U.S. venture capital firms are getting in on the Buy Canadian movement.
Driving the news: In the first quarter of this year, U.S. investors participated in 80% of Canadian venture capital (VC) deals — up from 68% in 2023 — totalling US$800 million across 86 investments, according to PitchBook data compiled by The Logic.
Why it matters: When big American firms fund startups, they take equity, control, and a bigger chunk of the eventual payday. That means when a U.S.-funded Canadian startup flourishes, the intellectual property and profits often migrate south of the border.
- For example, Montréal AI firm Element AI — which was backed by Microsoft and other U.S. firms — was bought by California’s ServiceNow for US$230 million in 2020. Its new parent wound down the business and integrated the parts it needed.
Why it’s happening: It’s tough to blame founders. Notoriously risk-averse investors and fewer deep-pocketed funds in Canada make it harder for startups to scale without taking American investors. On the other side of the border, VCs are far more willing to shell out cash on riskier, longer-term bets.
Big picture: Those bigger bets pay off. A recent study found that the U.S. is currently home to 782 unicorns — private companies valued at over US$1 billion — while Canada has produced just 33.—LA