Canadian VC sees lowest quarterly deal count in nearly a decade

Canadian venture capital (VC) saw the lowest deal count of any quarter since 2017 in Q1 of this year, according to the Canadian Venture Capital Association’s (CVCA) quarterly market overview report. However, the deals that did take place were largely early-stage rounds. 

The CVCA said the first quarter of 2026 closed with $936 million CAD in venture capital invested across 104 deals, which is 41 percent fewer deals than the previous quarter. Still, capital deployment remained above pre-pandemic levels, and average deal size increased six percent compared to this time last year. 

“One quarter doesn’t really suggest where the rest of the year will go.”

The figures show that, once again, more Canadian VC money is going toward fewer, larger players. CVCA’s director of data and product, David Kornacki, told BetaKit in an interview on Tuesday that this shows investors are being more selective by investing more money per round. 

Despite the record-low deal count, Kornacki said the capital deployment still made it “a quarter of note.” He added that he wasn’t writing off the rest of 2026 just yet. 

“One quarter doesn’t really suggest where the rest of the year will go,” Kornacki said. “Q4 was a really big quarter last year, perhaps that’s where really big deals were closed, and that’s why this quarter has seen a little bit less.” 

Capital concentrating around early-stage deals

Kornacki said the Canadian data is pretty similar to global activity, and that if four outlier deals from US giants OpenAI, Anthropic, xAI, and Waymo are eliminated (representing 57 percent of global VC in Q1), the global market is also seeing fewer deals with larger cheque sizes. 

“These are also larger cheque sizes, but these are just historically large,” Kornacki said. “Even the US has never seen anything like this before.”

The biggest beneficiaries of Canada’s Q1 concentration were earlier-stage deals, which Kornacki said “hasn’t really happened before,” as capital is typically concentrated in the later and growth stages. Instead, pre-seed through Series B rounds accounted for $651 million, or nearly 70 percent, of total investment last quarter. The average seed-stage deal size also rose to nearly $4.5 million, a 37-percent increase compared to the five-year average and the highest the CVCA has ever seen.

On the flip side, later-stage rounds brought in just over $248 million across nine transactions, at an average size of $27.6 million. That is well below the five-year Q1 average of almost $55 million. 

CVCA also found only one growth-stage deal (Series E and beyond) last quarter, which Kornacki said hasn’t yet been announced. While the CVCA’s data on the round is incomplete and the total commitment is unknown, Kornacki said they included it to paint as comprehensive a picture as possible. 

“Even if this was a $150-million deal, it’s still not adding a considerable amount to the overall capital invested,” Kornacki said. 

More Canadian ecosystems are growing

Exit activity remained subdued in Q1—with nine undisclosed exits from mergers and acquisitions generating $572 million in exit proceeds—but the strained later-stage environment is something to keep an eye on, Kornacki said. He pointed to Xanadu and the public market ambitions of General Fusion and Juno Industries as evidence that private companies may be looking towards other outlets to fuel their next stages of growth; a shift, as companies have typically opted to stay private since 2021. 

“So [it could be an] indication on what’s to come,” he said. “Maybe it’s just a one off, or two off, three off, but maybe it’s also…  just this year.”

The absence of capital can also compel Canadian companies to turn to international capital at later stages to fill in their gaps, which brings a Canadian sovereignty angle to supporting those companies, Kornacki said. He added that the data supports the CVCA’s proposal for the federal government’s $750-million CAD envelope for “early growth-stage funding gaps” to be pointed at providing more domestic capital to growth-stage firms at the Series B level and beyond. 

RELATED: Capital concentrates as Canadian VC market narrows: report

Regionally, Ontario-based startups accounted for nearly 40 percent of all deals in Q1, but captured only 15.5 percent of total capital invested. Meanwhile, British Columbia and Quebec recorded similar levels of deal activity but attracted 69 percent of total capital deployed, with $357 million and $292 million invested, respectively.

Kornacki also noted that CVCA is starting to see more deals in places like Saskatchewan, Manitoba, and New Brunswick, which he said indicates more Canadian ecosystems are growing. 

“It’s a sign of a growing, maturing market overall,” Kornacki said. “There are opportunities all over Canada.”

Feature image courtesy Unsplash. Photo by Tom Carnegie.