New data from RBCx reveals that Canada's early-stage startup ecosystem is under growing pressure, with both the number of companies raising venture capital and the total amount raised falling 40% year-over-year in Q1 2026. The findings follow RBCx's Capital Under Pressure report, which found that Canada's VC market has become increasingly concentrated, leaving less capital available for early-stage startups than expected based on historical data.
Key Findings from RBCx Data
The data shows a sustained decline in the number of companies raising capital since the start of 2025. In Q1 2026, the number of early-stage founders raising capital dropped 31% from Q4 2025 and 40% from Q1 2025. Despite this decline, the average seed round size has remained stable at approximately $3 million across 2025 and into Q1 2026, indicating that the amount of funding needed by early-stage startups has not changed, but fewer founders are entering the market.
Emerging managers raised $2.8 billion in 2025, which is 36% below anticipated levels of approximately $4.3 billion. The top five largest VC funds captured nearly 80% of total capital raised in 2025, compared to 46% in 2023 and 67% in 2024. Since 2021, there has been a 50% drop in the amount raised by the top five funds, while the rest of the market experienced a 90% decline.
Impact on Deeptech Sectors
While AI tools are being touted for reducing operational costs for some startups, deeptech sectors such as cleantech and life sciences remain heavily reliant on venture funding. According to Tony Barkett, Head of Banking at RBCx, "Venture capital plays an important role in the early stage, especially for businesses in cleantech and life science with heavy upfront costs in research and development. Without funds available, the innovation pipeline narrows."
RBCx tracked the fundraising activity of over 700 pre-seed and seed-stage companies headquartered in Canada across a two-year period. The data underscores a troubling trend: the number of companies raising capital has continued to decrease, yet the funding needs remain steady, creating a squeeze on early-stage startups.
RBCx's Commitment to Early-Stage Companies
Despite the challenging environment, RBCx remains committed to supporting early-stage companies. Barkett added, "Our team, many of them former founders themselves, offer tailored financial products and direct connections to VCs, helping founders unlock growth at every stage, especially when the fundraising environment is tough."
