2021 in Review: A Stellar Year for Canadian Tech

The sky’s the limit for Canadian tech entrepreneurs. Our maturing ecosystem had a record breaking year in investments and is now growing at double the rate of the U.S.

Real Ventures
Real Ventures


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There’s no doubt about it; 2021 has been an unparalleled year for the Canadian tech ecosystem. As of the end of Q3 2021, Canada had already eclipsed its previous annual investing record, with $11.8B invested across 568 deals. While the venture capital market is breaking records around the world, Canada is out-pacing the U.S. and international markets as a whole. For instance, venture investment into Canadian-based companies was up 4.1x in Q3 2021 vs year-ago while the U.S. was up 1.7x.

Three key factors underlie Canada’s success as a tech ecosystem:

  1. Canada boasts a deep pool of AI, deep tech, and engineering talent. Montreal alone is home to over 250 AI researchers and 9000 AI students, making it the city with the highest concentration of AI professionals globally. And Toronto has the highest concentration of AI startups in the world.
  2. Canada has easy access to global markets. The world’s largest economy is just south of the Canadian border and Canada has free trade with all G7 countries. In addition, its immigrant-rich population (more than half the population of Toronto were born outside Canada, for instance) means that selling to global markets comes naturally to Canadian companies.
  3. The virtuous cycle of successful tech companies fostering even more globally-competitive tech companies (as capital and talent are reinvested) is gaining momentum. There are more repeat founders, tenured scale-up executives, and experienced angel investors than ever before in Canada.

As one of Canada’s most active early stage venture capital firms since 2007, at Real Ventures we find it incredibly gratifying to see so many of our portfolio companies — and Canadian start-ups as a whole — experiencing record growth and securing the backing of world-leading investors. In fact, Canada is now ranked as the fourth best country in the world for start-ups, trailing only the US, the UK, and Israel.

Below are highlights from different regions across Canada and the key trends we have seen throughout 2021.

Tech innovation is happening coast to coast


Ontario-based companies accounted for over half the venture dollars raised by Canadian companies from Q1 to Q3 2021. As of end Q3 2021, Ontario-based companies had received $6.1B in venture capital investment, with Toronto accounting for $4.9B. Clearco, a Toronto-based capital provider for e-commerce and other businesses, raised $215M from Softbank in July, just weeks after they had announced a $100M financing round that brought their valuation to over $2B. Quantum computing startup Xanadu is another example of a Toronto-based company establishing itself on the global stage as it raised a $120M Series B round in May led by Bessemer.

As Toronto gains international recognition, more global programs are choosing to operate or expand their Toronto presence. For instance, Entrepreneur First chose Toronto as their first North American location. This six-month entrepreneurship program helps aspiring founders launch their next venture through extensive funding and mentorship. Techstars doubled its presence in the city, increasing the number of companies that go through its program annually from 12 to 24. These and other world-class programs, such as Creative Destruction Lab, help to ensure that the growth in Toronto’s tech community will continue to accelerate.


Montreal is the second-largest center of venture investing in Canada, with $1.8B invested into the city’s tech start-ups in the first three quarters of 2021. The second quarter was particularly strong for Montreal, as the city experienced its best funding quarter to date with over $711M invested. Several large financings in 2021 have contributed to the growth of Montreal’s ecosystem, including AlayaCare’s $225 million Series D, a $175 million financing of Hopper, and a $100M Series C round closed by Paper (a graduate of Real Ventures’ FounderFuel accelerator).

Not surprisingly, given the extremely strong university research labs and talent base, artificial intelligence and healthcare are the two most significant areas of venture investment to date in 2021. Real Ventures remains the most active investor in Montreal, tracing its roots as one of the earliest active pre-seed and seed stage investors in the city starting in 2007.


Venture investing in British Columbia is having a breakthrough year in 2021. As of Q3 2021, tech startups in the province had received over $2.3B in investments across 79 deals and minted 10 unicorns. The province is well on track to see its best year in investments yet. The largest Canadian venture deal in Q3 was done by Vancouver-based Dapper Labs, which raised $319M, their second raise of 2021. Another local standout is bitcoin infrastructure startup Blockstream, a Real Ventures portfolio company, which raised a Series B of $210M in August, bringing its total valuation to over $4B.

Across Canada

Beyond Canada’s three largest cities, strong tech companies are raising funds and scaling quickly throughout Canada. Calgary continues to see strength in fintech as Neo Financial raised $64M to accelerate their growth and Symend raised $42M.

Also in Western Canada, Saskatoon-based Vendasta announced a $119.5M raise in May. Other impressive examples of scaling startups emerging throughout Canada include CoLabs, a Newfoundland-based startup, which announced a $17M Series A raise in October, and Coveo, a Quebec City-based company that went public in November.

2021 Investment trends

Tech adoption soared during the pandemic and is not slowing down

Tech companies — including deep-tech, software, and tech-enabled services — were already booming before the pandemic. When the pandemic hit in March 2020, after an initial period of uncertainty, it became clear that technology adoption was accelerating. While traditional industries such as food service, hospitality, and retail struggled to stay afloat, many tech businesses thrived and scaled at accelerated rates. According to a report by McKinsey, COVID accelerated the digitization of industries by up to seven years. Companies in fields such as e-commerce, digital health, e-learning, and online collaboration saw unprecedented growth. Even as vaccines have rolled out around the world and pandemic fears are starting to recede (notwithstanding the impact of Omicron), technology adoption is continuing to proliferate.

Larger rounds are being fueled by abundant capital

The average size of venture rounds is increasing around the world. This is particularly true in Canada, where the average VC round in 2021 (to end Q3) is 2.5x Canada’s five-year average, going from $8.21M to $20.7M. This growth is being driven by an abundance of capital and a maturing Canadian ecosystem.

Hedge funds and other large, global investors who traditionally focused on investing at the pre-IPO stage, are now investing aggressively in early stage tech businesses, often investing as early as Series B and occasionally at Series A. They understand the tremendous return potential of early stage, high-growth tech companies and are eager to deploy capital at that stage. Investors such as Coatue Management, D1 Capital Partners, and Tiger Global have dramatically accelerated their early stage tech investing in Canada and around the world. In fact, Tiger has invested in over half a dozen Canadian companies in the past nine months.

We’ve seen this trend first hand at Real Ventures through several of our portfolio companies. For instance, dcbel, a Montreal-based company that provides solar-powered home energy stations, announced a $40M raise led by Coatue Management in April. And Clutch, Canada’s leading online car-buying platform, recently announced a $100M Series B led by D1 Capital Partners.

Seed investing is slowing, creating a cause for concern

Despite a record-breaking year for Canadian venture investments, it’s not all positive. While the number of Series A, B, and growth stage investments in Canada are breaking records, the number of seed stage deals has actually fallen year-to-date vs pre-pandemic. This is an alarming trend and one that needs to be addressed if Canada is to continue producing scalable, global tech companies in the years to come.

Unlike later stage investment rounds that attract international investors, seed investing is a local game. Canada must significantly grow the amount of capital available for its earliest stage tech companies to ensure a robust and sustainable pipeline of companies that will form the next generation of global tech leaders.

Not all founders are being funded equally

In 2019, the Brookfield institute highlighted just how wide the diversity gap is within tech in Canada. At the time, only 20% of the Canadian tech workforce identified as female and 31% identified as a visible minority. Indigenous people in tech occupations accounted for a mere 1.3%. Market research conducted by Pitch Better Canada, an organization dedicated to helping women founders access capital through grants and investments, revealed that Black women in particular face incredible obstacles to receiving funding. One revealing example shared in their report was how a Canadian grant program designed to fund women entrepreneurs had only provided funding to three Black women out of three hundred female founders. It is difficult to accurately gauge the progress being as few organizations are collecting gender and diversity data consistently, if at all. But multiple reports reveal that women have been disproportionately negatively affected by the pandemic across all fields. And U.S. data shows that funding to female founders as a percentage of all funding fell during the pandemic.

To increase the number of female entrepreneurs and entrepreneurs of color receiving funding, Canada needs more programs and funds dedicated to funding these underrepresented groups. Some progress was made in this respect during 2021. In June, the federal government announced the launch of a new loan program providing financing (up to $250,000) to Black-owned businesses; within a month, they had received over 7600 applications. Raven Indigenous Capital Partners, one of Canada’s first Indigenous-led VC firms, announced a $25M initial fund to invest in startups led by Indigenous founders who strive to impact Indigenous communities positively. And StandUp Ventures, a firm dedicated to funding female founders, announced a new $30M fund in Q3 of this year. While these initiatives and others are positive steps, there is still much work to be done if we are to close the gap.

The talent war is on and it is fierce

The competition for skilled talent, including engineers, product managers, digital marketers, and other experienced tech managers has arguably never been more intense in Canada than it has been over the past six months. Global tech companies have recognized the strength of Canada’s tech talent and in the past nine months, companies including Google, Microsoft, Amazon, DoorDash, Twitter, Pinterest, and Netflix have all announced their intention to hire more Canadians. Add to that the growth of Canadian-based companies such as Clearco, BenchSci, Neo Financial, and Hopper, and the fact that remote work enables Canadian-based talent to work for almost any company around the world, and you have a severe shortage of Canadian tech talent.

As a result, salaries have increased significantly, particularly for engineers. Multiple Canadian tech companies reported that their engineers are being offered 50% to 100% higher salaries to work elsewhere. To attract and retain world-class talent, Canadian tech startups are paying higher salaries, granting more options, and rethinking all aspects of their employee offering including benefits, remote vs in-person working, career growth, training opportunities, and company culture.

Canadian tech: A rising star on the global stage

Canada’s tech ecosystem has been gaining international recognition for years, but 2021 was truly a breakthrough year as growth accelerated and the number of Canadian-based tech unicorns skyrocketed. While tech investing is hitting records around the world, Canada is outpacing global growth and is growing at double the rate of the U.S.. This is being driven by the depth and breadth of Canada’s talent pool, easy access to global markets, and the accelerating network effect of a strong tech ecosystem. It’s never been a more exciting time to be part of the Canadian tech startup community and we look forward to the year ahead!

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Real Ventures
Real Ventures

Canada’s leading early-stage VC firm dedicated to serving entrepreneurs and nurturing the communities in which they thrive.