FundFest 2025 – Looking Back and Looking Forward
This was our third year hosting FundFest. As always we had a blast and learned a lot! Our 2025 lineup featured a data-driven keynote from Peter Walker (Carta) and John Rikhtegar (RBCx), a deep dive on corporate venture capital with National Bank, Canadian Tire, Couchetard and Deloitte, a Canadian growth panel featuring EDC, Idealist and Harbourvest, and the return of our Emerging Manager Showcase. In this recap, we share highlights and insights from the market update and emerging managers.
Looking Back – A Market in Transition
John and Peter set the baseline for this year’s conference with a two-part message:
- At the macro and micro level, the market is still recovering from the aftershocks of the post-COVID bust
- The generative AI platform shift is providing a tailwind that is also sucking oxygen from the rest of market
Macro view
- Venture capital has grown into a large institutional asset class,
- Venture investments are not inherently liquid, they require M&A or IPOs to return capital,
- After a long bull run driven by low interest rates, venture assets received a final boost of capital during COVID, leading to significant overfunding and overpricing of ~1,000 “COVID unicorns”,
- As interest rates rose sharply, the trajectory of these companies reversed and available capital dried up, including at the IPO stage
- As a result, these 1,000 companies remain largely stuck in the digestive tract of the capital markets, difficult to reprice and hard to exit,
- By one count, the backlog of unrealized value in in VC backed tech cos is over $8 trillion globally,
- The backlog has created a severe slowdown in new capital flowing into funds and startups,
- At the same time, the generative AI platform shift is attracting outsized investment. This has provided a boost to the market, while leading to even tighter funding conditions for anyone not positioned as AI-first.
Micro view
- About half as many companies are making the jump from seed to A,
- Time between rounds has stretched considerably — going from Seed to A now takes over 800 days on average,
- Series A also has significantly higher ARR thresholds, around $3M at the median,
- Repricing remains a key trend — roughly one in five rounds last year were down rounds,
- Downward pressure is being felt up the chain, with decreased performance for recent fund vintages, fewer LPs investing and less capital flowing overall,
- Meanwhile, generative AI is a world apart, with hot rounds in AI companies attracting capital at valuations at the high end of historical norms
- Generative AI may also be helping companies get more efficient on headcount, although many factors are at play in this trend.
- You can find slides for the on the ground portion here.
Looking Ahead – New Strategies for the Future
In the face of a challenging market outlook, it was uplifting to spend time with some of Canada’s top emerging managers. Every new venture fund seeks to leverage unique insights or methods to drive alpha i.e., better-than-average returns. Here’s what we heard from our presenters about how they are positioning their firms to win:
- One liner – Esplanade backs early-stage digital health startups in North America and EMEA.
- Alpha – Sector expertise. Esplanade is led by former founders, physicians, and health tech operators with deep networks in the space.
- One liner – Sandpiper is a high-conviction early-stage fund investing in women-led companies across Canada
- Alpha – Women founders are systematically overlooked and hence mispriced. Sandpiper’s all women investment team has the experience, network and mindset to find and support these founders.
- One liner – Futuresight is an AI company creation platform.
- Alpha – By acting as a co-founder, Futuresight can invest in seed opportunities at an 80% discount to market prices. Key to the model is Futuresight’s founder funnel, which generates more than 800 profiles per month!
- One liner – GTMfund is an early-stage fund backed by 300+ go-to-market executives from the fastest growing companies on the planet.
- Alpha – GTM’s LP network helps them source, diligence and support companies. Their podcast, newsletter and social media assets can be deployed in support of portfolio companies.
- One liner – High conviction pre-seed investors backing Canadian founders.
- Alpha – Canada’s early-stage ecosystem still lacks high conviction lead investors at pre-seed, especially in Quebec. Telegraph leverages decades of VC expertise with on the ground presence and entrepreneurial experience
We want to thank all of our FundFest speakers, our co-organizers at Inovia and HarbourVest, the StartupFest team, and everyone who attended. If you’re keen to get involved in future events, please don’t hesitate to reach out — we’d love to hear from you.
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