Canada’s venture capital ecosystem is showing signs of recovery, with disclosed exit proceeds more than doubling compared to last year. The Canadian Venture Capital & Private Equity Association’s Q3 2026 report reveals a total investment of $4.3 billion CAD across 397 deals in the first three quarters of the year. Notably, there were only 29 exits in total last year, showing the current uptick in activity.
Mergers and acquisitions are driving this growth, accounting for 26 out of 28 venture-backed exits during this period. Proceeds from these exits totaled $744 million CAD, a significant increase from the $355 million recorded in 2025.
Acquisitions Lead the Charge
This pending deal, along with others, could further bolster the ecosystem’s momentum.
David Kornacki, CVCA’s director of data and product, highlights the positive impact of increased liquidity in the market. He notes that this facilitates the return of capital to limited partners and enables the raising of new funds, creating a more dynamic investment environment.
IPO Drought Persists
The report also highlights the absence of venture-backed initial public offerings (IPOs) since 2023. This has created challenges for Canada‘s VC industry, as companies stay private longer, delaying the return of capital to limited partners and making fundraising more difficult for general partners. Alternative routes, such as reverse takeovers and SPAC deals, have gained traction, with companies like Xanadu and General Fusion leveraging these methods to access public markets.
Growth-Stage Investment Lags
While overall VC activity remains steady, growth-stage investment has faltered, sitting at 66 percent below its five-year average. With only $396 million invested, this stage saw a 55 percent decrease compared to the same period last year. Early-stage and later-stage deals, though also below their averages, have not experienced as sharp a decline, showing the unique challenges facing growth-stage companies.
The CVCA has advocated for increased focus on growth-stage investment, and the federal government has responded with a $750 million strategy, earmarking funds for later and growth-stage companies. However, details remain pending, and it may take 12 to 18 months for capital to reach fund managers. Kornacki emphasizes the urgency: Let’s press on the gas, let’s get this money deployed as quickly as possible.
The recently announced $7 billion CAD Cohere Series E deal is expected to significantly boost the year-to-date total once it closes, potentially uplifting the growth stage. This megadeal, along with others larger than $50 million, continues a trend of capital concentration in fewer, larger transactions, while overall deal counts have dropped annually since 2021.