Canadian Venture Capital and Private Equity Association's latest report shows just one growth-stage deal, worth around $1-million, in the first three months of 2026.Adrien Veczan/The Canadian Press
New venture capital investment for growth-stage companies in Canada fell to near zero in the first quarter of 2026, according to a report from the Canadian Venture Capital and Private Equity Association.
The CVCA report showed just one growth-stage deal, worth around $1-million, in the first three months of the year. CVCA defines growth stage as a later step of a company’s expansion where money is invested to support its scale-up.
More broadly, the report showed a total of $936-million in venture capital for all stages invested over 104 deals during the quarter. That was the smallest deal count for a quarter since 2017.
To replace growth-stage investment, some companies are going public, according to David Kornacki, the CVCA’s director of data and product.
Xanadu Quantum Technologies Ltd., a quantum computer developer, went public on the Nasdaq and Toronto Stock Exchange earlier this year, raising $302-million in the initial public offering. According to chief executive officer Christian Weedbrook, the company didn’t want to wait for private investors to emerge.
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“It was going slow, to be honest. We would have gotten there, but we looked at what was happening at that point in time on the public markets and we decided to follow suit,” Mr. Weedbrook said in an interview, adding, “This is a race, so we need to move as fast as possible.”
John Ruffolo, founder and managing partner at Maverix Private Equity, said some companies are choosing to go public because private investors are risk-averse. “If you’re asking me about risk appetite on larger capital pools, I would say we’ve got a big issue here.”
Earlier-stage investment accounted for almost 70 per cent of total investment in the first quarter, the CVCA report showed. This marks a reversal of the trend seen last year, when money invested into late-stage development was growing.
Mr. Kornacki said the current situation is unusual. “Typically we see more spread to the later stages,” he added.
He also said foreign capital investors typically support companies in later stages of growth. “Two-thirds of those transactions are typically supported with U.S. investment or foreign investment capital, but we didn’t really see that activity this quarter.”
He stressed, though, that the first quarter doesn’t necessarily signal what will happen the rest of the year.
Notably, after a decline last year, overall U.S. venture capital investments in Canada are beginning to increase.
Mr. Kornacki said this is a “good thing,” adding, “We like having more capital available to Canadian portfolio companies, but we do still require some more Canadian investors at those growth stages to help fuel and build these companies and retain these companies in Canada.”
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The private equity report showed a total of $3.82-billion was invested over 138 deals in the first quarter of 2026. The total money invested declined by 12.5 per cent, compared with the final quarter of 2025, while the number of deals increased about 11 per cent. The average deal size was $27.9-million.
Private equity investing was concentrated in just a few regions. Quebec accounted for 65 per cent of deals and 93 per cent of money invested, with 90 deals worth a total of $3.59-billion.
Ontario saw just 15 deals worth a combined $52-million. This was lower than either British Columbia, which saw 17 deals worth $135-million, or Alberta, which saw 10 deals worth $71-million.
Mr. Kornacki said the volume of deals is typical for Quebec. “I think what is notable is there are fewer transactions than we normally see across Canada, and Quebec is driving most of the activity.” He pointed to the province’s big pension funds as being behind most of the investments.
Mr. Ruffolo said he would like to see public investment funds across the country commit more money domestically. “Believe in Canada. If we just believed in these businesses more as Canadian investors, we would do a lot better, but a lot of them don’t. They just don’t think it’s sexy,” he said.