This is extremely misleading. YC still backs Canadian founders (and other international founders). There must have been one too many painful experiences investing in companies based in Canada. Creating or converting to a US-based entity is a standard ask for most international founders who want to participate YC and I suppose something has changed such that Canada is no longer an exception to that.
Important added context here: the list went from US, Cayman, Singapore, Canada to US, Cayman, Singapore. It's not as if YC was generally investing in non-US based entities before. Canada was an exception and isn't anymore.
We're a global employer, and just employing people in different jurisdictions is kind of a nightmare (totally worth it, though). I can't imagine how much of a pain it must be to try to manage investment stakes in foreign corporations.
It's a weird change though. Canada is one of the most investor-friendly and startup-friendly jurisdictions I can think of. If you want to grow quickly, you need to be thinking about how to get an office set up in places like Calgary (lots of machine-learning talent there), Toronto, and Vancouver, and when you do so you'll find the government incentives and lower wages lead to you spending about half on total compensation versus a typical American startup hub.
I worked at a place that expanded into Calgary and picked up a bunch of ML engineers with oil-and-gas backgrounds (who were eager for something outside the energy sector) and the government picked up half of the payroll tab for several years. There is also, of course, no health insurance benefits to worry about.
Much like the US, the regulations and culture varies depending on which province (state) you're in, so someone starting a business in Alberta could have a very different experience than someone in Ontario.
> There is also, of course, no health insurance benefits to worry about.
Uhh, we don't have universal coverage for everything health up here, we still have private benefits that our employers pay for as part of our compensation plans.
> “It’s the Valley-or-bust mentality that breaks the ecosystem and really hurts Canada,” Gomez said.
Canadian pride isn't enough to keep a company in Canada. There are real and significant economic incentives to move elsewhere. That said, it's disappointing that YC no longer supports Canadian companies.
Fairly senior dev, US citizen here (20 years experience).
After what I've seen this past year, but more the past month, I will work for peanuts for a path to citizenship in Canada. US in 5 years is not a place I want to be, looking into all options and very serious.
I can't speak for YC, but legal overhead is an operational pain.
It's safe to assume YC will continue to fund Canadian founders, but they'll now require them to incorporate in Delaware, Singapore, or the Cayman Islands - none of which is significantly difficult for a founder. You could literally make a US Corp via Firstbase in a couple of minutes [0]
It's actually remarkable how difficult it's made. My only experience is here in BC. In a couple of years I've learned that it's practically punitive, and you have to want to do it really badly. The risk to reward ration is abysmal. I only continue because it's more of a passion project than an economically viable, sensible project. It could become one eventually, but my god, I'd hate to be doing this without a full time job to depend on.
We in the VC, PE, and Growth Equity space invest using other people's money.
The people who have capital in Canada are uninterested in funding Canadian GPs - they mostly end up choosing American asset classes because of high returns.
Institutional investors like the Ontario Teachers Pension Plan and CDQP tend to target asset classes outside of Canada due to their returns requirements being in the double digits range.
Edit: Can't reply
> TBF, the OTPP has a huge home bias - they’ve got more Canadian investments than they do US investments despite the market being less than a tenth the size
Huge by institutional investor standards but not in aggregate.
The majority of OTPP's assets are not in real estate [0] - out of $209B AUM, only $29.4B is invested in real estate globally.
Most of their Canadian assets are fixed income investments.
> Institutional investors like the Ontario Teachers Pension Plan and CDQP tend to target asset classes outside of Canada due to their returns requirements being in the double digits range.
TBF, the OTPP has a huge home bias - they’ve got more Canadian investments than they do US investments despite the market being less than a tenth the size.
They couldn’t target a higher proportion of Canadian assets while remaining reasonably diversified.
Israel [0], China [1], and increasingly India [2][3] worked on resolving this issue by establishing funds of funds that partnered with private sector players by matching dollar-to-dollar with them to help build a VC ecosystem.
It's the same problem in the EU as well despite ECB proclamations. Heck, Norway's (ik not EU, it's EFTA) PIF has been conspicuously absent from any sort of statment of solidarity for Greenland unlike their Swedish, Finnish, and Danish peers because 25% of Norway's budget is dependent on the PIF maintaining double digit performance.
Edit: can't reply
> I think our biggest problem in Canada is total addressable market is small [...]
Israel is even smaller than Canada - 9 million people versus 40 million - and the median Israeli remains poorer [4] than the median Canada [5]. That didn't stop Israel.
Size of home country doesn't matter. The only difference is vision (and moreso lack thereof amongst Canadian and European decisionmakers).
> I don't think an Israeli founder would have trouble moving to the US if they wanted to.
They don't. In fact, Israel had an India-style brain drain to the US until the 2010s.
I think our biggest problem in Canada is total addressable market is small.. We're 40M people (compared to what, 350M in the US, and 900M in the EU), and we're directly next door to the largest startup economy in the world.
So not only do we have fewer customers, we're competing against an economic juggernaut that shares our broad business rules, our culture and language (with one exception) and can market to us through all our media channels with very little friction.
So unless you're in health care or some other regulated field that a US startup can't just expand into easily, it's a tough go.
Wonder if the founders not being US citizens or possibly even residents will hinder their ability to maintain their company. Or, whether this change increases the likelihood of being replaced when the startup shows some success.
Also, being foreign in the US is a concern at the moment. Hell, being native in the US is a concern at the moment...
Not at all. The only benefit Canadians get compared to others is the opportunity to work for employers on TN status which is a temporary non-immigrant-intent work visa. You're not even allowed to want to immigrate if you have one. And given the political climate there's a chance it will go away at any time.
> The only benefit Canadians get compared to others is the opportunity to work for employers on TN status which is a temporary non-immigrant-intent work visa.
That doesn't strike me as "not at all" when the TN status is 1/ effectively a work visa, whether you like the strings attached or not, and 2/ a foot in the door that lets you move to a more permissive status down the line. A Waterloo or UofT grad can go from applying to a US job to their first day in a few weeks, and the only interaction they'll have with the immigration system will be getting asked for paperwork at the border. Compare that to a British or Japanese new grad, for whom there is essentially very few options unless they have excellent connections or that they display enough extraordinary abilities to be eligible for O-1.
Yup, such visas (going both ways) are based on the NAFTA/CUSMA agreement and probably live or die with that agreement. Uncertainty limits what businesses and people can/will do, and the sudden loss of work/residency permission would be really annoying for the families involved.
Canada's economy is dominated by a few big companies because the government makes too many rules. It costs too much to start a business here. In politics, only two parties really matter. This creates a closed system where big players stay big and new competition is crushed by red tape. Regulatory frameworks impose prohibitive compliance costs, favoring established incumbents over startups. Key sectors like banking, telecom, and aviation function as protected triopolies. Political power remains centralized between two parties with overlapping establishment interests. These structural barriers effectively suffocate competition and exclude new market entrants.
This is extremely misleading. YC still backs Canadian founders (and other international founders). There must have been one too many painful experiences investing in companies based in Canada. Creating or converting to a US-based entity is a standard ask for most international founders who want to participate YC and I suppose something has changed such that Canada is no longer an exception to that.
Important added context here: the list went from US, Cayman, Singapore, Canada to US, Cayman, Singapore. It's not as if YC was generally investing in non-US based entities before. Canada was an exception and isn't anymore.
We're a global employer, and just employing people in different jurisdictions is kind of a nightmare (totally worth it, though). I can't imagine how much of a pain it must be to try to manage investment stakes in foreign corporations.
It's a weird change though. Canada is one of the most investor-friendly and startup-friendly jurisdictions I can think of. If you want to grow quickly, you need to be thinking about how to get an office set up in places like Calgary (lots of machine-learning talent there), Toronto, and Vancouver, and when you do so you'll find the government incentives and lower wages lead to you spending about half on total compensation versus a typical American startup hub.
I worked at a place that expanded into Calgary and picked up a bunch of ML engineers with oil-and-gas backgrounds (who were eager for something outside the energy sector) and the government picked up half of the payroll tab for several years. There is also, of course, no health insurance benefits to worry about.
> Canada is one of the most investor-friendly and startup-friendly jurisdictions I can think of.
Other comments in this thread make it sound like an absolute nightmare. So which is it?
Much like the US, the regulations and culture varies depending on which province (state) you're in, so someone starting a business in Alberta could have a very different experience than someone in Ontario.
Somewhat. Our provinces have fewer rights, powers and responsibilities than US states. The experience is more homogenous.
It's only a nightmare if you hate all taxes and labour rights. So, you know, YC
> There is also, of course, no health insurance benefits to worry about.
Uhh, we don't have universal coverage for everything health up here, we still have private benefits that our employers pay for as part of our compensation plans.
Life insurance, dental, vision, prescriptions, physio, mental health, critical illness etc..
It might be less than in the US, but it's not "no health insurance benefits to worry about".
> “It’s the Valley-or-bust mentality that breaks the ecosystem and really hurts Canada,” Gomez said.
Canadian pride isn't enough to keep a company in Canada. There are real and significant economic incentives to move elsewhere. That said, it's disappointing that YC no longer supports Canadian companies.
Economic incentives are only one of the many incentives weighing on the scales. There are others.
Like which?
Attractiveness to talent?
Fairly senior dev, US citizen here (20 years experience).
After what I've seen this past year, but more the past month, I will work for peanuts for a path to citizenship in Canada. US in 5 years is not a place I want to be, looking into all options and very serious.
Is it politically motivated or does it have to do with Canadian tech not requiring investment because of its stability?
I would bet it's politically motivated, YC strikes me as money at all costs, and very dismissive of the techno feudalism they help support
I can't speak for YC, but legal overhead is an operational pain.
It's safe to assume YC will continue to fund Canadian founders, but they'll now require them to incorporate in Delaware, Singapore, or the Cayman Islands - none of which is significantly difficult for a founder. You could literally make a US Corp via Firstbase in a couple of minutes [0]
[0] - https://www.firstbase.io/partnership/y-combinator
Shopify is basically the only really successful Canadian start-up.
It's very hard to run a very small business here.
It's actually remarkable how difficult it's made. My only experience is here in BC. In a couple of years I've learned that it's practically punitive, and you have to want to do it really badly. The risk to reward ration is abysmal. I only continue because it's more of a passion project than an economically viable, sensible project. It could become one eventually, but my god, I'd hate to be doing this without a full time job to depend on.
Can you give more details? I'm simply a sole proprietorship in Canada so not sure what I'm getting myself into.
That's truly saddening. I hope there will be more VC backing in Canada because the talent is definitely there.
We in the VC, PE, and Growth Equity space invest using other people's money.
The people who have capital in Canada are uninterested in funding Canadian GPs - they mostly end up choosing American asset classes because of high returns.
Institutional investors like the Ontario Teachers Pension Plan and CDQP tend to target asset classes outside of Canada due to their returns requirements being in the double digits range.
Edit: Can't reply
> TBF, the OTPP has a huge home bias - they’ve got more Canadian investments than they do US investments despite the market being less than a tenth the size
Huge by institutional investor standards but not in aggregate.
The majority of OTPP's assets are not in real estate [0] - out of $209B AUM, only $29.4B is invested in real estate globally.
Most of their Canadian assets are fixed income investments.
[0] - https://www.otpp.com/content/dam/otpp/documents/reports/2024...
> Institutional investors like the Ontario Teachers Pension Plan and CDQP tend to target asset classes outside of Canada due to their returns requirements being in the double digits range.
TBF, the OTPP has a huge home bias - they’ve got more Canadian investments than they do US investments despite the market being less than a tenth the size.
They couldn’t target a higher proportion of Canadian assets while remaining reasonably diversified.
Or Canadian real estate.
Most institutional investors limit real estate to around less than 5% of their portfolio.
So what's the upshot? No Canadian VCs? I guess there's always ClearCo LOL
> No Canadian VCs
Pretty much.
Israel [0], China [1], and increasingly India [2][3] worked on resolving this issue by establishing funds of funds that partnered with private sector players by matching dollar-to-dollar with them to help build a VC ecosystem.
It's the same problem in the EU as well despite ECB proclamations. Heck, Norway's (ik not EU, it's EFTA) PIF has been conspicuously absent from any sort of statment of solidarity for Greenland unlike their Swedish, Finnish, and Danish peers because 25% of Norway's budget is dependent on the PIF maintaining double digit performance.
Edit: can't reply
> I think our biggest problem in Canada is total addressable market is small [...]
Israel is even smaller than Canada - 9 million people versus 40 million - and the median Israeli remains poorer [4] than the median Canada [5]. That didn't stop Israel.
Size of home country doesn't matter. The only difference is vision (and moreso lack thereof amongst Canadian and European decisionmakers).
> I don't think an Israeli founder would have trouble moving to the US if they wanted to.
They don't. In fact, Israel had an India-style brain drain to the US until the 2010s.
[0] - https://www.yozmagroup.com/overview
[1] - https://english.www.gov.cn/news/202512/26/content_WS694e4e56...
[2] - https://idtalliance.org/
[3] - https://rdifund.anrf.gov.in/
[4] - https://www.ynet.co.il/economy/article/bjn8ppfz2
[5] - https://www.statcan.gc.ca/hub-carrefour/quality-life-qualite...
I think our biggest problem in Canada is total addressable market is small.. We're 40M people (compared to what, 350M in the US, and 900M in the EU), and we're directly next door to the largest startup economy in the world.
So not only do we have fewer customers, we're competing against an economic juggernaut that shares our broad business rules, our culture and language (with one exception) and can market to us through all our media channels with very little friction.
So unless you're in health care or some other regulated field that a US startup can't just expand into easily, it's a tough go.
Israel, like the parent poster said, is even smaller. I don't think an Israeli founder would have trouble moving to the US if they wanted to.
Wonder if the founders not being US citizens or possibly even residents will hinder their ability to maintain their company. Or, whether this change increases the likelihood of being replaced when the startup shows some success.
Also, being foreign in the US is a concern at the moment. Hell, being native in the US is a concern at the moment...
There's probably no nationality easier for tech workers to migrate to the U.S. with than Canada, though. (And vice versa.)
Not at all. The only benefit Canadians get compared to others is the opportunity to work for employers on TN status which is a temporary non-immigrant-intent work visa. You're not even allowed to want to immigrate if you have one. And given the political climate there's a chance it will go away at any time.
> The only benefit Canadians get compared to others is the opportunity to work for employers on TN status which is a temporary non-immigrant-intent work visa.
That doesn't strike me as "not at all" when the TN status is 1/ effectively a work visa, whether you like the strings attached or not, and 2/ a foot in the door that lets you move to a more permissive status down the line. A Waterloo or UofT grad can go from applying to a US job to their first day in a few weeks, and the only interaction they'll have with the immigration system will be getting asked for paperwork at the border. Compare that to a British or Japanese new grad, for whom there is essentially very few options unless they have excellent connections or that they display enough extraordinary abilities to be eligible for O-1.
Yup, such visas (going both ways) are based on the NAFTA/CUSMA agreement and probably live or die with that agreement. Uncertainty limits what businesses and people can/will do, and the sudden loss of work/residency permission would be really annoying for the families involved.
Canada's economy is dominated by a few big companies because the government makes too many rules. It costs too much to start a business here. In politics, only two parties really matter. This creates a closed system where big players stay big and new competition is crushed by red tape. Regulatory frameworks impose prohibitive compliance costs, favoring established incumbents over startups. Key sectors like banking, telecom, and aviation function as protected triopolies. Political power remains centralized between two parties with overlapping establishment interests. These structural barriers effectively suffocate competition and exclude new market entrants.
Can't help but read this as "Canada's today is the US in 10 years..."
NVIDIA makes up 7% of the S&P 500 ETFs. We live in the United States of NVIDIA.
Probably de-risking (or front-running) capital controls (tariff on FDI).
Disappointing.