Canadian healthtech saw $900M VC funding decline in 2025

Ahead of MaRS Discovery District's 2026 Vital Signs report, Louise Pichette, Director, Health Sciences at MaRS, explained that Canadian healthtech is seeing a decline in venture capital funding and a need for more attractive procurement practices.

According to data from MaRS, 2025 saw CAD $1 billion in VC investment, compared to CAD $1.9 billion in 2024. 

"In 2025 in particular, we did see less M&A and exits. So it is perhaps a kind of knock-on effect of the last few years, since the COVID craze, of decrease in early stage funding," said Pichette. "Now we're kind of seeing the effects of that as these companies advance through the pipeline. So it's a challenging time, and in general, capital markets are struggling. There's less liquidity available in many sectors."

MaRS, located in downtown Toronto, supports over 1200 startups from climate tech to the health sciences. Pichette says the health sector at MaRS is composed of about half digital health, a quarter med tech, and a quarter traditional life sciences, with about 65 per cent in pre-seed and seed, 30 per cent in Series A, and around five per cent in Series B or above.

According to data from the National Angel Capital Organisation (NACO) and Startup Genome, Canada has seen a decline in the overall value of its tech ecosystem in recent years. The country's top three startup ecosystems in Toronto-Waterloo, Vancouver, and Montreal have lost a total of USD $66 billion in ecosystem value since their respective peaks. The joint report pointed to an imbalance of infrastructure investment at each stage of the investment pipeline.

According to NACO's data, the federal government's Venture Capital Action Plan Seed-to-Series A funding ratio was approximately 95 per cent, while under the Venture Capital Catalyst Initiative, Series A investment grew by 2.5 times, while seed investment grew only by 1.6 times.

"[At MaRS] we have more volume at the early stages. But as companies grow, we get more hands-on with how we support them. At the early stage, it's more of a one-to-many, community-driven model. And as they grow, they have unique challenges that we really need to kind of give them that really deep one-on-one support as they continue to expand."

Pichette said a sector-wide decrease in exits has strained funding for early-stage ventures entering the program.

"We're seeing challenges in liquidity available for funds to be able to deploy back, as well as increasing global competition. Some of the data highlighted increased funding, particularly in China, who have are investing quite heavily in biotech. It just creates that much more challenge for emerging Canadian companies," she said.

In China's 14th Five-Year Plan period (2021-25), it set out to address rising demand for "healthcare and better lives, foster high-quality economic development, prevent and control biosecurity risks and modernize China's system and capacity for governance." The Mercator Institute for China Studies stated that public funding in the field was CNY 20 billion (CAD $4 billion) in 2023 alone. Other sources say investment in China continues to rise.

In Canada, medical device funding for 2025 is on the rise, with increases in funding for image-guided therapy, cardiovascular monitoring, and surgical tools. Women's metabolic and hormone health, in particular, also saw increased domestic interest, MaRS reported.

"I'd say those are the key domains to watch, along with cell and gene, which is kind of on a worldwide level, experiencing a global winter in fundraising," Pichette said. "We've seen a strong signal for these companies being able to fundraise amidst a challenging time. It's still challenging for Canadian cell and gene companies, but it is a promising signal that this financing happened during this time."

Talent and research are recognised as abundant in Canada, but an execution gap impedes Canadian companies from reaching their full potential as fully Canadian ventures.

"There are challenges when a company reaches scale, because they're generally going to get that capital from non-Canadian sources, and then they have incentives to either relocate or become non Canadian controlled at that point."

Pichette said it's vital to keep procurement programs attractive at all stages of growth by implementing innovations within Canadian institutions or, at least, pursuing mutually beneficial partnerships.

"Interestingly, we're seeing more interest in either other Commonwealth and European countries that want to partner with Canadian innovators, and then that can create a wider market opportunity for companies and countries that have more similarly structured healthcare systems to us," she said.

"So there is definitely movement, but it's it remains challenging for companies to scale."