On April 23, 2025, Canada-U.S. relations face tension due to trade issues, particularly a trade war initiated by the U.S. that impacts both economies. The introduction of new tariffs raises concern over venture investment in Canadian startups. In 2024, VC-backed startups in Canada raised $6.9 billion, marking a 17% increase from $5.9 billion in 2023 and a recovery from the low of $3.9 billion in 2020. Funding increases occurred alongside a decline in the number of deals, which dropped below 700 in 2024 from nearly 1,000 in 2023. Significant investments in AI-related sectors contributed to this funding boost, with notable rounds including $900 million for Clio, over $693 million for Tenstorrent, and $500 million for Cohere. The successful rounds surpassed $2 billion in Q3 and Q4 of 2024; however, Q1 of 2025 saw Canadian startups raise $1.6 billion in 128 deals, down from $2.4 billion in Q4 2024. Major deals in Q1 included $235 million for StackAdapt and $160 million for Tailscale. New U.S. tariffs complicate future projections, potentially affecting spending in various sectors, including chips and software.

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