For years, startup funding looked like a ladder: pre-seed, seed, Series A, Series B. One rung after another. But lately? Founders are skipping the seed round altogether—pulling themselves up with pre-seed and bootstrapped dollars until Series A makes sense.
Let’s take a look at what’s driving the shift, and what it means for founders navigating today’s venture market.
How Canada’s Venture Capital Ecosystem has Changed
Venture capital in Canada hasn’t disappeared, but it looks different than it did a few years ago. Here’s where the shifts are showing up:
- Early-stage funding is shrinking: In the first half of 2025, 133 early-stage deals pulled in $297M. That’s more than half the activity, but just a sliver of the money.
Translation? More startups are knocking, fewer VCs are answering. - Ontario leads the pack: Ontario pulled in $115.1M across 36 deals, nearly 45% of rounds nationwide. Quebec snagged second with $66.1M across 18 deals and one of the fattest average cheque sizes at $3.67M.
- Policy whiplash. Budget 2024’s proposed capital gains hike spooked angels and VCs, cutting into early-stage risk appetite. The policy was scrapped earlier this year, but investors don’t exactly forget tax scares overnight.
- New capital on the way: Ottawa’s 2024 Fall Economic Statement pledged a $1B top-up to the Venture Capital Catalyst Initiative for 2025–26. The idea? Pull more pension and institutional money into Canadian VC. Great for the ecosystem overall, but no promises that funding will end up in the early rounds.
As David Kornacki of CVCA puts it, “Canada’s venture capital ecosystem is holding steady through a period of adjustment … more selective deployment of capital, especially at the critical earliest stages.” In other words? The bar’s higher, the cheques are bigger, and fewer founders are getting them.
Why More Startups are Skipping the Seed Round
A mix of market reality and founder choice is pushing more teams past the seed round. Here’s what’s driving it:
- Cooling investor appetite at seed: Seed used to mean betting on a smart team and an early idea. Now, investors expect Series-A-level proof: revenue, traction, and a clear path to scale. By the time founders have that proof, they can essentially leapfrog the seed stage and go straight to Series A.
- Pre-seed rounds are swelling: What started as friends-and-family money is now institutional. In hot sectors like AI or climate, $1–3M pre-seeds are common. With that much capital upfront, a second round isn’t always necessary.
- Bootstrapping is easier (and cooler): Twenty years ago, starting a company meant servers, office leases, and big up-front costs. Today? Cloud credits, no-code tools, and remote offices enable teams to build fast without the overhead. Add early contracts or pre-orders, and founders can brag about building with customers instead of investors.
- Government grants fill the gaps: In Canada, programs like SR&ED tax credits, IRAP grants, and accelerators give founders breathing room to grow without immediate VC backing. That public support makes skipping seed doable here in ways other ecosystems can’t match.
- Equity is worth protecting: Every round means giving up a slice of ownership. With valuations flat, founders are holding off until they’ve got traction that earns them better terms and more control.
Canadian Success Stories: Startups that Skipped the Seed Round
Not every founder climbs the funding ladder rung by rung. A few Canadian companies have proved you can build traction, grow a real business, and only bring in outside money when it makes sense (or skip it altogether).
- 1Password (Toronto): The password manager used by millions ran profitably for 14 years before touching VC. When they finally did, they skipped seed entirely and went straight to a $200M Series A (Accel’s largest single cheque at the time). From there, it scaled into a record-breaking $744M CAD Series C, backed by stars like Ryan Reynolds, Robert Downey Jr., and Justin Timberlake. Not bad for a company that never bothered with a seed round.
- AppArmor (Ottawa): AppArmor bootstrapped from day one, reinvesting customer revenue into safety apps for campuses and workplaces. It never raised seed or venture funding, and still sold for about $40M in 2022—proving that sometimes the best investor is the one paying your invoice.
- FreshBooks (Toronto): Long before chasing investors, FreshBooks spent a decade bootstrapping its way into the small-business accounting spotlight. When it finally raised, it went straight to a $30M (USD) Series A, then kept scaling with a $100M USD credit line from BMO and J.P. Morgan. The lesson? You can skip seed and still end up banking with, well, the banks.
Startup success isn’t about avoiding a seed round at all costs, but recognizing that there’s more than one way to reach the top.
Building Beyond the Seed Round on Your Own Terms
Skipping the seed round only works if you can show you’re ready for what comes next. Here’s how founders make that happen:
- Define your proof points early: Don’t drown yourself in metrics. Choose the two or three numbers that actually prove you’re onto something (revenue, retention, customer growth) and make them the centerpiece of your pitch.
- Spend with intention: The test is simple: Does it drive growth or just look good? Put cash into the people and tools that push revenue forward, and hold off on the extras until the basics pay for themselves. A new sales hire? Hard yes. Fancy espresso machine? Not yet.
- Stack your runway: Mix and match: pre-seed dollars, SR&ED credits, IRAP grants, accelerator perks, early customer revenue. Put it on a timeline so you know exactly how far you can get without a seed cheque.
- Keep the equity lens on: Every round costs ownership. Map out what you give up now versus later. Sometimes holding off means scrappier months but better terms when it counts.
- Plan your story early: If you’re skipping the seed round, frame it as a strength. Show how you got this far without it and why that puts you in a better position for what’s next.
Bottom line: With enough traction, a strong funding mix, and a story that resonates, you can arrive at Series A stronger than if you’d raised seed on weak terms.
To Seed or Not to Seed?
The seed round isn’t dead, but it’s no longer a given either. Some founders raise it, others skip it, and plenty of successful companies have come from both paths.
At TBDC, we help founders make that choice with confidence through fundraising coaching, investor strategy, and introductions to Canadian VCs, angels, and grant programs. So, if you’re weighing whether to take a seed round—or walk right past it—let’s chat.
