A new report from the Business Development Bank of Canada (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.
Titled Canada’s 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.
Geneviève Bouthillier, BDC
“We’re good at starting companies, we’re just not getting them across the goal line.”
The 2026 report identified several key findings impacting Canada’s 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.
That creates a “scale-up gap,” 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.
BDC also identified difficulty in accessing Canadian investment during late-stage fundraising as a key issue. Late-stage deals for Canadian businesses remain “heavily dependent on foreign investors,” according to BDC, with the report claiming that foreign investment accounts for “80 to 90 percent” of capital in $50-million-plus financing deals.
“We’re good at starting companies, we’re just not getting them across the goal line,” said Geneviève Bouthillier, the executive vice-president of BDC Capital, the bank’s investment branch.
The report’s 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.
“The heavy reliance on foreign capital … is no longer just a feature of the market, it has implications for Canada’s ability to retain ownership, decision-making, and long-term value,” she said. “This is now an economic sovereignty issue.”
Bouthillier called the report a “call to action” for Canadian venture capital to get involved in commercialization-stage companies.
“If 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,” Bouthillier wrote in the introductory remarks of the report. “Let’s be clear. We need these firms to grow and stay in Canada.”
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BDC’s 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 to start the Canadian Startup Capital Association (CSCA), aiming to unite what he called a fragmented investment landscape for early-stage startups in Canada.
The Canadian government has also acknowledged the need for more investment, earmarking $750 million for early-growth startups in its 2025 budget. How that money is spent has been the subject of debate 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.
All of that has come amid a broad array of federal investments and initiatives aimed at supporting Canadian businesses and industry, 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’s report findings show the needle continuing to move backward, rather than forward.
The 2026 report reveals that Canada’s 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’s a trend that Bouthillier said has been consistent in recent years.
Geneviève Bouthillier, BDC
“It’s a decline from last year, and last year was a decline from the year before. The peak year was 2021, and it’s been declining since then.”
“It’s a decline from last year, and last year was a decline from the year before. The peak year was 2021, and it’s been declining since then,” Bouthillier said. “So what’s that mean? It means that there are a couple of big outliers in terms of big investments. Cohere, Wealthsimple, that’s where a lot of the capital is going. That’s an issue for smaller companies.” 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.
“We need to collaborate and be cohesive … it’s a requirement for everyone to invest in the Canadian economy,” she said.
For BDC, that investment is starting internally. In its official statement announcing the report’s release, the bank’s investment branch announced it would be increasing its direct and indirect investments in an effort to “crowd-in” 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 “across the value chain.”
BetaKit’s Prairies reporting is funded in part by YEGAF, a not-for-profit dedicated to amplifying business stories in Alberta.
Feature image courtesy Madison McLauchlan for BetaKit.