Just over one year ago, US President Donald Trump was asked at a press conference if he would use military force in his oft-stated goal of annexing Canada.
“No,” he replied. “Economic force.”
This week, Canadian tech learned that Y Combinator no longer invests in Canadian-domiciled businesses. The move effectively requires Canadian startups to redomicile in the US to join the famed Silicon Valley accelerator.
The reaction to the decision has been loud and broad, ranging from ‘sign of the End Times’ to a big ole’ nothingburger. On the latter front is Shopify president Harley Finkelstein, who noted that Canadian startups reincorporating in Delaware has “been the reality for years.”
I worked through all of the options on The BetaKit Podcast with Maverix Private Equity’s John Ruffolo, who made a compelling case that the change is effectively a business decision by YC CEO Garry Tan (also a Canadian!) to save the accelerator’s target portfolio of angel and pre-seed investors hard cash in the form of tax exemptions and reduced legal fees. The issue, Ruffolo argues, is Tan using fuzzy data to claim redomiciled startups raise more capital, which will only fuel the ‘Valley or bust’ mindset amongst young entrepreneurs.
The Canadian startup diaspora is a real problem, and one BetaKit has dedicated significant attention to. It should not be lost in the cacophony.
But I don’t think that’s the only reason why so many people are up in arms right now. YC cut Canada from its investment list, but kept Singapore and the Cayman Islands. The latter two were kept for access to Chinese and crypto startups; the former was cut because YC knows that access to Canadian talent does not require Canadian-domiciled businesses, nor Canadian investors.
This is what economic force on Canadian tech looks like. People are up in arms because Canada currently has no leverage to stop it.
Douglas Soltys
Editor-in-chief
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Waabi claims largest-ever Canadian tech fundraise as it hauls in $750-million USD Series C
The round already appears to be a record-setter, but ridesharing giant Uber has committed up to $250 million USD in additional funding if Waabi hits certain undisclosed milestones, which would bring the round up to a staggering $1 billion USD.
Waabi will use the funding to develop its physical AI platform, speed up the commercialization of its self-driving trucks, and help the company move into a new target market—robotaxis, via Uber’s platform.
AI pioneer Richard Sutton to receive honourary degree from U of A
Sutton is the founder of modern computational reinforcement learning, a branch of machine learning in which AI systems learn to solve problems through trial-and-error, mirroring human learning.
A University of Alberta faculty member since 2003, Sutton will receive his honourary degree from the university at its first winter convocation later this year.
Float secures nearly $100 million in debt to expand credit products for Canadian businesses
Float co-founder and CEO Rob Khazzam told BetaKit that “the capital is not for Float’s coffers,” rather that “it’s capital that we enable our businesses to deploy and spend.”
This week, Float joined fellow FinTech firms Wise, Koho, Paramount, and Brim as the newest members of Payments Canada. The companies are now eligible to apply for access to the upcoming real-time rail payments system.
Canada’s housing supply is in crisis. Can robots help?
An emerging class of Canadian companies hope to modernize the housing industry and make a dent in Canada’s housing crisis by bringing the speed, scalability, and sophistication of AI and advanced robotics to homebuilding.
Expert insight
- BDC Capital head Geneviève Bouthillier sat down with BetaKit reporter Josh Scott to unpack its recent investments in Irréversible and Canada Rocket Company, and why Canadian defence tech investments are heating up.
- Following Australia’s recent ban on social media for kids under 16, Chamber of Progress senior director Josh Tabish explained why he doesn’t think a ban is the right move for Canada—and what could be done instead.
- As AI scribes flood healthcare, experts like Ontario’s information and privacy commissioner Patricia Kosseim stressed the need for responsible adoption at a data privacy event this week.
- As Elon Musk and Jeff Bezos look to the stars, Schneider Electric Canada VP Jim Kalogiros explained to BetaKit that he sees the benefits of building data centres in space, even if he isn’t sold on the feasibility just yet.
Arlene Dickinson and Amber Mac sever ties with Gander Social
Mac and Dickinson both posted on LinkedIn that they are no longer involved with Gander as investors or advisors. Mac said that she was “devastated” but that the “decision was made for us,” and Dickinson added that she was “disappointed” in the situation.
Gander CEO Ben Waldman told BetaKit that he was surprised by the posts, and that he’s not sure how what he saw as an amicable separation became contentious.
Meet Winnipeg’s latest venture studio, Ignition
A joint venture between Winnipeg’s Launch Coworking and Washington State-based ProductStak, Ignition is leveraging the strengths of both of its founding organizations.
Launch Coworking brings the physical space and deep connection to Manitoba’s founder community, while ProductStak’s expertise in scaling and accelerating businesses.
Toronto Tech Week signs new two-year agreement with City of Toronto
Host applications are now open for the 2026 edition of Toronto Tech Week, as the non-profit community initiative adds more partners and a new multiyear agreement with the City of Toronto.
Over 120 community partners are already on board for the 2026 edition, which will run May 25 to 29, including Golden Ventures, 1Password, DMZ, Elevate, Float, MaRS, and BetaKit.
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🇨🇦 Weekly Canadian Deals, Dollars & More
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The BetaKit Podcast — Why Y Combinator cut Canada out
“It’s important for the success of Y Combinator to see people investing at a very, very early stage. And if it means, to keep them happy so that they’re investing in YC companies, they will do what it takes.”
Globally recognized tech accelerator Y Combinator will no longer directly invest in Canadian-domiciled startups. Is the change a huge blow to Canada, a big nothingburger, politically motivated, or perhaps simply “formalizing what’s inevitable?”
Maverix Private Equity founder and managing partner John Ruffolo joins to discuss fuzzy data, “bullshit” narratives, and the real problems hampering Canadian tech.
Feature image “SD5_6949” by Web Summit, CC BY 2.0, via Flickr.