IVCC Newsletter | 2025–2026

Thinking Like a VC: Inside Today’s Deal Environment

IVCC is excited to share the 2025–2026 edition of our newsletter. This issue covers:

• Global Venture Capital Trends shaping markets worldwide

• Key Canadian VC developments from the past year

• Notable Canada-centric deals and what they signal

• Highlights from our Boyang Li podcast

• Highlights from our John Ruffolo podcast

• How Venture Capital Works: a practical overview for students and early builders

Global Venture Capital Trends

If you look at VC right now, it is almost impossible to ignore how dominant AI has become. Nearly all of the largest deals in 2025 have been in AI, and generative AI funding in the first half of 2025 alone has already surpassed all of 2024.

This momentum explains why many traditional generalist VC funds are starting to fall behind. It was found that 58% of all $500M+ rounds in 2025 went to AI companies, up from just 7% in 2022. According to EY’s H1 2025 Generative AI VC Funding Report, generative AI alone attracted $49.2B in the first half of 2025 — underscoring just how concentrated capital has become around AI-native businesses. Non-AI rounds, in contrast, have collapsed from $126B in 2021 to just $23B in 2025, highlighting a shrinkage of over 5x. Investors are increasingly moving toward more specialized strategies (often referred to as vertical-focused: concentrating on a specific, narrow market), such as AI in healthcare, fintech, or cybersecurity. EY Ireland points to this in their reports, citing Acuvity’s RYNO, a GenAI security platform for adaptive risk management and compliance, as one such example of how investments increasingly flow to companies building software in niche industry problems.

At this point, AI is no longer just a trend in venture capital. It is actively reshaping infrastructure, fintech, climate tech, healthcare, and cybersecurity, and now accounts for roughly 45% of global VC funding. This level of concentration signals a structural shift in how capital is being allocated across industries.

Where this becomes especially clear is in how investors are thinking beyond software. As models grow more compute-intensive, demand has surged for GPUs, high-performance data centers, networking equipment, and power infrastructure. This has pushed capital toward the physical layer that supports AI. Data centers, in particular, have become a bottleneck as AI simply cannot scale without them. As a result, rising AI adoption is directly tied to increased investor interest in energy, cooling, real estate, and grid-adjacent infrastructure. At the same time, investors are also beginning to use AI themselves, applying machine-learning tools and workflow automation to source deals and spot early signals of emerging trends.

However, the narrative around AI is starting to shift as more financial data becomes available. Recent reporting has highlighted a contrast between OpenAI, which is operating under an aggressive spending plan projected to result in approximately $74 billion in losses by 2028, and Anthropic, which expects to break even on a similar timeline. While OpenAI remains the largest AI platform with a reported valuation of more than $500 billion, public commentary from Sam Altman and increased Big Tech bond issuance have led to growing investor caution around AI-driven infrastructure spending. This caution has been reflected in recent pullbacks across the sector, including declines in NVIDIA and CoreWeave.

Looking at deal dynamics more broadly, average seed-stage deal sizes have continued to increase, while growth-stage deal sizes have dipped following OpenAI’s unusually large $40 billion round last quarter. Overall, deal volume has decreased, but the deals that do occur are significantly larger, suggesting that capital is becoming more concentrated.

In Q3 2025, total biotech venture financing increased by over 70 percent, rising from $1.8 billion to $3.1 billion. After peaking in 2021, biotech experienced a two-year downturn driven by factors such as tariffs, drug pricing pressure, funding cuts to the NIH, and regulatory uncertainty from layoffs at the FDA and CDC. With recent interest rate cuts lowering the cost of capital, investor confidence has begun to return. This environment is expected to drive increased M&A activity, as large pharmaceutical companies with record profits look to replenish pipelines ahead of patent expirations. This shift is reflected in the growth of Series D financing, which rose more than earlier-stage rounds. Notable examples include Kriya Therapeutics raising $320 million for its gene therapy pipeline and Odyssey Therapeutics raising $213 million to develop targeted autoimmune treatments.

Finally, capital flows are showing signs of geographic rotation. The United States continues to dominate, capturing about 64% of global VC funding, while Europe has cooled amid macroeconomic uncertainty and high interest rates. China’s funding environment remains constrained, while India has emerged as a strong growth market, particularly in fintech and mobility. With equity markets at elevated levels, some investors are beginning to anticipate lower future returns in the United States after a prolonged bull run, increasing interest in undervalued opportunities in emerging markets. Argentina has already experienced a market surge, and Brazil may follow, with several profitable companies, including public banks, trading at relatively low valuations.

• AI is no longer just about software. The biggest opportunities now sit across data centers, energy, and infrastructure, which is why investors are specializing and moving away from generalist strategies.

• Capital is becoming more selective and concentrated. Fewer deals are happening, but later-stage rounds are increasing in size, meaning investors are prioritizing companies with proven revenue, clear economics, and defensible positioning over speculative growth.

• While the U.S. still dominates, emerging markets and recovering sectors like biotech are drawing renewed interest, making geographic awareness and sector depth increasingly important for students looking to enter the VC and startup ecosystem.

 

Canada-Specific Trends in the Past Year

1. AI: From Hype to Heavy Integration

Artificial Intelligence continues to dominate Canada’s venture capital landscape. AI has accounted for roughly 30% of all VC investments, which is the highest share ever recorded. Over half of all capital deployed within AI has gone to information and communication technology (ICT), with AI-driven software and infrastructure at the forefront. This capital was mostly concentrated in two Ontario-based leaders, Cohere and Tenstorrent. Overall, this trend reflects the market’s shift from simple AI experimentation to integration and scalability, as AI is spreading across multiple industries like HR, finance, and biotech. This shift highlights why it’s increasingly important to think beyond AI hype and be able to explain where real adoption, defensibility, and long-term value sit.

2. Life Sciences & Deep Tech Step Up

While information and communication technology leads VC in terms of deal volume, the life sciences, as well as energy and clean technology (ECT) sectors, are also a driving force in Canada’s diversification history. AI-powered drug discovery, remote patient monitoring, and diagnostics are just some of the results of increased capital going towards AI integration in this industry. The ECT sector, despite being down 4% in total share, still recorded the highest average deal size at $12.4M, reflecting investor preference for fewer but higher-quality opportunities.

In terms of returns on investment, life sciences have outperformed all other sectors with a 10-year IRR of 23.6% compared to 15.9% in ICT and 10.9% in ECT. This indicates that the next potential growth frontier in Canada will stem from deep tech and bio-innovation, not just software.

Higher returns in life sciences and larger average deal sizes in clean tech point to a market that is prioritizing domain depth and market quality over volume, reinforcing the importance of sector knowledge as capital becomes more selective.

3. The Rise of Secondaries

Data shows that $800 million in secondary deals were completed across five transactions last year, offering a path for limited partners and general partners to recycle capital amid stalled exits. The continued growth of secondaries could also attract new institutional entrants and help Canadian VCs maintain fundraising velocity, even in the absence of activity in IPO or M&A markets.

Recent Market Activity within the Secondary Market:

◦ Industry Ventures acquisition ‘very on strategy’ for Goldman Goldman buying Industry Ventures is a signal that secondaries are no longer a niche corner of VC; they’re becoming a mainstream institutional strategy. It also shows big financial players see real demand for liquidity when IPOs and exits stay slow, so secondaries are turning into a regular way to “unlock” returns without waiting years.

◦ Insight Partners launching a dedicated secondaries strategy Insight launching a secondaries platform shows that even top growth investors are formalizing liquidity plays as a core part of their toolkit. For the market, it means more structured capital will flow into buying existing stakes in strong private companies, which can support late-stage valuations and give founders and early investors more flexibility.

Secondaries are becoming a core part of how venture firms manage risk, timing, and liquidity, not just a fallback when IPOs slow, highlighting the value of understanding fund mechanics.

4. Domestic Capital vs. Foreign Dependence

One of the ongoing challenges for Canadian VC is its reliance on foreign capital. Foreign investors participated in 39% of all deals but accounted for a staggering 78% of total dollars invested year-to-date. This shows the disparity between domestic participation and deal value, as Canadian investors represented 61% of transactions but just 22% of total capital deployed. The U.S. remains Canada’s largest external investor, with U.S. participation up 30% from pre-pandemic levels. With a new U.S. administration, concerns emerge about the future of U.S. VC funding. Overall, with the many uncertainties around additional funding from external investors from the U.S. and other countries, Canada’s VC landscape must focus on strengthening domestic capital flow and continue to build Canada’s innovation pipeline independent of international partners.

Canada’s reliance on foreign capital leaves its venture ecosystem exposed to external political and market shifts, reinforcing the importance of building deeper domestic funding capacity to support companies through scale.

5. Canada Compared to the U.S. VC Landscape

Canada’s VC performance is still significantly behind when compared to the U.S. on several fronts. Canada’s 10-year net IRR declined to 10%, widening the gap relative to the U.S.’s 14.6%. Additionally, Canadian valuations remain lower across the board in both Series A and B rounds.

Overall, Canada falls behind the U.S., but it is still punching above its weight in terms of its VC ecosystem. Since pre-pandemic levels around 2019, VC investment has grown 111%.

Canada’s VC market may lag the U.S. in performance metrics, but strong post-pandemic growth points to an ecosystem that is still early in its development rather than structurally weak.

To read more about Canadian VC trends, look at: Canada’s Venture Capital Landscape

 

Canadian-Centric Deals

One of the most defining Canada-specific VC moments this year was Cohere’s late-stage raise, which really put Canada back on the global AI map. In mid-2025, the Toronto-based AI company raised about CAD $689 million, or roughly USD $500 million, in a Series D round. This was the largest VC deal in Canada for 2025.

What made the round especially notable was the investor mix. It brought together major global strategic investors like Nvidia, AMD Ventures, and Salesforce Ventures, alongside Canadian funds like Inovia and Radical Ventures, and HOOPP, one of Canada’s largest pension funds. This combination signals confidence not just from VCs, but from long-term institutional capital that typically invests only when companies look durable and defensible.

Cohere has also been very intentional about how it positions itself. Unlike more consumer-facing AI companies, it focuses on enterprise-grade large language models built for regulated industries like finance, healthcare, and government. In practice, this means prioritizing data security, reliability, and compliance over flashy consumer features. The raise pushed Cohere to a valuation of USD $6.8 billion, and the company added another $100 million before the end of Q2 2025. More broadly, the scale and timing of the deal signalled that Canada can produce a globally competitive AI infrastructure company.

A very different but equally telling Canadian deal came from logistics. UniExpress (more commonly known as UniUni if you have ever tracked a SHEIN or Temu delivery) raised $95 million in a Series D round in June. Based in Richmond, B.C., the company has quietly become one of the fastest-growing last-mile delivery platforms in the country. Last-mile delivery refers to the final step of getting a package from a local hub to a customer’s door, which is often the most expensive and operationally complex part of shipping. With a 6829% surge in revenue between 2021 and 2024, the company has landed in 5th place in Deloitte Canada’s 2025 Technology Fast 50, and is expected to continue growing its North American delivery and warehouse footprint in 2026.

UniUni operates on thin margins and wins by being operationally efficient, optimizing delivery routes, managing large gig-driver networks, and handling massive volumes of low-cost parcels. UniUni’s late-stage raise in a tighter market shows that investors are still backing companies solving real, physical infrastructure problems, especially those tied to global e-commerce demand.

Taken together, these two deals highlight a broader trend in 2025. Investors are making fewer early-stage bets, but writing much larger checks at the later stages. Capital is concentrating in companies that already have clear revenue pathways, proven demand, and defensible advantages, rather than speculative ideas that still need to find product-market fit.

• Canada is moving beyond early-stage tech. Deals like Cohere and UniUni show that Canadian companies can scale into globally competitive, late-stage businesses with real revenue and institutional backing.

• Investors are making fewer bets, but writing much larger checks for companies that have proven demand, clear unit economics, and defensible advantages.

• The biggest opportunities are often infrastructural. AI infrastructure and logistics platforms may sit behind the scenes, but they are where long-term value and durable careers are increasingly being built.

 

In this episode, the IVCC team sat down with Boyang Li, Principal at Framework Venture Partners, to explore his journey into venture capital and the lessons he’s gathered along the way. Boyang started his career in equity research at RBC Capital Markets, where he covered leading Canadian tech names like Shopify, Lightspeed, and OpenText. This experience honed his analytical skillset, taught him how great companies scale, and gave him early exposure to market dynamics, all of which later shaped his perspective as a venture investor. Before RBC, Boyang also spent time at Mithril360, a $1.3B venture and growth equity affiliate of Mithril Capital, where he was introduced to private-market investing and evaluating early-stage startups.

At Framework, Boyang’s trajectory from Associate to Senior Associate and eventually Principal reflects both his investing success and his ability to adapt to an ever-changing startup landscape. He spoke about Framework’s data-driven investment philosophy, emphasizing how analytics and pattern recognition guide decision-making and help identify standout founders. Boyang discussed trends within Canadian tech, including the rise of generative AI, shifts in valuations post-correction, and Canada’s evolving positioning as a global innovation hub. He highlighted how founders today must be more resilient and adaptable than ever, especially in macro environments filled with uncertainty, rising capital costs, and rapid technological change.

Throughout the conversation, Boyang offered valuable guidance for aspiring investors and builders. He stressed the importance of curiosity, consistent learning, and the willingness to form independent views rather than follow hype cycles. He also reflected on the human side of venture, noting that the most rewarding part of his job is being able to partner with ambitious founders and help them grow businesses that push industries forward. The episode concludes with practical advice for listeners looking to break into VC and ways to continue engaging with Framework Venture Partners.

 

In this episode, the IVCC team sat down with John Ruffolo, Founder and Managing Partner of Maverix Private Equity, to discuss his storied career and his vision for the future of Canadian innovation. Widely regarded as a leading voice in Canada’s technology ecosystem, John’s perspective is rooted in decades of experience backing some of the country’s most iconic companies. In this conversation, he breaks down the Maverix investment thesis, explaining how traditional businesses can unlock outsized growth by strategically adopting transformative technologies.

John offers a candid assessment of the current landscape, specifically focusing on the structural challenges holding Canadian capital formation back and the importance of maintaining economic sovereignty in a globalized market. He delves into the real-world impact of AI disruption, moving beyond the hype to discuss how technology acts as a catalyst for efficiency and scale. Throughout the episode, John highlights why resilience is the trait he values most in entrepreneurs, famously noting that the true measure of a founder is not the absence of mistakes, but how they react after they are made.

The conversation serves as a masterclass for founders, students, and future investors navigating a rapidly changing market. John stresses the importance of grit and long-term thinking, drawing from his own journey of navigating multiple market cycles. The episode concludes with clear guidance for the next generation of builders on how to remain adaptable in the face of macro uncertainty and how to continue engaging with the work being done at Maverix Private Equity.

 

How Venture Capital Works: Recap from Venture Academy

Venture capital is fundamentally about financing early-stage, high-growth companies in exchange for equity, and it plays a critical role in shaping today’s innovation economy. VCs invest in young companies with upside potential, aiming for outcomes that can generate 10x–100x returns because only a small fraction of startups ever become breakout successes. This dynamic is driven by the power law, where roughly 10% of investments create 90% of total returns. As a result, venture investors make many “shots on goal,” prioritizing transformative founders over predictable businesses.

VC funds raise capital from limited partners such as pension funds, sovereign wealth funds, endowments, and family offices and operate under the typical 2/20 fee structure: a VC firm charges a 2% annual fee to manage the fund and keeps 20% of the profits it earns for investors. Funds deploy capital strategically by investing slightly over half (typically 60/40 or 70/30) their dedicated capital early and reserving the rest for follow-on rounds. The entire model is built around accepting high risk in pursuit of asymmetric, outlier-driven reward.

The startup financing journey moves through a structured set of stages, beginning at the idea and minimum viable product (MVP) phase and continuing through to an eventual exit. In the earliest stages, accelerators and incubators help founders validate their concepts, build minimum viable products, and access mentorship and networks. Angel investors often provide the first dilutive capital, backing pre-product or early-product companies based on conviction in the founding team, early customer validation, and promising market signals. As startups enter pre-seed and seed rounds, investors begin looking for evidence of product–market fit, analyzing retention, customer engagement, and whether early traction can scale. By the time a company reaches Series A, expectations rise significantly. Founders must show a repeatable go-to-market motion, strong revenue growth, sustainable margins, and healthy efficiency metrics like LTV/CAC and net retention. At this stage, investors still target large multiples, but their mindset shifts from “Is there potential?” to “Is the potential already being realized?”

In the growth stages, Series B and beyond, the process becomes increasingly metrics-driven. Growth equity investors typically target 3–5x returns, looking for companies capable of producing hockey-stick revenue curves, expanding across markets, strengthening customer retention, and scaling efficiently. Execution becomes key: benchmarks tighten, valuation discipline matters, and companies must rely on durable economics rather than narrative alone. Later-stage investments often face lower returns if entry valuations are inflated, highlighting the importance of timing and realistic growth expectations. Altogether, understanding these stages provides a clear view of how venture funding works end-to-end: who participates at each inflection point, how risk evolves across the lifecycle, and what investors ultimately look for when assessing a company’s ability to grow and scale.