Total venture funding for Canadian technology companies remained steady at US$1.5 billion in the first quarter, but a 62 per cent decline in the number of deals executed shows the market is moving toward fewer but larger investments.
according to a quarterly report Released by market intelligence platform Traxon, the total capital deployed represents a 10 per cent sequential increase from Q4 2025 and a decline of 8 per cent compared to Q1 2025.
However, the 73 transactions recorded represent a 62 per cent year-on-year decline in the number of deals. This divergence indicates that the average transaction size has more than doubled as institutional capital has moved away from early-stage startups.
For example, seed-stage funding declined 48 percent and early-stage capital declined 62 percent year-over-year. In contrast, late-stage funding increased by 82 percent to $1.1 billion. The geographic distribution was heavily skewed toward Toronto, which captured 55 percent of all national funding at US$832 million.
The quarter’s funding metrics were heavily driven by single transactions in the autonomous vehicle sector. Toronto-based Wabi secured US$750 million Series C Backed by BlackRock, Volvo Group and Telus Ventures. The transaction accounted for half of the country’s total venture capital infusion for the quarter and created the only new unicorn of the period.
Other major late-stage deals include a US$131 million Series D for Coquitlam-based quantum networking firm Photonic and a US$110 million Series D for Montreal’s Vention.
On the other hand, the exit market was characterized by low public listing activity but high-value infrastructure acquisitions. Only one company, quantum computing firm Xanadu Quantum Technologies (TSE:XNDU, NASDAQ:XNDU), went public US$433 million initial public offering.
However, the biggest liquidity event of the quarter came from corporate acquisitions with Ecolab (NYSE:ECL). get Calgary’s CoolIT Systems for US$4.8 billion.
Within the broader data set, enterprise applications remained the leading sector, attracting US$1.1 billion or growth of 92 percent year-on-year.
Meanwhile, Canadian wealthtech companies like d1g1t and Bellwether Investment Management are using AI and real-time risk analysis to provide institutional-grade services to a broader client base.
Bellwether, a subsidiary of Lorne Park Capital Partners, has deployed tools like AI chatbots to streamline onboarding, competing directly with the country’s “Big Six” banks.
“Our aim is to be seen as the alternative to the bank when it comes to money management,” said Bob Sewell, founder and president of Bellwether. told the Financial Times. “The reality is that there is a certain degree of democratization that happens when we can take advantage of some of these tools, frankly probably more quickly than a bank because of all the internal workings of them.”
Toronto-based d1g1t, which provides risk analysis to more than 100 advisory firms, expects assets under management on its platform to reach $1 trillion by the middle of the year. Business Association recently partnered With the wealth management unit of Royal Bank of Canada (TSX:RY) to serve high net worth clients.
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Securities Disclosure: I, Gian Liguid, do not have any direct investment interest in any of the companies mentioned in this article.
