Venture capital and government funds are being largely concentrated among three industrial foodtech categories, according to a new report.

Of $62.7 million in funding in Canada for startups and next-stage firms tracked in Q2, a staggering 93.5 per cent was funnelled into manufacturing, food safety and traceability, and next-generation ingredients, the Canadian Food Innovation Network (CFIN) found in its Q2 2026 Sightline Report.

For the CFIN — which funds and connects foodtech industry players with each other — the reports were launched to gain more knowledge about the funding landscape.

“We began to track, through the Sightline reports, what the investment trends are in the sector, what opportunities or deals are gaining attention . . . because we saw there was generally a lack of knowledge about what was happening in the Canadian foodtech space,” Alexandra Barlow, vice-president, programs at CFIN, said to FoodNX in an interview.

It showed that for now, there are gaps in funding in the sector.

“It’s a massive sector for Canada, and so we began tracking and reporting on it to the sector, giving them exactly the sight line into what’s happening because obviously where the dollars are going is a strong indicator of where people are seeing the biggest opportunities.”

CFIN’s funding partners

The organization has more than 9,000 members around the world, including manufacturers, processors, operators, distributors, retailers, foodservice companies, tech companies, service providers, and funders, according to its website.

It has so far provided $19 million to bring foodtech projects to market. Members include McCain, Farm Credit Canada and Atlantic Canada Opportunities Agency, among others. It is also partially funded by the federal government.

Where the money is being invested is eye-opening, but for Barlow, it’s about time some of these areas were better funded.

“We need to be getting new technologies commercialized and into our own production plants, and so that was something that really excited us because for a while the restaurant tech space was really dominating, and we were seeing that as one of the leading investment opportunities,” she said.

There are some leading-edge technologies being funded, which will help the country to move forward, such as “physical AI and using new combinations of sensors and digital tools to drive decision-making or gather better insights from the plant floor,” Barlow said.

The increased deployment of AI should greatly improve industry performance that is facing a “huge modernization challenge,” she added.

More U.S. products on shelves

Canada risks falling behind in foodtech, according to Barlow, and the fallout of this trend is already being experienced by consumers.

“We’re seeing the impact on the grocery shelves. We’re seeing more and more U.S. brands, imported products, and less of our own homegrown processed goods.”

Complicating these efforts are current trade talks with the U.S., as Canada faces “increased trade uncertainties.” This represents an “opportunity to make investments in existing Canadian operations,” which will serve us well, Barlow said.

There are some homegrown success stories in new categories such as meal-delivery kits, which are also addressing shifting consumer needs in nutritional makeup.

“Look at the growth of something like Factor Canada. Those pre-made meals are high protein, smaller portions, and they’re seeing very strong sales growth,” she said.

Lack of money at higher levels

Besides this challenge, the report illustrated that when funding reaches more advanced levels of startup growth, it begins to dry up due to a number of factors, she said.

“Structurally over the years, some things have happened to erode how our pension funds invest in this country, and how some of our very large investment portfolios (spend) their dollars. That created a lot of difficulty because that’s great Canadian capital that’s not necessarily being invested here in Canada.”

“There’s definitely not enough capital at the scale level, and that’s not just for foodtech, that’s for anyone.”

CFIN is not the only organization that has pointed this out. “There’s been recent reporting from the Canadian Council of Innovators (CCI), where they interviewed 30 founders who had recently exited, and they said there’s not enough capital throughout the whole time,” she said.

“Governments and organizations around the world are supporting innovation firms to reach scale on their own home soil. In Canada, too many companies hit a wall just when momentum matters most,” Patrick Searle, chief executive officer of CCI said in a release.

Companies forced to look south

The Sightline report does expose the fact that there isn’t enough money in Canada to keep up.

“Canadian investors, they’re certainly not leading the charge and to be fair, there’s not enough of them," Barlow said.

"As a result, they are picking very low-risk opportunities because they don’t have the same depth of pockets as we’re seeing out of the U.S., who not only dominate the Canadian foodtech investment landscape, but the global foodtech investment landscape.”