Cover Letter

The report dispels misconceptions about product scarcity and treating impact investing as a single asset class. It provides a baseline to scale the market effectively.

Summary insights

Impact investing requires robust deal flow sourcing, screening, due diligence and portfolio management. An estimated CA$162 million in target capital comes from funds expected to close in 2026.

Background and context-setting: Characteristics of impact investing in private markets

Private market impact investments span multiple asset classes, each with distinct characteristics. They are typically illiquid, featuring holding periods extending from seven to 10 years or more. Valuations are infrequent, relying on internal models or comparable market data, and standard performance benchmarks are limited. Impact strategies mandate impact measurement and occasionally tie compensation to impact outcomes.

Practitioner insights

The availability of varied asset classes enables diversified multi-asset portfolios. Following the Government of Canada’s CA$755M Social Finance Fund, there has been an approximately five-times increase in deal flow from first-time managers. However, capital supply struggles to match this opportunity, highlighting the need for aggregation strategies. Venture capital dominates early-stage funding, revealing gaps in diversified private credit and private equity. Geographically, Atlantic Canada and Northern Canada see proportionately low activity, presenting opportunities for blended-finance models. Thematic gaps remain in climate adaptation and natural capital.

Researcher insights

The market analysis relies on target capital as a proxy due to inconsistent realised fund size data.

1. Market size

Canada’s market totals CA$17.7 billion in target capital across 218 products. Venture capital leads with CA$4.6 billion across 91 products, followed by private equity at CA$3.5 billion across 19 products. Real estate and private debt hold CA$2.5 billion and CA$2.1 billion respectively but feature high product counts (42 and 40). The median product size is approximately CA$30 million.

2. Market growth and trends over time

The market saw a turning point in the 2019 vintage with nearly CA$0.8 billion targeted. From 2022 onward, activity rebounded strongly. The 2025 vintage year reached a record high of 55 product launches, including 22 managed by first-time managers. Between 2023 and 2025, private equity, real estate, and infrastructure grew notably.

3. Geographic distribution

More than one-third of products are managed from Ontario’s Greater Toronto Area. Ranking by total target capital, Ontario leads, followed by Quebec and British Columbia. Quebec’s capital is driven by two products exceeding CA$1 billion. Around half of all products have a Canada-wide mandate, while Ontario is the most targeted specific region at roughly 25%.

4. Impact areas

Climate change mitigation dominates with approximately CA$4.7 billion in cumulative target capital as of 2025. Private equity alone directs about CA$2 billion to this area. Resilient infrastructure and sustainable forestry grew in 2023, largely driven by single funds exceeding CA$1 billion. Recently, products increasingly combine multiple impact areas, particularly pairing social-oriented themes or affordable housing and green buildings.

5. Research gaps

Future investigations should unpack asset owner allocations, especially from pension funds. Rigorous benchmarking requires multi-year realised returns data. Finally, longitudinal analysis comparing actual fund sizes to targets would produce more accurate assessments.