Y Combinator website no longer lists Canada as a country it invests in

What YC’s Change Likely Means

• YC removed Canada from the small list of jurisdictions where it would invest directly in locally incorporated companies; the list went from: US, Cayman, Singapore, Canada → US, Cayman, Singapore.
• Multiple commenters say YC will still fund Canadian founders, but they’ll now be expected to set up a US/Delaware, Cayman, or Singapore parent (standard “flip” structure already used for most non‑US startups).
• Main hypothesized reasons: reduce legal/compliance burden, concentrate expertise in a few corporate law regimes, and avoid governance deadlocks or quirks in foreign corporate law.
• Some argue this is about predictable governance and tax treatment for downstream investors, not about excluding Canadians.

Debate on Motives

• A few see it as politically motivated or “money at all costs,” possibly aligning with US policy.
• Others strongly dispute that, calling it a practical move driven by low volume of Canada‑domiciled deals and high overhead per jurisdiction.
• No concrete evidence in the thread for a political or sanctions/capital-control angle; that remains speculative.

Canada’s Startup & Business Environment

• Pro‑Canada points:
  • Strong incentives like SR&ED and provincial programs that can cover large shares of payroll, especially for R&D/ML.
  • Lower total compensation costs and no employer‑tied core healthcare.
• Critical views:
  • Heavy regulation, slow permitting, high industrial rents, complex export rules, and safety inspections make small, especially hardware/biotech or physical-goods businesses “punitive” to run.
  • Government grants often require prior profitability and headcount, favoring incumbents.
  • Key sectors (banking, telecom, aviation, agriculture) seen as protected oligopolies; newcomers struggle to win contracts.

Capital & VC Dynamics

• Several comments describe a weak domestic VC ecosystem: Canadian pension funds and institutions often chase higher returns abroad instead of backing Canadian GPs.
• Comparisons to Israel/China/India, which used public “fund-of-funds” strategies to seed domestic VC; Canada and the EU are portrayed as lacking similar vision.
• Some say founders who incorporate in Canada gain tax/SR&ED benefits but often face lower valuations and smaller checks than in the US.

Talent, Wages, and Cross-Border Structures

• US tech salaries are reported as much higher; some Canadians work remotely for US companies or consider emigration.
• Others highlight Canada’s livability and healthcare as offsetting factors.
• Cross-border setups like “Delaware parent + Canadian subsidiary” are described as workable, but more complex, and YC’s move nudges founders toward the standard US/Cayman/Singapore structure.