The number of new Canadian venture capital (VC) funds is plummeting, with just 14 launched in 2024, the lowest in a decade, according to PitchBook. Behind this trend lurk “zombie funds,” VC firms unable to raise new financing but still managing old portfolios.
Liquidity challenges, weak returns, and inflated valuations during low-interest years have deterred investors from reinvesting in underperforming funds. Emerging managers, particularly vulnerable, face prolonged breaks or reduced operations.
Despite this downturn, initiatives like the federal Venture Capital Catalyst Initiative and secondary investment deals offer hope. Experts foresee gradual recovery, though the zombie fund dilemma remains urgent.
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