An exploration of Toronto’s venture capital landscape

Toronto has long been recognized as a hub for the real estate, retail and aerospace industries, but what may be less apparent—especially to our readers in the US and other regions—is the city’s VC presence in the context of both Canada and the North American markets. Earlier this year, the New York Times called it a “quietly booming tech town”. Toronto is indeed booming: it’s the financial capital of Canada, home to world’s ninth largest stock exchange and the second highest financial sector employment of any city in North America.

Given Toronto’s crucial positioning in the VC landscape, we’re taking a closer look at the city’s VC market activity—including key VC firms, deals and more.

Toronto venture capital firms

In analyzing the top-performing Toronto VC firms, we see that a majority of them were founded in the last 15 years, with only two of its top 25 firms with the most investments being founded before 2000. To put this in perspective, in 2000 the city had been home to only 75 VC investors, while as of July 20, 2022 there are now 304 active VC investors headquartered in Toronto. 

Another characteristic of Toronto VC firms is their connection to the US market. More than 50% of Canadian VC deals since 2020 have involved one or more American investors. This has partly been brought on by an increase in remote deal sourcing, paralleling the rise of remote hiring based out of Canada.

Looking at patterns among the firms with the most investments, we see that the last two years have marked both a shift in activity and greater stratification among these top performers. Firms like Golden Ventures, OMERS Ventures and MaRS Accelerator Fund represent some of the most active Toronto VC investors throughout the pandemic, with anywhere from 37 to 57 investments made in the last two years. In some cases, like those seen with firms like OMERS Ventures and Golden Ventures, these investments can even represent more than one third of the firm’s total lifetime investments. Conversely, some of the highest-ranking firms in lifetime investments have had very little activity in the last two years, with five or less deals deals in that timeframe and in some cases, none at all.
  

The growth of VC in Toronto

Given the central role Toronto plays in the larger Canadian market, it can be helpful to consider some of the national statistics Toronto VC contributes to. Mirroring the trajectory of its startups, 2021 was also a breakthrough year for Canadian VC, which collectively invested over $13.6 billion. This represents a high point in both capital invested and the number of deals made, as well as a willingness to participate in different funding stages.

National stats for invested capital nearly tripled from 2020 to 2021, from $4.3 billion to $13.6 billion, while the number of deals rose from 823 to 1,172. Breaking down these stats, we see that 627 deals and $19 billion in VC investments—more than half of the national total in both areas—come from the province of Ontario, whose figures are largely reflective of Toronto’s VC efforts.

In Q1 2022, we again see the province of Ontario leading the way in Canadian VC investments, with 166 deals and $4.3 billion invested. By comparison, Quebec, which has the next highest VC performance among Canadian provinces, made 44 deals and invested only $1.5 billion.  

The future of venture capital in Toronto

As evidenced by its performance in recent years, Toronto is a central pillar of Canadian VC, both in terms of its investors and the venture capital gathered by its startups. As investors begin to reconsider their position in tech, those following the Toronto VC market should look to see if and how its firms adapt. Given its strong affinity for tech startups, VC in Toronto may have to diversify its investments and consider new forms of deals and exits. The VC market may also be due for changes due to the presence mega-deals and their effects on the investing landscape.