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Things are looking up for venture capital funding in the tech industry, but experts contend that some perennial problems still need solving.

Fourth quarter figures released last week by the Canadian Venture Capital Association (CVCA) show the ICT sector scooped the largest share of venture capital funding in 2014, with $1.3 billion — up from $1.1 billion in 2013, which was a 19% increase from 2012. Life sciences netted the second largest amount at $423 million, followed by clean tech at $133 million.

However, Tom Houston, national spokesman for VC funding on the leadership council for the Canadian Advanced Technology Alliance (CATA), warned there are still spotty areas for venture capital in the Canadian tech sector, particularly in mid-stage funding.

The country is well-served by local capital for micro-financing deals — less than $2 million — he said, while late-stage funding is also relatively healthy, but that’s enjoyed by a handful of tech firms including Hootsuite and Shopify. In the middle is a chasm that needs more cash input.

“The funds that invest in early stage companies tend not to have the ability to continue supporting that company through later rounds,” Mr. Houston said. “You need a new entry point and we’re not seeing that coming.”

Bill Tam, president and chief executive of the British Columbia Technology Industry Association, argues that early-stage funding is also still a problem out West.

“B.C. has seen some of its strongest years in terms of late stage venture capital but we’ve seen worrying signs in the decline of early stage venture capital,” he said. “Much of this is directly linked to the number of VC funds.”

Things aren’t entirely grim for startups in B.C., though. Angel Pui, founder of Vancouver-based Weddingful.com, has raised more than $1 million locally since starting her site in 2010.

Brides use the site, a directory of third-party wedding services, for free. Ms. Pui, a former fashion designer, said her site makes money from fees charged to vendors. Acquiring them was tough in the early days, because wedding services are varied, and company pricing is typically opaque.

“Dealing with a photographer was different to a florist. Talking to a limo driver was different to talking to a venue,” she said. There was a lot of telephone work, and she had to win companies’ trust.

She won an initial $120,000 angel round in 2010 from local early-stage funder Boris Wertz of Vancouver-based Version One, along with Hannes Blum and Kevin Swan. A year later, Mr. Wertz followed up with $100,000. Then, in 2012, she got a $500,000 seed round from Business Development Bank of Canada (BDC).

Her latest round was $600,000, split evenly between BDC and Vancity. It financed her U.S. expansion. “It’s about marketing, gaining a lot of awareness from Boston and Chicago brides,” she said, adding that the money will also help her to court vendors of wedding services.

Having investors close by who understood her business and were willing to mentor her was an important factor for Ms. Pui. “My checklist was, do they know the marketplace and are they easy to work with?” she said. “There were some U.S. investors, but I just didn’t get the same amount of value from them, so I went with BDC.”

One thing that could accelerate already buoyant fortunes in the Canadian tech VC sector is money from the Venture Capital Action Plan (VCAP), announced federally two years ago. There have been three fund-of-fund announcements. These companies will channel money into partner organizations, to fund emerging innovative firms.

Although it is too early to show up in the CVCA’s figures, that money is finally trickling through. Rick Nathan is the managing director of Kensington Capital Partners, which was the first of these three funds to begin channeling money, last month.

“It’s very carefully set up to be private sector-driven,” Mr. Nathan said of the VCAP fund, which allots $1 of government money for every $2 of private capital raised. Upstream funders typically wouldn’t place too many constraints on what stage of company would be funded by the money. “I look at the whole VCAP program as being a strong booster shot into our sector,” he said.

John Ruffolo, chief executive of Omers Ventures, is bullish on tech. The tech industry is still recovering from a malaise that began even before the 2008 financial crisis, he warned. “By 2008, the traditional LP investors like banks and insurance companies all left the asset class. A lot of them left because there was a poor history of returns since 2001,” he added.

Mr. Ruffolo contends that VCAP was a strong chance for the tech sector to prove itself. “They’d better deliver great returns so that investors will come back into the asset class.”

With the price of crude down 50% since the summer and the decline continuing last week, you might think that nervous energy investors might shift their capital into a growing sector such as tech, providing it with another booster shot. Mike Woollatt, chief executive of the CVCA, doesn’t expect failing fortunes in the energy sector to be a catalyst, though.

“In Canada and elsewhere, contrary to the way that people might think, you’re making decisions over longer periods of time,” he said. The private equity firms who feed venture capital often invest in 10-year cycles.

Private money will be pulled toward tech by emerging opportunities, rather than pushed away from energy, Mr. Woollatt argued. “We need to realize that we ought to be looking more thoroughly at the innovation side, where productivity gains lie, whether that’s in IT or life science,” he said, citing “huge exits” in sectors outside oil and gas. “There’s a long-term opportunity that a lot of investors see in those technology clusters.”

At the other end of the spectrum, Ms. Pui continues to push south, having already become profitable in the Canadian market. She expects to be able take more Canadian money for her A-round, but says after that, should the opportunity arise, she may deal with U.S. investors.

That might be a bittersweet day for her, though. “Canadian investors are really passionate about their entrepreneurs,” she said. “There may be less money because of market size, but I feel like the investors I chose really cared about me.”

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