2024 has been a pivotal year for Canadian tech. While challenges remain, the opportunities are even more significant, making this the perfect time to build world-class companies in our own backyard.
As we prepare to release our State of Canadian Software Report in early 2025, here’s a preview of the key trends shaping our ecosystem, highlighted during a lively discussion at SaaS North featuring Chris Arsenault, Douglas Soltys, and Rob Kenedi:
Canada’s Tech Ecosystem Can Become a Global Leader
Over the past decade, Canadian tech has attracted more than $48B across 3,000+ deals, with total investment value growing 5x since 2013. Today, our ecosystem competes with global leaders like France, Israel, Germany, and Sweden and others. While global VC funding is down 11% YTD, Canada’s funding remains steady, underscoring the resilience of our ecosystem.
Venture & Growth: A Tale of 2 Worlds
Despite macroeconomic headwinds, venture funding has remained resilient, driven by advancements in AI and the influx of talent from big tech.
However, growth transactions are becoming increasingly polarized, presenting two distinct opportunities:
- Efficient, profitable companies that are driving mergers and acquisitions (M&A).
- Transformative AI investments that are fundamentally reshaping entire industries.
Zooming In: Some Strong Momentum in Western Canada
Vancouver is leading Canada’s investment growth in 2024, while Calgary boasts the fastest-growing tech job market in North America. Institutional players like InBC, BCI, AEC, and AIMCo have a stronger presence, and we’re seeing notable mega-rounds in the region like Clio, Neo Financial, Photonic, and Poolside.
The AI Supercycle Continues
Meanwhile, the party is in full swing for AI! Global AI adoption skyrocketed in 2024, with 65% of organizations using AI, up from 33% in 2023. Canada remains a leader with major deals like Cohere (US$500M) and Waabi (US$200M), and Geoffrey Hinton’s Nobel Prize further cements Canada’s global influence in AI.
Structural Changes in Capital Markets Emphasize the Importance of Optionality
Market cycles create new opportunities. Indeed, in 2024, the depressed public market drove a surge in secondary transactions and take-private deals, setting new global records. This trend is mirrored in Canada, where take-private deals have seen a median premium of 42%, reflecting investor confidence in acquiring high-quality companies at fair valuations. As M&A activity rebounds, a strong deal pipeline is forming, though regulatory and election uncertainties suggest many deals will close in the first half of 2025.
Want to learn more about Canada’s global potential?
🎧 Listen to the SaaS North live BetaKit podcast for deeper insights — Tune in
📄 Download our teaser deck for an exclusive sneak peek at the full report — Download now