Canadian venture capital investment dropped to $1.12 billion in first quarter
Canadian venture capital (VC) investment fell to $1.12 billion across 110 financings in Q1 2026 – down from $1.44 billion in Q1 2025, according to a report from research firm CPE Media.
The Q1 26 figure is the fourth-lowest quarterly result since CPE began publishing its reports in 2017. Excluding the US$275-million Xanadu financing drops total investment to $741 million across 109 financings – highlighting weak underlying market activity.
US investors, historically the most reliable funding source, dropped their share of total funding to 40%, down from 58% in 2025. International investors also pulled back, with their share declining from 12% in 2025 to 4% in 2026 and the number of investor countries falling from 54 to 16.
“This data suggests that Canada’s efforts to boost the overall level of foreign direct investment in the country are not being met with enthusiasm by foreign venture capital providers as nations across the globe deploy incentives to keep leading technologies at home,” said Richard Rémillard, president of Rémillard Consulting Group (RCG), a financial services industry consultancy.
The pullback of US and international investors has created a significant gap in Canada’s funding landscape, CPE says, with Canadian VC-backed companies remaining under sustained funding pressure since 2023.
In Q1 26, Canada-based funding sources were governments ($126M), institutional VCs ($121M), corporate VCs ($110M), and VCs ($91M). US VC firm investment totaled $138 million in the quarter.
Ontario was the top destination at $627 million, followed by Quebec ($231M) and BC ($136M). Early-stage firms received 33% of capital while growth-stage firms took in 47%.
In terms of VC fundraising, Canadian VC firms raised $362 million across 13 funds during Q1 26. However, $300 million was a BDC allocation to its StrongNorth Fund. As such, the other 12 funds managed to raise an average of approximately $5 million each.
“Unless these sums change drastically upwards going forward, the outlook is for severe underfunding of Canada’s future technology-heavy firms in the not-too-distant future,” Rémillard added. “All in all, Canada is in the midst of a venture winter.”
On the VC exit front, Canada hasn’t recorded a venture-backed IPO since 2021. Secondary liquidity has also remained weak, with no notable secondary transactions reported during that period.
