New data from RBCx indicates that Canada has seen a “sustained decline” in early-stage technology startup funding since the start of 2025, including a particularly rough Q1.
RBCx recently tracked the fundraising activity of over 700 Canadian-headquartered pre-seed and seed companies across a two-year period. It found that 61 startups closed nearly $190 million CAD during the first quarter of 2026—a 40 percent drop year-over-year by both metrics. Despite this decline, the average seed round size has held steady at $3 million, suggesting that companies’ capital needs have remained the same.
“If this trendline continues, that’s not great [for] the Canadian market.”
Matt Roberts, RBCx
That analysis comes in the wake of a January RBCx report that found 2025 was an especially poor year for Canadian venture capital (VC) fundraising, with the smallest amount of total dollars raised since 2016 and the fewest funds closed since 2018. Those fundraising challenges—which have been particularly pronounced among emerging managers—may have begun to filter down to early-stage investment activity.
In an interview with BetaKit, Matt Roberts, managing director of RBCx’s VC coverage, said it is tough to attribute this decline in pre-seed and seed investment to any single factor. He said fewer entrepreneurs starting businesses, and more founders deciding not to raise as early since they can build more with AI, or turning to the US for capital or as a place to establish a company, were possible contributors.
“It’s something to flag and it’s something to be concerned about,” Roberts told BetaKit in an interview. “If this trendline continues, that’s not great [for] the Canadian market.”
For his part, Roberts isn’t sure whether we have yet hit the bottom of the market.
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Canada’s five largest VCs swallowed up approximately 80 percent of all the capital raised in 2025. But they are also feeling the crunch: fundraising among this group has fallen 50 percent since 2021. The rest of the market is just feeling it more acutely: RBCx found that fundraising outside this top five has dropped 90 percent over the past five years, and emerging managers, who typically invest in early-stage startups, have gotten the brunt of that stick.
Growth is also an issue: the Canadian Venture Capital & Private Equity Association (CVCA) recently charted a lack of growth-stage activity during the first quarter.
As the CVCA, National Angel Capital Organization, and Canadian Startup Capital Association present competing visions for where the federal government should deploy the $750 million CAD it pledged towards “early growth-stage funding gaps,” Roberts said there are presently issues “at every stage of the capital stack” in Canada’s innovation market.
Feature image courtesy RBCx.