750 million at a two-to-one matching investment from the private sector – which NACO has recommended to the government – “would fill the bulk of that gap,” he said

“Then doing that, what would happen at the later stage is that we would be crowding in capital because the return profile of the companies moving through the pipeline would be much higher in aggregate,” Rojas said.

Mason, agreed, saying that without angel investment in earlier funding stages, venture capital firms wouldn’t have the companies to invest in at later growth stages. “I remember talking to a VC in Ottawa a few years ago and said, ‘Where do you find your deal flow?’ and he said, ‘Oh we go and look where the angels are investing.’”

“So the ecosystem is extremely complicated and if you take one element away then that screws up the ecosystem operation,” he said.

Supporting investment infrastructure and network is also vital

Companies are less likely to relocate if they’re bigger before they’re acquired, Mason noted. “So it’s a case of how can we make Canadian companies that are acquired “sticky,” so that when they’re acquired, they stay here.”

“Maybe there's more we can do to kind of protect the companies that are acquired in doing deals, particularly [with] government as an investor,” he said.

Mason also pointed out that angel investors aren’t only providing money to startups, but are usually successful entrepreneurs or business professionals who are also investing their expertise and knowledge about investor networks.

NACO’s report said it is exactly that network and infrastructure support that led Northern Ontario to lead Canada in angel investment deals on a per-capita basis in 2025, with approximately 36 deals per million population – about 64 percent higher than southern Ontario.

Northern Ontario’s success “reflects the depth and durability of organized angel infrastructure in the region, supported in part by predictable multi-year federal regional development funding,” the report said. “Replicating this performance where infrastructure remains thin requires investment in operational capacity.”

For example, significant regions of the country remain thinly served by formal angel infrastructure, particularly in Saskatchewan, Manitoba, and the Northern Territories.

NACO has recommended to the federal government that $250 million of the $750 million should be allocated over five years to an Early-Stage Infrastructure Growth Funding Initiative, to stabilize and professionalize the foundational layer of Canada's pre-seed and seed ecosystem that makes private capital deployment possible at scale.

“There seems to be a strong correlation there between having what we call the infrastructure support, so having strong angel networks, and the investment activity that lifts off of that,” Rojas said.

NACO recommended that the other $500 million from the $75-million envelope should be used to create a five-year Early-Stage Matching Funds Program that would catalyze $1 billion of dormant private wealth into productive risk capital and increase the graduation rate of companies to Series A, NACO recommended.

When it comes to spending the $750 million “there’s a there's a risk that the government makes an uninformed decision on the basis of the headlines,” Rojas said.

“What we need at a country level is well-informed, thoughtful policy recommendations. Whichever direction they go in, there's risks on all sides.”

See also: Ottawa should spend $750 million in venture capital strategy to close the gaps in in Canada’s early-stage capital market

How to spend $750 million in federal funding to most effectively support Canada’s startup-to-scaleup pipeline?

Canada needs more investment in early-startups and to build an investment community “ecosystem”

Canada’s top startup ecosystems are hemorrhaging value and growth due to structural funding gaps