As Canadian venture capital and private equity investors enter 2026, they face a landscape shaped by both persistent challenges and emerging opportunities.
This environment is increasingly defined by “cautious resilience,” as firms aggressively front-load their fundraising to navigate a market where securing liquidity has overtaken talent as the primary hurdle for portfolio companies.
Drawing from CVCA’s latest member survey, this article explores the trends, hurdles, and expectations driving the market this year.
The Investor Profile
Out of all survey participants, a vast majority (74%) identified as a VC investor, while 18% identified as a PE investor.
About 12% of respondents identified as neither a VC or a PE investor, but another type of investor (e.g growth equity, debt provider, etc).
Here’s a more detailed breakdown of the survey respondents and what types of companies they invest in:
Current and future challenges faced by portfolio companies
Private capital investors cited a variety of current challenges across their portfolio companies in this year’s survey.
Securing financing and liquidity emerged as the top pain point, with 68% of survey respondents citing this as a current challenge for their funded ventures.
Coming in at second was customer acquisition and retention at 38%, and then recruiting high-quality talent at 32%.
Notably, talent acquisition was the top-cited challenge last year at 65%, and was also anticipated by a majority (60%) to remain the top challenge in the future, back in 2025.
Broken down by investor type, securing financing and liquidity was the top concern for VC investors, while supply chain and costs of products were the top-cited challenges for PE investors, as seen in the chart below.
Reflecting the distinct needs of their respective asset classes, securing financing and liquidity was the primary concern for VC investors in 2025, a challenge notably absent for PE investors, who instead identified talent recruitment as their most pressing hurdle last year.
Global competition was also another significant concern shared among all three investor types, largely driven by Canada’s widening “innovation gap” and struggle to retain intellectual property and scale startups domestically before they are acquired by foreign interests.
Looking ahead, securing financing and liquidity remains the most commonly anticipated challenge investors foresee for their portfolio companies, with the same share of respondents (68%) identifying it as a key concern for the future.
Customer acquisition and retention also remains the second-most cited anticipated challenge at 53%, followed by both recruiting high-quality talent and global competition tied at 38%.
For VC investors, securing financing and liquidity was still by far the chief concern for the future at 83%, while for PE investors, regulation and supply chain concerns were the top-cited concerns, tied at 67% each.
Global competition was the main future challenge cited by other investors, with three-quarters of non-PE, non-VC respondents citing this.
Notably, 50% of PE investors also cited strong domestic competition as a future challenge, while no other investor type did.
Investment opportunities, exit conditions, and valuation trends
Investor sentiment regarding new prospects in 2026 remains largely stable, with 50% of respondents expecting the number of new investment prospects to stay the same as previous years.
While the majority anticipate no change, 47% of the cohort leans toward growth, primarily driven by those predicting a slight increase (35%), followed by a smaller share (12%) predicting a significant increase in new investment prospects.
Only a single respondent anticipated a decrease in prospects.
PE and other investors were more optimistic than VC investors about new investment opportunities.
A majority (63%) of VC investors expect the number of new investment opportunities to stay the same, while two-thirds of PE investors expect the number to slightly or significantly increase.
Three-quarters of non-PE, non-VC investors also expect new opportunities to slightly increase (while a quarter expect it to stay the same).
As seen in the charts below, VC and PE investors are still both continuing to deploy capital to new and existing investments, though with a smaller share of respondents saying their firm would focus on new investments only this year.
83% of both VC and PE investors say they plan to deploy capital to both existing and new investments. While still the vast majority, this reflects a decrease from 100% from last year.
The remaining 17% of both investor types said they will focus on investing in new investments only in 2026.
100% of non-VC, non-PE investors said they plan to focus on deploying capital to new and existing investments.
Here’s a breakdown of investor sentiment on investment opportunities and trends for 2026:
Exit opportunities, exit prices, and company valuations for investors’ portfolio companies are projected to generally stay the same or improve slightly this year, with a small share of certain investors anticipating some slight declines in these categories.
Optimism generally prevails regarding exits. 74% of all respondents expect opportunities to improve (65% slightly, 9% significantly).
PE investors were overall the most optimistic–100% of respondents believe that exit opportunities will improve slightly this year.
The largest share of respondents (47%) also anticipate exit prices to increase this year, 44% slightly and 3% significantly.
However, a significant portion of respondents (38%) believe exit prices will stay the same.
PE investors were once again the most optimistic in this category, with 83% of PE respondents believing exit prices will slightly increase.
VCs again were less optimistic, with both 38% of respondents believing prices will increase and stay the same. Notably, 21% of VCs believe exit prices will decrease.
However, overall, there’s a strong expectation for growth, as 71% of all respondents anticipate valuations will increase (62% slightly; 9% significantly), while 21% expect them to remain stable.
Most VC and PE investors believe their portfolio company valuations will slightly increase in 2026 (67% and 63% respectively), reflecting a bit more optimism across the board.
Fundraising intentions for 2026
This year, the CVCA also surveyed its members on fundraising expectations and intentions heading into the new year.
Overall, fundraising activity is high, with 74% of firms either currently fundraising (41%) or planning to start within the next 18 months (34%).
On the flip side, a little over a quarter (27%) said their firm is not currently fundraising nor planning to start fundraising in the next 18 months.
For those planning to start fundraising, start dates are concentrated heavily in the Q1 2026, as seen in the chart below.
For firms currenting raising or planning to raise, the target size of the fund ranges between $20 to $700M CAD, with an average of $195M.
Nearly half of the respondents have not yet reached the first close of their current fund. 18% have successfully reached their first close, and 3% operate under an evergreen structure.
Overall, the majority of respondents (65%) represent firms that have previously closed a fund. Among those firms, on average, they successfully closed 2.6 funds to date.
The distribution of the most recently closed funds is heavily concentrated in the post-pandemic period, with 2021 and 2022 being the most common vintage years.
The average amount deployed from their previous fund is $91.9M CAD, and the average final fund size was $155.5M CAD
Challenges faced by private capital
Private capital investors cited a range of challenges in the current market, from fundraising difficulties to the exit environment.
Currently, the biggest challenges facing the Canadian private capital market currently are fundraising, exit environments, and political uncertainty.
Fundraising is particularly pressing for VC firms, with 53% of respondents identifying it as a top concern. For other PE and other investors, fundraising is still the top issue, albeit cited by a smaller share (12%).
Competition from other investors is another major concern for PE investors, 12% of whom view it as a pressing issue. Around 9% of VCs cited it as an issue, and 3% of other investors.
Here’s a more detailed breakdown in the charts below.
Among all respondents, the most pressing regulatory challenge is global market access and trade policy (27%), followed by a lack of incentives/initiatives (18%) and capital gains taxes (15%).
Broken down by investor type, global market access and trade policy was the top cited challenge for VCs and non-VC, non-PE investors (Other). For PEs, regulatory uncertainty was the top regulatory challenge cited.
This year, firms were also asked which types of Limited Partners (LPs) they anticipate may not re-invest in their next fund.
Competition law and clean fuel regulations were not seen as major regulatory challenges, with no respondents citing them as key issues.
Other individual respondents also highlighted a widening competitive gap with the U.S., specifically noting the lack of tax incentives like the U.S.’ Qualified Small Business Stock (QSBS) and a worsening “brain drain” of Canadian talent to Silicon Valley.
Beyond the regulatory landscape, the survey results also highlight potential shifts in the LP environment.
High net worth individuals were the most cited group for potential LP attrition (32%), followed by Corporate LPs (24%).
A significant portion of respondents (24%) said they do not expect any LP attrition, while fund of funds and pension funds both saw lower expected attrition rates at 12% each.
Despite these aforementioned challenges, respondents expressed a moderate level of confidence in long-term growth prospects, with an average score of 56.7 out of 100.
PE investors were by far the most optimistic with an average rating of 73.2, followed by non-VC, non-PE investors at 59.
VC investors were significantly less optimistic, with an average of 51.9, highlighting the specific headwinds facing the early-stage market as valuations continue to recalibrate.
Conclusion
Canadian investors are entering 2026 with a strategy of cautious resilience.
Despite a moderate confidence score of 56.7, the industry remains active, with 83% of both VC and PE firms planning to deploy capital to both new and existing investments this year.
With 74% of respondents currently fundraising or planning to start by mid-year, and nearly half of all investors expecting stable or growing investment prospects, 2026 is shaping up to be a year of navigating regulatory shifts while maintaining capital deployment and a long-term growth perspective.
Kayla Zhu, a freelance data journalist, presents an analysis of CVCA members’ responses to the 2026 investor sentiment and fundraising intentions survey, highlighting evolving trends among VC and PE investors.
