Canadian VC reaches $2.59B in H1 2020, two consecutive quarterly drops from Q3/Q4 2019

TORONTO, Sept. 8, 2020 /CNW/ - Canadian venture capital investment activities reached 281 financings totaling $2.59 billion during the first half (H1) of 2020 according to the Canadian Venture Capital Report released today by CPE Analytics, the data analytics division of CPE Media Inc. (All amounts in Canadian dollars unless otherwise stated)

The first half activities were down 22% and 19% respectively from the same period in 2019, accompanied by two sharp consecutive quarterly drops from Q3 and Q4, 2019.

VC investments by quarter: 2017 - Q2 2020 (CNW Group/CPE Media Inc.)

Monthly VC disbursement comparison: 2018 - June 2020 (CNW Group/CPE Media Inc.)

VC funding sources - shrinking US funding share ($) (CNW Group/CPE Media Inc.)

COVID-19 impact on Canadian VC in H1 2020

With the exception of steep drops in disbursements in May and June, 2020 so far is performing fairly against 2019 and 2018 (please note that the disbursement figure for July 2020 is incomplete and it is still being compiled). The impact of COVID-19 will likely continue to stretch out in the second half.

CPE Analytics strives to accurately report VC activities and deal closing time. It should be noted that several large deals that were announced in Q2 and reported by some data providers as Q2 deals were in fact closed in Q1 2020 or Q4 2019. The measurements of COVID-19 impact by those providers are just as reliable as they dated the VC deals.

US Investor share of H1 2020 VC funding drops below 40%

US investors play important role in supporting Canadian startup companies. For the past three years, the US investor shares have always been above 40%: 46% (2017), 41% (2018) and 46% (2019). It is with concern that the US funding share in H1 2020 dropped to 30% of total disbursements.

"The data for H1, 2020 indicate that venture capital investing has been significantly affected by the eruption of COVID-19, much like the broader economy. The data reflect some particularities of venture capital too as this part of the financial services industry has long relied on face-to-face meetings with startup and early stage firm entrepreneurs prior to making investment decisions. Of note is the decline in the percentage contribution of US-led investment across the board, but acutely in certain parts of the country, notably Québec," commented Richard Rémillard, President of Rémillard Consulting Group (RCG).

H1 2020 - Venture Capital disbursements - where the funding went

• 9 large deals with deal value of $50 million or more attracted $861 million or 33% of the total amount.
• Top three provinces: Ontario ($1,048 million), Quebec ($700 million) and BC ($553 million), representing 41%, 27% and 21% of the total amount respectively.
• Million-dollar cities: Toronto ($522 million), Vancouver ($471 million), Montreal ($406 million), Quebec City ($284 million), Kitchener, ON ($268 million), Calgary ($112 million).
• Series A and B financing captured $358 million (14%) and $552 million (21%) respectively.
• ICT and biotech companies raised $1,635 million (63%) and $592 million (23%) respectively.
• Early stage companies raised $1,497 million or 58% of the total amount.
• Companies with the number of employees under 50 raised $1,414 million or 55% of the total amount.

H1 2020 - Venture Capital funding sources - where the funding came from

• Top 5 funding sources: Canada ($1,500 million), US ($789 million), South Korea ($69 million), United Kingdom ($34 million), Denmark ($24 million).
• Leading investor types: US Private VC ($529 million), Canadian Private VC ($375 million), Canadian Corporate VC ($287 million), Canadian Institutional VC ($209 million), Canadian PE ($177 million).
• Investors from 31 foreign countries or regions or overseas territories invested in Canadian companies.

H1 2020 - USA and foreign investment breakdowns

• Western Canada companies attracted largest USA and foreign share of the total amount.
• Quebec companies attracted least USA and foreign shares with 15% of the total amount.
• Ontario companies attracted 42% share of USA and foreign investments.

H1 2020 - Fundraising by Canadian VC firms

• 15 VC funds raised $2,676 million.

H1 2020 - Active VC law firms 

• Top five active VC law firms: Dentons Canada LLP, Osler, Hoskin & Harcourt LLP, LaBarge Weinstein LLP, Fasken Martineau DuMoulin LLP, Miller Thompson LLP

The full report can be downloaded from financings.ca website: https://www.financings.ca/reports/

About Rémillard Consulting Group (RCG)

Rémillard Consulting Group (RCG) is a unique, Ottawa-based, bilingual consulting firm specializing in providing private sector, government & trade association clients with creative, research-grounded solutions to business issues and public policies involving the Canadian financial services industry. For more information: https://remillardconsulting.com/.

About CPE Analytics

CPE Analytics is a provider of comprehensive, unbiased and verified information on Canadian venture capital industry, and Canada's only provider on all Canadian private and public financing activities.

Backed by over 27 years' private capital research experience, we are Canada's only data provider that actively tracks and provides analysis on where the Canadian venture capital funding came from - by investor types and by provinces, countries or regions. We provide this essential information for truly evidence-based policy analysis and decision making, and for the true understanding of the Canadian venture capital ecosystem. INFORMATION YOU CAN USE.

CPE Analytics is the data analytics division of CPE Media Inc. 

More Info: https://cpeanalytics.ca,  https://financings.ca,  https://cpemedia.ca/

SOURCE CPE Media Inc.

Ted Liu, President, [email protected], 647-782-8818