Y Combinator has revised its standard deal terms to exclude Canada as a permitted site of investment, implying that Canadian startups aspiring to join the prestigious San Francisco-based startup accelerator will have to incorporate their companies elsewhere. 

As first reported by The Logic Monday, Y Combinator’s standard deal terms webpage now says it invests in corporations based in the United States, the Cayman Islands, or Singapore. Canada was in that list as recently as Nov. 2, 2025, according to an archived version of the webpage, but the reference was removed by the end of that month. Dozens of Canadian companies have been part of Y Combinator’s numerous winter and summer cohorts since the first one was accepted in 2008. 

The deal terms go on to state that if a startup is already incorporated in another country that is “not one of the three” (previously “four”) countries listed, the startup needs to “flip” its corporate structure to have a parent company in one of those three countries.

BetaKit has reached out to Y Combinator for comment. 

The gravitational pull of Y Combinator’s program over Canadian startups has increased in recent years, aided by remote policies instituted during the COVID-19 pandemic. In the 2010s, there were usually fewer than five Canadian-headquartered companies in a given Y Combinator cohort, according to data gathered last year by Bram Sugarman. Between winter 2020 and winter 2022, that number grew to range between nine and 15 startups in the program. 

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It is common practice for Canadian founders to set up shop in the Valley, especially to participate in Y Combinator. Y Combinator CEO Garry Tan claimed in an X post last year that “The Canadians stay in the USA and raise more money. The ones that stay in SF after demo day become unicorns at 2.5X the rate.”

Tan added at the time that he was part of a YC dinner with many Canadian founders looking to base their startups in San Francisco after graduation.

One such company is Guelph, Ont.- and Irvine, Calif.-based edtech startup Opennote. A member of Y Combinator’s Summer 2025 batch, co-founder Vedant Vyas told BetaKit last July that the firm hoped to scale out of the Bay Area, citing support from US-based investors and an increased institutional willingness in the US to pilot new edtech solutions.

The pull was a topic of conversation at Toronto Tech Week’s Homecoming event in June 2025, where Shopify president Harley Finkelstein, Wealthsimple founder Mike Katchen, and Cohere founder Aidan Gomez encouraged the crowd to say no to leaving Canada.

“It’s the Valley-or-bust mentality that breaks the ecosystem and really hurts Canada,” Gomez said. 

Image courtesy of Paul Miller, licensed under CC BY 2.0.