TORONTO — Y Combinator is no longer investing in Canadian startups, forcing firms that want to join the Silicon Valley accelerator to reincorporate, likely in the U.S., The Logic has learned.

YC, which is based in San Francisco, now only backs firms registered in the U.S., Cayman Islands or Singapore, according to its standard deal terms. Startups incorporated elsewhere must “flip” their structure so that their home-nation entity becomes a subsidiary of a new parent company in one of those three countries.

Talking Points

  • Y Combinator is no longer investing in startups incorporated in Canada, requiring them to instead set up a parent company in the U.S., Cayman Islands or Singapore
  • The prestigious Silicon Valley accelerator has many prominent Canadian alumni, including the likes of SRTX and Vidyard. It updated its standard deal terms in November to remove Canada from the list of countries where participating firms can be registered

Canada was previously listed as an acceptable jurisdiction, but Internet Archive records show references to it were removed from the webpage in November 2025. A similar change was made to YC’s frequently asked questions page. YC had previously backed Canadian-incorporated startups since at least its winter 2008 cohort.

YC did not respond to repeated requests for comment.

The change means that Canadian startups enrolling in the accelerator will need to set up a new parent company, with the U.S. the obvious jurisdiction. Foreign firms accepted to YC often relocate to San Francisco after the program to be part of the city’s booming tech sector, and U.S. VCs frequently prefer to invest in startups that operate as Delaware C-Corps, a particular type of legal entity.

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YC invests US$500,000 for a seven per cent stake in startups that participate in its three-month programs. YC’s demo day attracts many of Silicon Valley’s most important venture capital funds, and its startup school events feature speakers like Tesla’s Elon Musk, OpenAI’s Sam Altman and Eureka’s Andrej Karpathy.

The program has long attracted promising Canadian startups. Alumni of the program include video sales firm Vidyard, wearables developer North, textile manufacturing innovator SRTX, and AI engineering toolmaker CoLab. 

YC’s startup directory shows it has accepted 144 Canadian firms since 2005, with the country providing up to 15 firms per batch. None of the 99 startups in the accelerator’s winter 2026 cohort, which runs from January to March, are listed as being headquartered in Canada. The numbers don’t include firms based elsewhere that have Canadian founders.

YC has recently ventured north of the border to recruit founders and firms. Four of the accelerator’s investment partners visited Toronto last September for an event aimed at students at Canadian universities; the panel also featured Farhan Thawar, head of engineering at Shopify.

Some Canadian founders and investors have previously expressed concern that YC contributes to the brain drain of top tech talent. In March 2025, Bram Sugarman, a former executive at Shopify and OMERS Ventures, posted a graph of Canadian startups in YC by batch. “The Canadians stay in the U.S.A. and raise more money,” YC CEO Garry Tan, who was born in Winnipeg, posted in response. He claimed that firms that remain in San Francisco after the accelerator’s demo day are two and a half times more likely to become unicorns than those that leave.

Applications for YC’s spring 2026 batch close on Feb. 9. The accelerator’s form asks firms to list where they currently live, where they plan to base their company after the program, and to justify their location decision.