In the first quarter of 2026, Canada’s startup ecosystem closed just 104 venture deals. That was the lowest quarterly count since 2017, according to the Canadian Venture Capital and Private Equity Association (CVCA). Ontario, home to the country’s largest tech cluster, took only 15.5 per cent of the capital that quarter. British Columbia and Quebec each brought in roughly twice as much.
Then the second quarter swung the other way. By the end of June, investors had put $2.69 billion into 250 Canadian deals, up 17 per cent in dollars from the first half of 2025. For a market that has spent four years watching deal counts shrink, it was the first rise in early-year dollars since 2021. CVCA chief executive Benjamin Bergen urged caution, telling BetaKit that “one thaw doesn’t make a spring.”
That swing is a good way into the state of Canadian startups in 2026. It’s lumpy and concentrated, and it gets pushed around by a handful of very large rounds. Underneath the national totals, the four biggest hubs (Toronto-Waterloo, Montreal, Vancouver and Calgary) are each running a different playbook. Here’s how they compare on talent, capital, flagship companies and the federal programs founders actually use.
The national startup ecosystem: more money, fewer companies
Canadian venture investment totalled $8.0 billion across 571 deals in 2025, according to the CVCA’s year-end report. Ontario took just over half of the dollars. Information and communications technology (ICT) absorbed $5.06 billion. Two numbers in that report stand out more than the headline total. Venture debt reached a record $1.40 billion across 69 deals. And there were no venture-backed IPOs at all, with only 29 exits and $358 million in disclosed exit value.
The first half of 2026 made the concentration more obvious. The Logic reported that 16 mega-deals of more than $50 million accounted for nearly 60 per cent of the capital invested. Seed funding fell 31 per cent to $285 million across 82 deals. Series A and B rounds, meanwhile, rose 29 per cent to $1.2 billion. ICT took 65 per cent of the dollars, while life sciences dropped 39 per cent to record lows.
Put simply, a company that already has traction can raise. A company that’s still at the idea stage will find it harder than at any point in the last decade. Angel money is also thin. The National Angel Capital Organization counted just under $114 million in angel investment across 490 deals in 2025, a five-year low.
Toronto-Waterloo: still the heavyweight
Toronto-Waterloo is the only Canadian hub in Startup Genome’s global top 40. The 2026 Global Startup Ecosystem Report, released in June, moved the corridor up seven places to 13th, tied with Paris. Startup Genome credited its strong “AI-native” sub-sector. A year earlier it had slipped to 20th.
Talent
Talent is the region’s clearest advantage. CBRE’s 2025 Scoring Tech Talent report ranked Toronto third among 50 North American markets, up from fourth. Waterloo Region jumped 11 spots to seventh. Tech workers make up more than 10 per cent of total employment in both, against a 50-market average of 5.3 per cent. Toronto added 42,900 tech jobs between 2021 and 2024.
Companies and capital
The region’s best-known companies are now big enough to move the national numbers on their own. Cohere, the Toronto enterprise AI developer, was valued at about US$7 billion in 2025. In September 2026, The Logic reported that it was in advanced talks to raise up to US$3 billion at a US$20 billion valuation. Wealthsimple raised $750 million at a $10 billion post-money valuation in October 2025, with assets under administration of $100 billion. Beacon Software, the Toronto company that buys and modernizes small vertical-software firms, closed the largest Canadian round of the first half of 2026.
Here’s the catch. Ontario’s dominance by dollar value is real, but it isn’t guaranteed in any given quarter. In Q1 2026 the province led on deal count with 41 transactions but trailed on capital. When the big cheques don’t land in a given quarter, Toronto’s numbers fall back to earth quickly.
Montreal: research depth and patient local capital
Montreal ranked 39th globally in Startup Genome’s 2025 report and held its position while other Canadian cities slipped. CBRE put it 15th for tech talent in 2025. Neither ranking captures what makes the city distinctive, which is its mix of deep AI research and an unusually committed provincial investor base.
Mila, the Quebec AI institute, anchors the research side and has been building out commercial channels, including partnerships with large AI labs. On the capital side, Quebec institutions keep showing up in local rounds. When the online mortgage broker Nesto raised its Series E in June 2026 at a valuation of nearly $1.5 billion, the investors included La Caisse, the Fonds de solidarité FTQ and Fondaction, alongside Fidelity.
That local backing showed up in the numbers too. Quebec drew $292.4 million across 22 deals in Q1 2026, or 31.2 per cent of national capital, while Ontario was having a quiet quarter. If you’re a founder with a technical or research-heavy product, Montreal’s mix of lower costs, university spinouts and provincial co-investors is hard to beat.
Vancouver: big outcomes, uneven momentum
Vancouver has produced some of the country’s largest private software companies, but its ranking has been sliding. Startup Genome placed it 36th in 2025, down two spots. StartupBlink’s 2025 index ranked it 39th globally. CBRE was kinder, putting the city 10th for tech talent.
The flagship is Clio, the legal software company founded in 2008. In November 2025 it completed a US$1 billion acquisition of the legal research firm vLex and raised a US$500 million Series G at a US$5 billion valuation, GeekWire reported. The company employs about 2,000 people. Climate tech is another strength. Mangrove Lithium, which is developing refining technology for battery-grade lithium, raised US$85 million in January 2026.
Those deals help explain why British Columbia led the country with $356.8 million in Q1 2026. But Vancouver’s results tend to depend on a few large rounds. In the first three quarters of 2025, Calgary out-raised it, which would have been unthinkable a decade ago.
Calgary: the fastest climber
Calgary is the hub with the strongest recent trend. The city recorded $341 million across 43 deals in the first three quarters of 2025, putting it third among Canadian cities and first in Western Canada, according to Calgary Economic Development. Alberta accounted for 58 deals, or 15 per cent of Canadian deal flow, its highest share in years.
The talent story is just as striking. CBRE moved Calgary up three spots to 17th in 2025, and the city’s tech workforce grew 61 per cent between 2021 and 2024 to almost 65,000 people.
Neo Financial is the city’s best-known startup. It was founded by co-founders of SkipTheDishes, has raised more than $700 million to date, and added AIMCo and Northleaf Capital as investors in a $68.5 million round in February 2026. Geothermal developer Eavor raised $89 million in 2025, one of the ten largest Canadian venture deals that year. Calgary still sits outside Startup Genome’s global top 40. The city ranked in the 41-50 band of emerging ecosystems in 2025, but its momentum is real, and its lower costs give founders a longer runway.
Government programs founders lean on
Canada’s public sector plays a bigger role in startup financing than its U.S. counterpart, and that role grew in 2026. These are the programs that matter most:
- BDC Capital. The Business Development Bank of Canada was the country’s most active venture investor in the first half of 2026, with 34 deals worth $831.5 million, according to the CVCA data reported by BetaKit. Budget 2025 also handed BDC a $1 billion Venture and Growth Capital Catalyst Initiative, a fund-of-funds meant to draw pension money into Canadian venture, plus $750 million aimed at the early growth-stage gap.
- NRC IRAP. The National Research Council’s Industrial Research Assistance Program funds R&D projects at incorporated, for-profit companies with 500 or fewer full-time employees. It also assigns each company an industrial technology advisor, which many founders value as much as the money.
- SR&ED. The federal R&D tax credit became considerably richer when Bill C-15 received Royal Assent in March 2026. The expenditure limit for the 35 per cent refundable credit doubled to $6 million, and capital equipment is eligible again.
- Start-up Visa. This one is going the other way. IRCC paused the program on December 31, 2025, after a backlog of more than 6,700 applications built up. Holders of 2025 commitment certificates had until June 30, 2026 to apply for permanent residence. Ottawa has promised a more selective “high-impact” entrepreneur pilot, but as of early autumn 2026 full details hadn’t been published.
That last point matters for any hub that relies on immigrant founders, which is all of them. Until the new pilot opens, foreign entrepreneurs have to rely on provincial nominee streams or regular work permits.
How the four hubs compare at a glance
| Hub | Global rank (Startup Genome) | CBRE tech talent rank, 2025 | Flagship companies |
|---|---|---|---|
| Toronto-Waterloo | 13th (2026) | Toronto 3rd, Waterloo 7th | Cohere, Wealthsimple, Beacon Software |
| Montreal | 39th (2025) | 15th | Nesto, Mila spinouts |
| Vancouver | 36th (2025) | 10th | Clio, Mangrove Lithium |
| Calgary | Emerging 41-50 (2025) | 17th | Neo Financial, Eavor |
What this means if you’re building in Canada
None of these cities is the “right” answer for every founder. A few patterns are worth acting on, though.
- Raise on traction, not on a deck. With seed dollars down 31 per cent and angel activity at a five-year low, investors are paying for proof. Plan to reach revenue or strong usage data before you go out for a priced round.
- Match the city to the company. Toronto-Waterloo has the deepest talent pool for software and AI. Montreal suits research-heavy products and gives access to Quebec’s institutional investors. Vancouver works for climate and vertical software. Calgary offers lower costs and a fast-growing engineering workforce.
- Stack non-dilutive money first. IRAP and the enhanced SR&ED credit can cover a meaningful share of early engineering costs before you give up equity. BDC is often in the room at Series A.
- Look at venture debt seriously. A record $1.4 billion of it went out in 2025. For companies with recurring revenue, it can stretch the gap between equity rounds.
- Don’t count on the Start-up Visa. If your co-founder needs immigration status, talk to a lawyer about other routes now rather than waiting for the new pilot.
The optimistic read is that Canada’s ecosystem in 2026 is maturing, with fewer but larger and better-capitalized companies. The pessimistic read is that the base of new startups is thinning just as the top gets stronger. Both are probably true. Which one wins out will depend on whether the new federal fund-of-funds money actually reaches seed-stage founders.
Sources and further reading
- CVCA: Q1 2026 Canadian VC market overview
- CVCA: Year-end 2025 Canadian VC market overview
- BetaKit: Canadian VC dollar deployment sees first early-year increase since 2021
- The Logic: Canadian venture capital investment in H1 2026
- Startup Genome: Global Startup Ecosystem Ranking 2026
- BetaKit: Canadian hubs in Startup Genome’s 2025 rankings
- RENX: Canadian markets in CBRE’s 2025 Scoring Tech Talent
- Calgary Economic Development: Calgary claims top spot in Western Canada
- National Research Council: NRC IRAP financial support
- Immigration.ca: Start-up Visa suspension and the 2026 pilot
