Venture Capital (VC) is essential to the Canadian economy and has been a critical success factor for many now-thriving Canadian companies. As capital became more expensive since 2021, funds have become more risk averse, resulting in a decrease in investments in life sciences and biomanufacturing companies. According to the Canadian Venture Capital & Private Equity Association (CVCA), in 2022, 16 percent of total deal in Canada ($1 billion over 112 deals) went to life companies; which decreased from 26 percent of total VC investment in 2020, amid the pandemic.
The federal government plays a significant role in VC through investments in Canadian innovative firms, by leveraging private sector investment, and through policies and programs that facilitate financing of business innovation. ISED created the Venture Capital Catalyst Initiative (VCCI) in 2017, investing in VC funds of funds managers and leveraging this federal investment with other public and private sources to advance promising technology companies. As part of this, the VCCI's life sciences stream is investing up to $50 million in six VC funds primarily focused in the life sciences sector.