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Heading into Q1â€�25, there was positivity that with the lessening of uncertainty in the wake of the US election, IPO exits would begin to pick up after the extended dry spell. However, a fresh wave of uncertainty and related stock market turbulence driven by the announcement of various tariffs by the new US administration caused many IPO ready startups to push their US IPO exit plans out another 6-12 months. During Q1â€�25, US-based AI infrastructure company CoreWeave was the only large tech company to brave the uncertainty to hold an IPO. After downsizing its IPO, CoreWeave raised $1.5 billion at a $23 billion valuation, ending flat at the end of its first day of trading.¹

Venture capital investment in Canada was notably subdued in Q1 2025, amid escalating concerns over a tariff war with the United States. Total VC investment reached just $917 million across 148 deals � levels not seen since early 2018.

The muted activity was also likely influenced by the upcoming federal election in April, which caused many VC firms and corporate investors to hold off on major funding decisions. Among the largest Canadian deals of the quarter were a $53 million raise by LemFi, a financial services platform for immigrants, and a $50 million round by Clutch, an online automotive buy-and-sell platform.

In response to the burgeoning trade war with the US, Q1â€�25 saw the Business Development Bank of Canada announce $500 million in capital for its Growth Venture Fund and $450 million for its Growth Equity Partners funds in order to support Canadian growth-stage tech companies having difficulties raising funding given the difficult market conditions.²

VC investment in Mexico fell quarter-over-quarter as trade tensions with the US caused uncertainty to rise to levels not seen in recent memory. Some VC investors held back from making investments in Mexico â€� and Latin America more broadly â€� while corporates with nearshoring plans and companies looking to potentially expand operations to Mexico also hit pause amid concerns and uncertainties related to announced and pending US tariffs. At a sector level, fintech continued to be the focus of VC investment in Mexico; during Q1â€�25, credit and BNPL company Plata raised $160 million â€� earning it coveted unicorn status with a valuation of $1.5 billion.³ Proptech has also seen some growth in Mexico, particularly related to short-term and vacation rentals.

While the US accounted for the vast majority of VC investment in AI â€� not only in the Americas, but globally â€� Canada has continued to grow its AI ecosystem and leadership in key areas, including AI-driven data analytics and AI enablement in areas like customer relations. In Q1â€�25, the Canadian government launched its $300 million AI Compute Access Fund to provide affordable assess to computing power for the development of AI solutions by Canadian small and mid-sized companies.⁴

During Q1â€�25, Mexico released Plan México, a six-year economic development plan focused on building Mexico’s economy in a number of strategic ways â€� from creating jobs in specialized manufacturing and promoting environmentally sustainable investments to producing more goods in Mexico and providing access to finance to more small and mid-sized businesses.⁵ Looking forward, it is expected that this plan could spur activity in a range of sectors, including infrastructure, clean energy, and pharma and biotech.