CVCA 2018 VC Canadian Market Overview: Canadian VC Investment Propelled by Two $1B Quarters in 2018
Canadian VC funded more new and later stage companies in 2018, indicating robust ecosystem
TORONTO, March 13, 2019-- Canadian venture capital investment continued its momentum in 2018 following years of steady investment growth across the entire spectrum of stages in the ecosystem. $1.3B was invested over 165 deals in Q4 2018, bringing the year-end total VC investment to $3.7B—only 2% lower than 2017. There was a total of 15 mega-deals ($50M+) which accounted for a 30% share of total dollars invested. The average deal size in 2018 was $6.1M, a 3% decrease from last year but a 16% increase compared to the $5.3M between 2013-2017.
Included in the 15 mega-deals in 2018 was Ottawa-based Assent Compliance’s $161M growth equity infusion from Warburg Pincus with previous investors including First Ascent Ventures, Montreal-based Hopper Inc.’s $129M series D round from a syndicate of investors which included BDC IT Fund, Brightspark Ventures, Caisse de dépôt et placement du Québec (CDPQ) and OMERS Ventures Management Inc, and Montreal-based Milestone Pharmaceuticals Inc.’s $103M series D round from an investor syndicate that included BDC Healthcare Fund and Fonds de solidarité FTQ.
“We are seeing more VC flowing into more Canadian companies at all stages which is an important metric for the health of the sector,” says Kim Furlong, Chief Executive Officer, Canadian Venture Capital and Private Equity Association. “A healthy mix of new growth funds, increased interest from international investors and government support through VCCI is helping to fuel the momentum.”
There were no surprises with sector distribution in 2018, with investment falling in line with historical trending. Information and communications technologies (ICT) companies secured a little over two-thirds of total dollars invested in 2018 ($2.6B over 386 deals), with life sciences receiving a 17% share ($630M over 101 deals). Cleantech companies received a 7% share ($264M over 47 deals).
The number of M&A exits in 2018 kept pace with 2017 (34 compared to 35), but the average exit value dropped by a third to $24.4M. CVCA member, Avrio Ventures Management Corporation, was an integral player in the largest VC exit in 2018, the $347M acquisition of the BC Tweed joint venture by Canopy Growth.
Canadian Venture Capital Highlights
• $1.3B was invested over 165 deals in the fourth quarter this year, bringing the year-end total VC investment to $3.7B which is only 2% lower than 2017.
• The average deal size was $6.1M—a 3% decrease from last year but a 16% increase compared to the average deal size in the five-year period between 2013-2017 ($5.3M).
• There were a total of 15 $50M+ mega-deals which accounted for a 30% share of total dollars invested—lower than the 39% share in 2017. These included:
• Ottawa-based Assent Compliance raised $161M via a growth equity infusion from Warburg Pincus with previous investors including First Ascent Ventures continuing to hold positions
• Montreal-based Hopper Inc.’s $129M series D round from a syndicate of investors which included BDC IT Fund, Brightspark Ventures, Caisse de dépôt et placement du Québec (CDPQ) and OMERS Ventures Management Inc.
• Montreal-based Milestone Pharmaceuticals Inc.’s $103M series D round from an investor syndicate that included BDC Healthcare Fund and Fonds de solidarité FTQ
• Deals between $5M-$20M totalled $1.3B representing 34% share of total dollars invested—a 7% and the largest year-over-year increase from its share last year.
• Ontario-based companies received 51% of investment ($1.9B), up significantly from their 39% share last year. Quebec-based companies received 29% ($1.1B) followed by BC-based companies with an 12% ($441M) share.
• Toronto-based companies received 41% ($1.5B over 197 deals) of total dollars disbursed, with Montreal-based companies receiving 24% ($901M over 119 deals) and Vancouver-based companies a 11% share ($400M over 71 deals).
• VC sector investments were aligned with historical trends: ICT companies grabbed a little over two-thirds of total dollars invested in 2018 ($2.6B over 386 deals) with life sciences receiving a 17% share ($630M over 101 deals). Cleantech companies received a 7% share ($264M over 47 deals).
• The share of investment in later stage companies increased by eight percentage points from last year to 49% ($1.8B) of total dollars. Early stage companies received a 42% ($1.6M) share, down from 52% in 2017. The year-over-year share of seed investments increased slightly from 6% to 8% (303M).
• The number of M&A exits kept pace with last year (34 compared to 35, but the average exit value dropped by a third to $24.4M.
• The largest exit involved a cannabis operation. A BC Tweed joint venture was acquired by Canopy Growthfor $374M. Avrio Ventures Management Corp. was involved in the transaction.
• In a repeat of 2016, there were no VC-backed IPOs in 2018.
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