Canada’s private impact investing market is maturing

The report defines target capital as the amount of capital a product aims to raise from investors. However, fund managers, especially those who are new and emerging, may miss the mark, resulting in lower realized fund sizes.

At the same time, private market impact investing product launches in Canada hit a record high of 55 last year, a nearly sevenfold increase since 2021. Almost half, or 22, of those products were run by investment managers that were new to the space.

The report uses the Global Impact Investing Network’s definition for impact investments, which the industry body describes as “investments made with the intention to generate positive, measurable social or environmental impact alongside a financial return.”

It stresses that impact investing is not an asset class, but rather an investment approach that can be used across asset classes such as venture capital, private equity, infrastructure and others.

The market’s growing, in pockets

The term ‘impact investing’ first emerged in the mid-2000s. This investing approach exists in both public and private markets.

Growth in the private market investing space in Canada was fairly muted for more than a decade. Then, in 2022, the market started to really take off, with record activity observed in 2025, the report noted.

“Overall, the market has grown remarkably, with rising levels of capital, a larger and more diverse set of products, new players entering the space, and increasing diversification across asset classes,” it said.

Despite this growth, the report said specific product gaps remain across asset classes, geographies and impact areas, “revealing the need for greater collaboration and innovation in financial product design.”

For one, it noted that the market is largely dominated by venture capital, which accounts for 25.8% of market share by target capital. Meanwhile, across asset classes, small-to-mid-sized products in the $10– to 100-million range lead the market, with the median product size being $30 million.

There’s also a high concentration in terms of geography, with impacting investment product headquarters and target regions being largely concentrated in major urban areas in Ontario (especially the Greater Toronto Area), British Columbia, Quebec and Alberta. By contrast, fewer impact investment products are managed from Atlantic and Northern Canada, and these regions are less targeted by product mandates.

However, the report said around half of all impacting investing products have a Canada-wide mandate.

Products are also mainly focused on a few themes, including climate change mitigation, which reached approximately $4.7 billion in cumulative target capital as of 2025. Meanwhile, other social impact areas, including affordable housing, racial equity, quality jobs, quality health care and financial inclusion, remain smaller in scale.

Still, the report said products have increasingly identified multiple impact areas in recent years, with more investment vehicles now targeting two such themes.

In a release, ISF and Rally Assets said the market “would benefit from increased asset owner allocations, more innovative financing models, greater regional representation and more diverse areas of impact.”

Documenting progress is key, they added.

“For asset owners, asset managers and other community partners, understanding where capital is allocated, how strategies evolve, and where gaps remain are key to scaling the market effectively in the years ahead,” said Yrjö Koskinen, ISF director of research, in the release. “We’re pleased this research helps to bring that deeper understanding.”

The research relied on Rally Assets’ proprietary database, which covers products and fund managers based in Canada. It excludes products located outside of Canada, even if they may have exposure to Canada through their investments.