BDC report says more than 80 percent of late-stage deals come via foreign capital.<\/p>\n
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A new report from the Business Development Bank of Canada<\/a> (BDC) echoes what the Canadian startup ecosystem has been saying for years: Canada needs more venture capital investment if it wants to be both competitive and sovereign.<\/p>\n Titled Canada\u2019s Venture Capital Landscape 2026, BDC released the annual report Tuesday morning, analyzing market data to assess trends in capital supply, demand, performance, and exits in the Canadian VC environment.<\/p>\n \u201cWe\u2019re good at starting companies, we\u2019re just not getting them across the goal line.\u201d<\/p>\n Genevi\u00e8ve Bouthillier, BDC<\/p>\n The 2026 report identified several key findings impacting Canada\u2019s investment landscape, including a growing concentration of capital deployed in fewer, more heavily concentrated deals. According to the report, just 10 publicly disclosed, big-ticket deals accounted for 49 percent of all investment in 2025. Additionally, the report found that investors are increasingly more selective, prioritizing perceived winners like AI (which accounted for half of all dollars invested), as safer investments.\u00a0<\/p>\n That creates a \u201cscale-up gap,\u201d according to BDC, in which fewer companies can access the capital needed to move from early growth to commercialization. The report shows that gap has widened, with deal volumes and investment values dropping at Series A rounds and beyond.\u00a0<\/p>\n BDC also identified difficulty in accessing Canadian investment during late-stage fundraising as a key issue. Late-stage deals for Canadian businesses remain \u201cheavily dependent on foreign investors,\u201d according to BDC, with the report claiming that foreign investment accounts for \u201c80 to 90 percent\u201d of capital in $50-million-plus financing deals.<\/p>\n \u201cWe\u2019re good at starting companies, we\u2019re just not getting them across the goal line,\u201d said Genevi\u00e8ve Bouthillier, the executive vice-president of BDC Capital<\/a>, the bank\u2019s investment branch.<\/p>\n The report\u2019s findings come as Canada finds itself under increased trade pressure from the US and working to both diversify its trade relationships and support domestic industry. Bouthillier said that a reliance on foreign investment, particularly at the commercialization stage, represents a newfound vulnerability amid the geopolitical turbulence.<\/p>\n \u201cThe heavy reliance on foreign capital \u2026 is no longer just a feature of the market, it has implications for Canada\u2019s ability to retain ownership, decision-making, and long-term value,\u201d she said. \u201cThis is now an economic sovereignty issue.\u201d<\/p>\n Bouthillier called the report a \u201ccall to action\u201d for Canadian venture capital to get involved in commercialization-stage companies.<\/p>\n \u201cIf maturing firms are lost, Canada misses both the value they would have injected into the economy and the returns on the early-stage investments that helped build them,\u201d Bouthillier wrote in the introductory remarks of the report. \u201cLet\u2019s be clear. We need these firms to grow and stay in Canada.\u201d<\/p>\n RELATED: BDC launches $150-million life sciences fund<\/a><\/p>\n BDC\u2019s findings echo a sentiment that many others in both the Canadian startup and tech communities have been expressing in recent months. As recently as last April, Jesse Wiebe left Startup TNT<\/a> to start the Canadian Startup Capital Association (CSCA), aiming to unite what he called a fragmented investment landscape for early-stage startups in Canada.<\/p>\n The Canadian government has also acknowledged the need for more investment, earmarking $750 million for early-growth startups in its 2025 budget<\/a>. How that money is spent has been the subject of debate<\/a> between investment advocacy firms such as the Canadian Venture Capital and Private Equity Association (CVCA) and the National Angel Capital Association (NACO). The CVCA has taken a similar outlook to BDC, advocating for more funding to go to businesses in the Series B phase and beyond, while NACO has largely aligned with the CSCA in focusing on early-stage organizations<\/a>.<\/p>\n All of that has come amid a broad array of federal investments<\/a> and initiatives<\/a> aimed at supporting Canadian businesses and industry<\/a>, including the $1-billion Venture and Growth Capital Catalyst Initiative, a federally-funded, BDC-administered program designed to boost late-stage investment in domestic companies. However, Bouthillier said BDC\u2019s report findings show the needle continuing to move backward, rather than forward.<\/p>\n The 2026 report reveals that Canada\u2019s venture capital footprint declined by six percent in 2025, with $8 billion deployed. That number was followed by another 12 percent decline in the number of deals in 2025. It\u2019s a trend that Bouthillier said has been consistent in recent years.<\/p>\n \u201cIt\u2019s a decline from last year, and last year was a decline from the year before. The peak year was 2021, and it\u2019s been declining since then.\u201d<\/p>\n Genevi\u00e8ve Bouthillier, BDC<\/p>\n \u201cIt\u2019s a decline from last year, and last year was a decline from the year before. The peak year was 2021, and it\u2019s been declining since then,\u201d Bouthillier said. \u201cSo what\u2019s that mean? It means that there are a couple of big outliers in terms of big investments. Cohere, Wealthsimple, that\u2019s where a lot of the capital is going. That\u2019s an issue for smaller companies.\u201d Bouthillier said that in order to start moving in the right direction, it will take a collaborative approach from private investors, institutional investors, and the government focusing on domestic investment across the startup lifecycle.<\/p>\n \u201cWe need to collaborate and be cohesive \u2026 it\u2019s a requirement for everyone to invest in the Canadian economy,\u201d she said.<\/p>\n For BDC, that investment is starting internally. In its official statement announcing the report\u2019s release, the bank\u2019s investment branch announced it would be increasing its direct and indirect investments in an effort to \u201ccrowd-in\u201d private capital. Those investments, according to Bouthillier, will be targeted at sectors that hold strategic value to Canada, including artificial intelligence, defence and sovereignty, life sciences, and backing of fund managers \u201cacross the value chain.\u201d<\/p>\n