Canadian startups focus on homegrown funding with U.S. relations strained

Tatiana Estevez was celebrating her fog water collection company Permalution securing money in a fundraising round and garnering support for a drinking water project, when it was all placed in jeopardy.

Because American president Donald Trump froze the U.S. Agency for International Development’s spending, one of the humanitarian organization’s biggest contractors had to put the funding it was set to send Permalution on hold.

USAID was also due to back a drinking water project from Estevez’s Sherbrooke, Que.-based business.

“It was very heartbreaking to see how everything was unfolding,” Estevez said. “We were so close to the crossing line.”

She managed to find other investors to step in and is hopeful she can still nab the paused funding after a U.S. judge ordered the release of billions of dollars in USAID’s frozen foreign aid, but North America is not without other tensions.

A tariff war between Canada and the U.S. now appears to be spilling over into the startup world, with Canadian founders saying the whims of Trump are weighing on investors and shaking up the typical fundraising process.

The shift has come with both pros and cons. Startups say it’s made domestic investors want to support homegrown businesses even more than usual and potential backers from even further afield are rising to the occasion.

However, some say investors of all stripes are also lobbing more questions at startups about how their businesses could be impacted by Trump and tariffs, setting the stage for it to take longer to secure financing deals.

“It’s created a lot of uncertainty in the fundraising space,” said Alexander Ip, chief executive at CERT Systems, a Toronto-based company manufacturing chemicals without fossil fuels.

“Hopefully, we