Venture capital investment in Canadian companies is up so far this year compared to 2025, marking the first increase in investments at the half-year mark since 2021.

Startups raised $2.69 billion in the first six months of 2026, up 17 per cent from the same period a year earlier, according to a report from the Canadian Venture Capital and Private Equity Association (CVCA). The number of deals, however, declined from 274 to 250, the lowest level since 2022, as VC firms continue to favour bigger but fewer deals.

The second quarter alone saw about $1.3 billion invested across 136 deals. That’s in line with the VC dollars invested in the same quarter last year, though well below average second-quarter deal values over the past decade. Since 2021, companies raised an average of about $2.7 billion in the second quarter and since 2016, the Q2 average was roughly $2 billion. 

CVCA chief executive Benjamin Bergen acknowledged that investment conditions remain difficult. “Canadian investors kept capital moving through a period that would have halted most markets,” he said in a statement. 

Sixteen deals of more than $50 million accounted for nearly 60 per cent of all dollars invested in the first half of the year, while five deals topped $100 million. Beacon Software’s $313-million Series C financing, closed in January but not announced until June, became the largest transaction of the period. 

Activity varied across funding stages. First-half pre-seed investments increased year-over-year from $39 million to $52 million, while seed-stage decreased 31 per cent to $285 million across 82 investments. Early-stage companies—mainly those raising Series A and B rounds—secured about $1.2 billion over 68 deals, a 29 per cent increase in value compared to last year. Later-stage deals, meanwhile, increased 23 per cent to $984 million, though hit their lowest count on record with just 18 transactions.

Growth-stage financings picked up in the second quarter after nearly disappearing in the first three months of the year. There were three deals at this stage worth $127 million in the first half of the year, up from one deal worth $17 million a year earlier. 

The CVCA’s report noted that larger deals tend to attract more foreign investors. Foreign backing for Canadian startups increased in the first half of the year, with U.S. investors most prevalent. They participated in 28 per cent of all transactions, up from about 26 per cent in 2025, though below the 2021 peak of nearly 37 per cent. European investors contributed to nearly 11 per cent of all deals, the highest level in six years and nearly double last year’s six per cent. About 66 per cent of all deals were financed exclusively by Canadian investors, roughly the same as in 2025. 

Bergen has warned about the risks of Canada not having enough growth-stage capital to back the country’s most successful startups and scaleups. A dearth of Canadian funds big enough to write large, growth-stage cheques leads companies to raise more foreign capital, diluting Canadian ownership, he said. “As rounds get larger, more of the world’s investors come to the table, a sign of how much Canadian companies can attract at scale,” said Bergen. “The work ahead is building more of the capacity to lead those rounds at home, so Canada captures more of the upside.”

The data also suggest that AI continues to influence where deals get done. Information and communications technology companies—which includes AI startups—accounted for 65 per cent of all investment dollars and 55 per cent of deals, making it the only sector to record year-over-year growth in both measures. Cleantech companies held relatively steady, buoyed by Mangrove Lithium’s $118-million round, while life sciences investment fell 39 per cent to its lowest first-half level on record. 

CVCA also released a separate report Tuesday on Canada’s private equity market. It shows a sharp decline in deal value, from $31 billion in the first half of 2025 to $12.7 billion for the same period this year. Deal count declined 24 per cent to 252 transactions. 

Four take-private deals accounted for 57 per cent all private equity value: the $3.3-billion acquisition of Dentalcorp, taken private by the Canada Pension Plan Investment Board and GTCR; Warburg Pincus’s $1.9-billion privatization of ECN Capital; La Caisse’s $1.2-billion acquisition of Information Services Corporation; and Francisco Partners’ $850-million deal for Blackline Safety. Bergen said the deals further suggest there’s lots of appetite for Canadian assets.