H1-2026: Québec remains well positioned as the market reconfigures
WHAT’S NEW IN THIS QUARTERLY REPORT:
- Economic note from Investissement Québec’s Economic Intelligence team
- Growth equity outlook and trends on the Centre of Expertise’s radar
In venture capital, 60 deals totaling $758 million were recorded in Québec since the beginning of the year. Deal count declined by 13%, while total dollars invested increased by 30% compared to the same period in 2025. This slowdown is primarily attributable to the pullback in cleantech investments, where deal count and dollars invested declined by 75% and 90%, respectively, compared to the same period in 2025. Québec is favourably positioned relative to the national level, accounting for 24% of deal count and 28% of total dollars invested. The province ranked second in both deal count and total dollars invested, behind Ontario and ahead of British Columbia.
The second quarter of 2026 confirms a profound reconfiguration of venture capital: artificial intelligence is capturing the bulk of global capital, concentrated in a limited number of mega-rounds, while institutional investors are now demanding real liquidity rather than paper valuations. In Canada, the ecosystem is consolidating significantly: fewer companies are raising capital, capital is concentrating in a few large funds, and corporate venture capital (CVC) investment is declining relative to the United States. For Québec, discipline on liquidity and differentiation will be the performance levers of the coming quarters.
In private equity, Québec experienced a slowdown in Q2 2026, recording 74 deals totaling $1.43 billion, a decrease of 23% in deal count and 60% in total dollars invested compared to the previous quarter. Despite this decline, H1 2026 totals 170 deals and $5 billion invested, ranking the half-year 9th out of 14 for deal count and 3rd for total dollars invested since 2013. Nationally, Québec remains first for deal count, with 68% of the total, and second for total dollars invested, with 40%, behind Ontario (42%).
The second quarter of 2026 highlights a single common thread: the difficulty of returning capital to investors. The contraction in private equity, concentrated in leveraged buyouts, and the valuation gap between public and private markets are delaying exits and weighing on the distributions expected by institutions. This pressure is compounded by a concentration of capital around a few large managers, longer holding periods in the absence of new acquisitions, and a tightening of private credit marked by rising anticipated defaults. For Québec, discipline on valuation, exits, and credit risk will be decisive in the quarters ahead.
Although the long-term optimism index among Canadian SMEs rose by 8 points between June and July, the economic and geopolitical environment remained uncertain in the second quarter of 2026, both in Canada and internationally. Trade tensions with the United States even intensified, with elevated tariffs maintained on steel and aluminum as well as the announcement of new duties of up to 50% on a wide range of Canadian goods, beyond the traditional CUSMA framework. This rise in friction, combined with heightened financial market volatility, global tariff measures of 10% on certain trade flows, and imported inflation risks, continues to weigh on business and investor confidence.
Venture capital highlights:
- The ICT sector, with 33 deals totaling $507 million, represented 55% of deal count and 67% of total dollars invested in H1 2026.
- In H1 2026, Québec maintained its second-place national ranking in both deal count (24% of national activity) and total dollars invested (28% of capital deployed in Canada).
- At the seed stage, total dollars invested declined by 42% in Q2 2026, while deal count increased by 27% compared to Q1 2026. Despite the decline from the previous quarter, the seed stage continues to perform above its historical average.
- In Q2 2026, the late and growth stages recorded a better quarter than the previous one, with 3 deals totaling $148 million, whereas no deals had been recorded in Q1 2026.
- The cleantech sector posted a very difficult half-year, with H1 2026 ranking 14th out of 14 first-half periods in deal count and 13th in total dollars invested.
- In H1 2026, $758 million was invested in Québec across 60 VC deals. Compared with H1 2025, this represents a 13% decrease in deal count and a 30% increase in total dollars invested.
Private equity highlights:
- In H1 2026, Québec recorded investments totaling $5.0 billion across 170 deals, positioning the half-year above the historical half-year average for both deal count and total dollars invested.
- Québec accounted for 68% of Canadian private equity deals year-to-date, ahead of Ontario (12%) and British Columbia (10%). The province also represented 40% of total dollars invested nationally, behind Ontario (42%).
- H1 2026 was characterized by a marked decline of 12% in deal count and 73% in total dollars invested compared to H1 2025.
- With 22 deals totaling $470 million, growth transactions rank 13th out of the past 14 half-years for deal count and 9th for total dollars invested.
- The industrial and manufacturing sector continued to generate significant deal volume, with 78 deals totaling $1.27 billion, representing 46% of deal count and 25% of total dollars invested for the half-year.
- Québec private equity activity in Q2 2026 recorded a 23% decline in deal count and a 60% decrease in total dollars invested compared to the previous quarter.