Canadian investors have been generous with funding for tech startups over the past few years. That may soon change.

Saad Shaikh, a partner with Toronto-based MNP, said investors are now weighing their technology investments far more carefully. Future funding, he noted, is increasingly tied to whether companies can move beyond research and development and toward deploying and scaling real-world business applications.

MNP is one of Canada’s largest accounting and business consulting firms, supporting technology companies ranging from early‑stage startups to established firms valued at up to $400 million.

“For startups, that means they have to look at the next step,” Shaikh said. “One of the key questions investors are asking is what the next 12 months look like in terms of funding.

"They want to know whether companies have a long‑term vision and how they plan to move their research toward actual products or solutions.”

Shaikh added that companies seeking future investment must shift from purely research‑driven AI development and align their work with what clients need.

“Everyone right now is using AI and throwing around the word AI,” he said. “What needs to happen is to step back and ask: What do my clients need from this research? What problem does it solve for them? And is what we’re building truly a solutions‑oriented product?”

Focus on real‑world business issues

Startups, he said, should conduct a portfolio review of their AI initiatives, retire “vanity projects,” and focus development on scalable work that aligns with core business metrics. Canadian companies, he noted, increasingly want AI solutions that deliver measurable productivity gains, cost efficiencies and support market growth in a highly competitive global environment.

“If you’re developing a solution, it always comes back to the client,” Shaikh said. “Understanding what they need and what will make their life easier is essential. Regular reviews and anchoring development to client metrics — checking that what you’re building aligns with what matters to them — are critical.”

Shaikh emphasized startups must understand marketing and growth as deeply as research and development, especially with AI dominating the conversation.

“I think people sometimes get too hung up on the idea of AI and the buzzwords around it, and forget about the clients they need to reach,” he said. “It’s about treating AI as an outcome, not the headline.”

He believes more startups are beginning to recognize this, often with support from provincial and federal governments.

He pointed to the federal government’s $2‑billion Canadian Sovereign AI Compute Strategy, announced in late 2024 and reinforced in the 2025 budget. The strategy focuses on building sovereign compute infrastructure, enhancing research capabilities, and promoting industrial adoption of AI.

An additional $200 million has been allocated through regional development agencies to support AI adoption by companies.

“I think that’s a great first step in helping companies take those next critical steps,” Shaikh said.