New RBCx data shows early-stage founders raised 40% less capital in Q1 2026 while funding needs remain steady
New data from RBCx reveals Canada’s early-stage startup ecosystem is facing growing pressure, with both the number of companies raising venture capital (VC) and the total amount raised falling 40% year-over-year in Q1 2026.
The findings follow RBCx’s Capital Under Pressure report, which found Canada’s VC market has become increasingly concentrated, leaving less capital available for early-stage startups than expected based on historical data.
Key findings include:
- 40% fewer early-stage founders raised capital in Q1 2026 vs. Q1 2025
- Emerging managers raised $2.8 billion — 36% below anticipated levels*
- Five well-established funds accounted for 80% of the total capital raised in 2025
- Excluding those five funds, fundraising among all other funds fell roughly 90% since 2021
Early-stage founders are raising 40% less
RBCx tracked the fundraising activity of over 700 pre-seed and seed-stage companies headquartered in Canada across a two-year period. The data shows a sustained decline in the number of companies raising capital since the start of 2025, with Q1 2026 down 31% from Q4 2025 and 40% from Q1 2025. While the number of companies raising capital has continued to decrease, the average seed round size has remained stable at approximately $3 million across 2025 and into Q1 2026. This suggests the amount of funding needed by early-stage startups has not changed yet fewer founders are entering the market. While AI tools are being touted for reducing operational costs for some startups, deeptech sectors, especially cleantech and life sciences, remain heavily reliant on venture funding.
“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,” said Tony Barkett, Head of Banking. “RBCx remains committed to early-stage companies. 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.”
Emerging managers raised 36% less than expected in 2025
On the other side of the equation, emerging managers are facing a capital funding gap. Additional analysis of the data used to generate RBCx’s 2025 Capital Under Pressure report was conducted on historical fundraising patterns, and it tells a troubling story:
- Emerging managers were expected to raise approximately $4.3 billion over the past three years*
- Actual fundraising amounted to approximately $2.8 billion — nearly a 36% gap
- In 2025, the top five largest VC funds captured nearly 80% of the total capital raised, compared to a 46% and 67% share in 2023 and 2024 respectively
- Since 2021, there has been a 50% drop in the amount raised by the top five funds compared to a 90% drop in the amount raised by the rest of the market
While fundraising overall has declined, the drop outside the top five largest VC funds has been far more severe. Fundraising levels among the top five fell from $3.5 billion in 2021 to $1.7 billion in 2025, roughly a 50% decline. All other funds combined dropped from $4.5 billion to $444 million over the same period — close to a 90% drop.
As the majority of VC funds raise dramatically less than they have in previous years, particularly emerging managers, there will be a structural shift in the tech ecosystem. Emerging managers have historically been the most willing to back early-stage startups, underwriting the higher risk bets that turn innovative ideas into transformational companies. With less capital available to them, first-time founders are left with fewer fundraising options.
“Emerging managers are the engine of early-stage innovation in Canada. They’re willing to take on the riskier bets by backing first-time founders solving problems the market hasn’t fully recognized yet,” said Matt Roberts, Managing Director, Venture Coverage. “That diversity of risk appetite is what keeps a healthy ecosystem moving. When emerging managers are underfunded, it’s not just a financing gap — it’s an innovation gap.”
About RBC
Royal Bank of Canada is a global financial institution with a purpose-driven, principles-led approach to delivering leading performance. Our success comes from the 101,000+ employees who leverage their imaginations and insights to bring our vision, values and strategy to life so we can help our clients thrive and communities prosper. As Canada’s biggest bank and one of the largest in the world, based on market capitalization, we have a diversified business model with a focus on innovation and providing exceptional experiences to our more than 19 million clients in Canada, the U.S. and 27 other countries. Learn more at rbc.com.
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About RBCx
RBCx banks, builds, and invests in the innovation ecosystem – backed by the institutional strength and stability of the Royal Bank of Canada (RBC). With specialized financial solutions, portfolio building experience, and a collective of specialists that provide powerful support, we help startups and scaleups unlock growth across every stage of their journey. Visit rbcx.com to learn more.
Source : RBCx
