Canadian VC reported $3.59B in first 9 months 2020, continuing downward trend
TORONTO, Dec. 8, 2020 /CNW/ - Canadian venture capital investment activities continued to be adversely impacted by COVID-19, reported $3.59 billion in 426 financing rounds during the first nine months of 2020, according to the Canadian Venture Capital Report released today by CPE Analytics. (All amounts in Canadian dollars unless otherwise stated)
In Q3, 2020, 138 financing rounds closed for total disbursements of $895 million. Q3 2020 disbursement level was the second lowest since 2017, just slight above the quarterly total of $847 million in Q3 2018.
For comparison, the first three quarterly disbursements represent decreases of 2%, 30% and 58% respectively from the same period in 2019.
COVID-19 continues to impact VC disbursements - first nine months of 20201
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1 It should be noted that companies tend to make funding announcements months later. Analysis of Canadian disbursements that are simply based on announced date without any verification as being reported by some data providers, is misleading specially in the context of Canadian market. |
Worrisome trend 1 – US Investors forced to retreat
Canadian venture capital analysis is not complete without information on the Canadian venture capital funding source and where came from. CPE Analytics is proud to be Canada's only data provider that actively tracks and provides this vital information.
US investors have been playing important role backing Canadian startup companies. The share of US investors in Canadian VC funding (31%) remained almost unchanged during first three quarters from the first half of 2020 (30%). To match funding levels of 2019, US investors would need to return to the Canadian market in substantial numbers, which so far in 2020 has not happened.
Worrisome trend 2 – Canadian VCs not raising capital
Fundraising by venture capital firms is another essential piece of information tracking the health of Canadian VC ecosystem.
18 Canadian VC funds raised $2.745 billion during the first three quarters of 2020, comparing to $3,621 million raised by 49 funds in the same period last year. Only $59 million was raised in Q3 2020.
Combined with US investors being forced to retreat from Canadian market and Canadian VCs raising little money, Canadian venture capital industry is entering into a unique and challenging environment. Governments have stepped up their efforts to inject additional capital to support Canadian startups, but it remains to be seen if governments efforts alone will be enough.
"Many are questioning whether these worrisome developments will disappear once COVID-19 has been tamed or whether they reflect more disturbing trends that could result in another Canadian venture capital Ice Age. It is time to review the entire panoply of support mechanisms for the Canadian venture capital industry before it's too late," commented Richard Rémillard, President of Rémillard Consulting Group (RCG).
Bright spots – Canadian corporate venturing steps up
Canadian corporate venturing has ramped up their investment activities to $405 million during the first three quarters, up from $263 million in the same period last year, even though the total disbursement by all corporate venturing (Canadian, US and other foreign) decreased from $936 million in 2019 to $768 million in 2020 for the comparable first three quarters.
First Nine Months 2020 - Venture Capital disbursements - where the funding went
- 13 large deals with deal value of $50 million or more attracted $1,222 million or 34% of the total amount.
- Top three provinces: Ontario ($1,495 million), Quebec ($901 million) and BC ($698 million), representing 42%, 25% and 19% of the total amount respectively.
- Million-dollar cities: Toronto ($817 million), Vancouver ($611 million), Montreal ($555 million), Kitchener ($384 million), Quebec City ($289 million), Calgary ($226 million), Edmonton ($150 million).
- Series A and B financing captured $518 million (14%) and $734 million (20%) respectively.
- ICT and biotech companies raised $2,185 million (61%) and $919 million (26%) respectively.
- Early-stage companies raised $2,075 million or 58% of the total amount.
- Companies with the number of employees under 50 raised $2,075 million or 56% of the total amount.
First Nine Months of 2020 - Venture Capital funding sources - where the funding came from (Canada's only source)
- Top 5 funding sources: Canada ($2,018 million), US ($1,097 million), South Korea ($69 million), United Kingdom ($65 million), Netherlands ($47 million).
- Leading investor types: US Private VCs ($700 million), Canadian Private VCs ($455 million), Canadian Corporate VCs ($405 million), Canadian Institutional VCs ($300 million), Canadian Governments ($262 million).
- Investors from 45 foreign countries or regions or overseas territories invested in Canadian companies.
First Nine Months of 2020 - USA and foreign investment breakdowns
- Led by BC, Western Canada companies attracted proportionally largest USA and foreign share of the total Western Canada amount.
- Quebec companies attracted least USA and foreign investments with 22% of the total Quebec disbursement amount.
- Ontario companies attracted 41% share of USA and foreign investments.
First Nine Months of 2020 - Fundraising by Canadian VC firms
- 18 VC funds raised $2,745 million.
First Nine Months of 2020 - Active VC law firms
- Top five active VC law firms: Dentons Canada LLP, Osler, Hoskin & Harcourt LLP, Fasken Martineau DuMoulin LLP, LaBarge Weinstein LLP, Blake, Cassels & Graydon 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 leading Canadian venture capital information provider, and Canada's only provider of all Canadian public and private financing activities.
Backed by over 27 years' private capital research experience, we offer comprehensive, unbiased and verified Canadian venture capital analysis and we are the 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
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