Canadian Venture Capital funding falls off a cliff in Q1, 2023
VC investing barely above $1 billion, a decline of 69% from Q1, 2022 and 64% from Q1, 2021
All dollar ($) figures in Canadian dollars unless otherwise noted.
TORONTO, May 19, 2023 /CNW/ - As anticipated, a perfect storm arrived on the shores of venture capital in Q1, 2023 given the public market turmoil affecting technology stocks, the ongoing stickiness in higher real interest rates, rising concerns about recession and global socio-political tensions and, not least, the sudden demise of Silicon Valley Bank (SVB) and the subsequent turmoil in the US banking sector.
Canadian venture capital (VC) disbursements barely passed the $1 billion mark, completing 141 financing for $1,064 billion in Q1 2023.
US and international investors invested $479 million and $107million or 45% and 10% of the total disbursements respectively in Q1 2023.
US investors maintained its relative share in Canadian VC funding, unchanging from its 45% share in 2022.
Canadian investors invested $479 million, increasing its relative share to 45%, absorbing funding loss from international investors.
The dynamics of the mixture of investors has changed dramatically.
Quebec investors replaced Ontario investors as the leading VC funders, investing $214 million ahead of $165 million by Ontario investors.
VC investors, Canadian and non-Canadian, invested $294 million leading all other top investor types.
On further breakdown individual investor types, Canadian government investors led all types with $220 million (21%), ahead of $207 million (19%) by US VC investors and $107 million by US PE investors.
Investissement Quebec and Export Development Corporation (EDC) had been the driving forces in the resurgence of government funding.
Provinces
Quebec, Ontario, BC and Alberta based companies raised $326 million, $306 million, 219 million and $191 million respectively, together account for 98% of Q1 2023 total disbursements.
Municipal Cities
To no surprise, Montreal replaced Toronto as the top recipient city, securing $323 million (30%)., Vancouver, Edmonton, and Calgary rounded the top five recipient cities, raising $190 million, $146 million and $34 million respectively.
Sectors
ICT companies raised $608 million or 57% of the total amount. Biotech companies reclaimed second place, raising $173 million.
Cleantech companies raised $118 million, or approximately 6% of 2022 total amount.
Stages
Early stage and growth/late-stage financings raised $381 million and $398 million respectively.
Seed/pre-seed stage financings raised $138 million from 38 financings, increasing its relative share to 13%, up to 6% in 2022 and 5% in 2021.
Company size
Companies with 0-49 employees raised $577 million accounting for over half of the total disbursements (545%). Companies with 50-99, 100-499 and 500+ employees raised $140 million, 213 million and $134 million respectively.
Q1 2023 VC fund fundraising
Six private VC funds reportedly raised $146 million.
Q1 2023 Leading VC law firms
Dentons Canada LLP continues to lead all law firms with 23 financings, well ahead of second place firm Border Lander Gervais LLP which involved in 13 VC financings. Fasken, Osler and McInnes Cooper rounded up the top five law firms with over 6 financings.
"With a mere $146 million raised by Canada's venture capital funds in Q1, 2023 concerns are likely to be raised about the future ability of the industry to have available sufficient capital available to fund the country's most-promising firms if this quarter's paltry fundraising results continue into the balance of 2023. Should this fundraising trough turn into a real drought, then one could expect the most-impacted to be emerging fund managers, resulting in an eventual contraction in the number and diversity of active venture capital funds," commented Richard Rémillard, President of Rémillard Consulting Group (RCG).
Summary report
Summary report can be downloaded from financings.ca website: https://www.financings.ca/reports/
Included
- Equity and quasi-equity investments in companies directly.
Excluded
- Secondary transactions (investor/shareholder exit events) in which companies received no money
- PE transactions
- Financing by foreign headquartered/domiciled companies with Canadian subsidiaries.
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: [email protected]
CPE Analytics
With over 78,700 financing transactions in its Canadian Financings database, CPE Analytics is Canada's leading all financing intelligence provider. We provide comprehensive, verified, and unbiased information and unmatched insights and intelligence on private and public financings, initial public offerings (IPOs), M&As, professional investment firm fundraising activities.
We cover all aspects of VC information, not limited to but including Canada's only information on VC firm fundraising, VC funding sources (where all the VC came from).
CPE Analytics is the data analytics division of CPE Media & Data Company. More Info: https://cpeanalytics.ca, https://financings.ca
CPE Media & Data Company
Founded by Canada's the most experienced private capital and financing research experts, CPE Media & Data Company is Canada's leading all financing news and intelligence provider. More information: https://cpecompany.ca/
SOURCE CPE Media Inc.
Ted Liu, President & CEO, CPE Media & Data Company, 647-782-8818, [email protected]
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