Canadian VC investment fell to $1.12 billion in Q1 2026 as investors from 38 fewer countries pulled back
Only 16 countries invested in Canadian startups in Q1 2026, down from 54 a year earlier.
Canadian venture capital investment totalled $1.12bn across 110 financings in Q1 2026, marking the fourth-lowest quarterly result since 2017, according to CPE Analytics.
That compares with $1.44bn across 168 financings in Q1 2025 and $9.37bn for the full year.
The foreign pullback drove much of the decline.
US investors cut their share of total funding to 40 percent from 58 percent in 2025, while international investors fell from 12 percent to just 4 percent, CPE Analytics reported.
Non-traditional capital providers stepped in to fill part of the gap, US and Canadian mutual and hedge funds together deployed $393m, or 35 percent of total funding, but institutional and foreign VC participation remained thin.
Richard Rémillard, president of Rémillard Consulting Group, said the trend reflects a structural shift in global capital allocation, with nations deploying incentives to keep leading technologies at home.
Canada's efforts to attract foreign direct investment, he added, "are not being met with enthusiasm by foreign venture capital providers."
Bridge financing hit a record 38 percent of all VC deals in Q1 2026, according to CPE Analytics — the first time it has exceeded 30 percent and up from 27 percent in 2025.
The figure has climbed steadily since 2022, when it sat below 20 percent, pointing to sustained funding stress among Canadian startups.
On the fundraising side, Canadian VC firms raised $362m across 13 funds during the quarter, but $300m of that came from BDC's allocation to its StrongNorth Fund, CPE Analytics reported.
The remaining 12 funds averaged roughly $5m each.
Rémillard warned of "severe underfunding of Canada's future technology-heavy firms in the not-too-distant future" if current trends continue.
Exit activity offered little relief.
According to CPE Analytics, Canada has not recorded a venture-backed IPO since 2021.
Xanadu Quantum Technologies completed a SPAC qualifying acquisition and began trading on Nasdaq and the TSX in March, backed by a US$275m PIPE financing.
General Fusion announced plans in January to go public through a SPAC qualifying acquisition with Spring Valley Acquisition Corp. III, targeting a close in mid-2026.
Ontario continued to lead all provinces with $627m raised, followed by Quebec at $231m and British Columbia at $136m, according to CPE Analytics.
Toronto alone captured $596m, or 53 percent of total investment, with Montreal the only other city to surpass $100m at $205m.
