Canada must scale what it creates: BDC’s VC Landscape report warns VC gaps now a sovereignty issue
MONTREAL, May 26, 2026 (GLOBE NEWSWIRE) -- Canada’s ability to create world-class startups is not in question. Its ability to scale, retain and commercialize them at home is. This ongoing gap needs to be addressed because the stakes are rising beyond venture capital matters to include economic sovereignty, according to Canada’s Venture Capital Landscape 2026, released today by the Business Development Bank of Canada (BDC).
“Canada is exceptionally good at creating innovative companies. Where we fall short is helping them scale and stay here. The heavy reliance on foreign capital to fill that gap is no longer just a feature of the market, it has implications for Canada’s ability to retain ownership, decision-making, and long-term value. This is now an economic sovereignty issue,” said Geneviève Bouthillier, Executive Vice President of BDC Capital, BDC’s investment arm.
The annual VC Landscape report led by BDC Capital, Canada’s most active investor by transaction count, finds that while venture investment remained resilient, with a modest 6% decline to $8 billion in 2025, capital is becoming increasingly concentrated in fewer, larger deals. At the same time, late-stage deals remain heavily dependent on foreign investors, with these accounting for 80 to 90 per cent of capital deployed in $50-million-plus financings. This concentration is consistent with a broader “scale-up gap,” where fewer companies access the capital required to move from early traction to commercialization.
“When ownership, intellectual property and decision-making shift outside the country, Canada risks losing not only economic upside but also influence over the industries and technologies that will shape its future,” added Ms. Bouthillier. “The call to action is clear for players in Canada’s VC landscape to finally, and once for all, address this critical scale-up gap because the stakes are real.”
Exits remain constrained, Canadian venture returns lag global peers like the US, and domestic fundraising has fallen to its lowest level in years.
Urgency rising as global conditions shift
The findings come amid heightened geopolitical uncertainty, growing trade pressures, and renewed global competition for strategic technologies — from artificial intelligence and life sciences to defence and dual-use innovation.
According to the report, AI alone accounted for nearly half of all venture capital invested in Canada in 2025. More broadly, later-stage growth in the sector remains highly exposed to foreign decision-making.
“The question is no longer whether Canada can innovate,” said Ms. Bouthillier. “It’s whether we are willing to mobilize the capital and partnerships required to own and benefit from that innovation here at home. Data and system sovereignty, especially AI, is mission critical for Canada’s commercial interests as a productivity lever. It’s a base element that we need to build in Canada, by Canadian companies, for Canada’s unique market needs.”
BDC Capital is positioning itself as a key driver in that effort, reinforcing its catalytic and countercyclical role, increasing direct and indirect investments to “crowd in” private capital, and targeting sectors where Canada has both strength and strategic imperative.
“Economic sovereignty isn’t only built at the seed stage, it’s built when companies scale, endure and lead globally from Canada,” Ms. Bouthillier said. “The window to act is narrowing, and the cost of inaction is growing.”
About the report
The annual Canada’s Venture Capital Landscape analyzes internal and external market data to assess trends in capital demand, supply, performance and exits across the Canadian VC ecosystem.
About BDC, Canada’s bank for small- and medium-sized business owners
BDC focuses on small- and medium-sized business owners, providing them financing, investment, and advice. As Canada’s development bank, we also support entrepreneurs who don’t fit the traditional mold working with a network of partners and help develop underserved markets to unlock economic potential. Our mission is to build strong, resilient businesses that drive Canada’s economic growth. BDC is a perennial Canada’s Top 100 Employer and B Corp certified. Learn more at bdc.ca or connect with us on social media.
Media contact:
mediainfo@bdc.ca
1 844 625-8321
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