By Aditi Roy

Raising capital in 2025 has been more challenging than ever, given the current economic state of the country. According to the Canadian Venture Capital and Private Equity Association’s (CVCA) report, Canadian venture capital investments have fallen 26 per cent from 2024, hitting their lowest level since the pandemic. 

At Toronto Metropolitan University (TMU), student entrepreneurs are facing a high-risk climate, learning to launch and fund their ideas in an era of tighter capital and higher stakes. 

The CVCA reports that, in the first half of 2025, only $297 million went into pre-seed and seed stages, which are initial investments for startup launch, across 133 deals in the first half of 2025. The report shows a 16 per cent drop in total funding and a 28 per cent decline in the number of deals compared to the same period in 2024, illustrating the steady decline that has been unfolding since the post-pandemic investment boom.

Matthew Robertson, director of venture growth at MaRS Discovery District—North America’s largest urban innovation hub—acknowledged the heavy burden facing new founders, noting that investors now expect clearer product-market fit and stronger early traction. 

“It’s a very challenging time for founders to raise capital right now, both at the pre-seed and seed stages, relative to pre-pandemic years,” he said.

Shahkir Alkozai, co-founder of VolTrack—a startup focused on car safety and theft prevention—and a first-year master’s student in engineering, sees the shift firsthand. “In 2020 it was fear of missing out because everybody was raising. Now it’s fear of starting, because you might fail,” he said.

Robertson emphasizes that cycles of uncertainty are normal and shouldn’t dissuade young founders from building something new. “This is still one of the most exciting times in history to start a company,” he added.

The rise of artificial intelligence (AI) and emerging technologies in 2025 has enabled students to explore the potential of entrepreneurship without the need for large teams and excessive funding. The use of AI in Canadian businesses has doubled from 6.1 per cent to 12.2 per cent in 2025, according to Statistics Canada. 

Robertson remains optimistic about the possibilities AI and new technologies that will open up for founders. “People will say you can build a product over the weekend, and the real challenge is deploying it in the market and getting traction,”  he said.

Not everyone shares this optimism. Some see significant drawbacks in an AI-reliant society. Fourth-year marketing management student Manan Jain shares his skepticism about the integration of AI in businesses. “Because of COVID, everything moved digital…Now that all the research and branding feels AI-driven, nothing feels authentic anymore,” Jain said.

Isha Sidhu, president of the TMU Entrepreneurship Association and a fourth-year business management student majoring in human resources, notes that students often struggle to navigate funding options and figure out where to start. “There’s so much available that it can feel overwhelming,” she said. “It’s not always clear what step comes first or who to go to.”

Alkozai secured $15,000 from DMZ’s Basecamp during these turbulent times and recognizes how intimidating and cutthroat the current landscape is for new founders. “We’re never going back to 2020 levels with zero interest rates,” he said. “Now only the strongest ideas and teams will survive.”

Jamelia Allen, the DMZ Skills Academy programs specialist, sees firsthand how difficult the market has become for this year’s cohort. “There have been more funding barriers, so investors might see a student-led startup as really high risk due to the limited experience,” she said. “And as they’re scaling back on the funds they’re giving out, that also adds to the issue these students are facing,” she added.

Allen notes that the struggle often continues even after students gain early traction. “We’ve seen some of the student ventures lose momentum once they no longer have access to campus resources, whether it’s accelerators, labs or mentorship,” she said.

Nodalli co-founders and TMU graduates Jason Ramsay and Joshua Daniel—whose startup aids students in networking and building professional connections—describe the exhausting nature of entrepreneurship. “There are nights you work on a marketing plan until 3 a.m.; it’s not glamorous but it’s the truth,” Daniel said.

Ramsay echoes the feeling of relentlessness. “One of the hardest parts is you’re always on—always thinking about fundraising, product, operations even at 4 a.m.,” he said. “There isn’t balance, but when you’re passionate, it doesn’t feel like work,” he added. The constant late nights—and their running jokes about being sponsored by Red Bull—say otherwise.

Despite the strain, both credit TMU’s ecosystem for helping them stay grounded and move forward in their journey. Having secured $20,000 through DMZ’s Basecamp program and other unnamed funding opportunities, they say support networks have been critical.

For some aspiring entrepreneurs, the barriers feel more daunting. Despite his ambitious nature, Jain describes the stress of starting in 2025. “With the economy the way it is, I think you need to be more careful,” he said. Jain recognizes that many students who dream of entrepreneurship are also torn between the prospects of security through a full-time job and the volatile nature of founding a startup.

Jain remains adamant about starting his venture in the final year of his undergraduate degree, even though the possibility of failure looms large. “I feel there’s an insane amount of competition—everyone is racing to grow fast, and the market is volatile,” he said. Jain admits he’s cautious about the prospect of funding, wary of diluting his company’s shares significantly before even launching his idea.

Robertson notes the grim reality that few ventures make it past the initial stages. “You have to show more traction, better product-market fit and a clear path to revenue,” he said. “There are far fewer examples today of startups getting funding before they’ve proven anything,” he added.

Still, for Alkozai, persistence remains the defining trait, even in a volatile and uncertain economy. Or, as he put it, “Sometimes you have to risk it for the biscuit.”