Backed by US and foreign investors, Canadian VC sets record at $7.263B for 2019

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TORONTO, May 20, 2020 /CNW/ РCanadian venture capital (VC) disbursements reached historical high in 2019, completing 642 financings totalled $7.263 billion (excluding Verafin financing which is not a VC deal1), according to results released today by CPE Analytics, the data analytic division of CPE Media Inc. 

 Ethan McArthur on Unsplash

“These 2017-19 results clearly indicate that venture capital was full-throttle on the upswing of its regular business cycle with fund raising and disbursements both growing strongly across most categories, notably US and foreign investment,” commented Richard R√©millard, President of Remillard Consulting Group (RCG). “The strong 2017 – 2019 numbers should position VC-funded companies and VC funds themselves in good stead to withstand the ravages of COVID-19, particularly those firms that entered the pandemic crisis with substantial dry-powder remaining and who most likely raised considerable sums in the latter half of 2019.”

2019 – Venture Capital disbursements (where the funding went to – companies, not investors in recap and secondary transactions)

  • 642 financings totalled $7,263 million, up 28% and 48% respectively in number of financings and amount disbursed from 2018.
  • 26 large deals with deal value of $50 million or more attracted $3,418 million or 47% of the total disbursements.
  • Ontario and Quebec led all provinces with $2,812 million (39%) and $2,116 million (29%) respectively.
  • Three billion-dollar cities: Toronto – $2,027 million (28%), Montreal – $1,588 milion (22%), Vancouver – $1,475 million (20%)
  • Series A and B financing captured $1,162 million (16%) and $1,421 million (20%) respectively.
  • ICT and biotech companies raised $4,020 million (55%) and $1,594 million (22%) respectively.
  • Early stage companies raised $3,408 million or 47% of the total disbursements.
  • Small sized companies with the number of employees under 50 were dominating recipients of VC disbursements for the past three years, raising $1,874 million (48%), $2,280 million (49%) and $3,220 million (44%) respectively.
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1 The $515 million Verafin recapitalization backed by senior secured debt is not a venture capital deal. The deal was a recap in which new equity from a new group of investors/funds together with leveraged senior secured debt (secured by their equity stakes) was used to buy out a previous group of investors/funds (an exit event for them). Management managed to use the senior debt to increase their stakes following the recap.

2019 – Venture Capital funding sources (where the funding came from) ‚Äď Canada’s Only Source

  • Canadian companies secured funding from investors from 45 countries or regions or overseas territories.
  • US investors – $3,321 million (46%), Canadian investors – $3,261 million (45%), European investors – $320 million (4%), Asian investors – $312 million (4%), all others – $48 million (1%).
  • Top five investor types: Private VC funds – $2,180 million (43%); Corporate – $936 million (18%); Family Offices – $491 million (10%); Angels – $293 million (6%) and Government ‚Äď $289 million (6%).
  • Top five individual sub types: US Private VC – $1,615 million (32%); Canadian Private VC – $466 million (9%); US Corporate – $407 million (8%); Canadian Institutional VC ‚Äď $408 million (8%); Canadian Government – $288 million (6%).

2019 – USA and Foreign Investment Breakdowns

  • BC companies attracted largest US investors with $1,087 million or 61% of total disbursements to BC companies. US and foreign investors together invested $1,387 million or 78% of the total disbursements.
  • Quebec and the Prairies attracted least amount of US and other foreign investments, securing 38% and 43% of their respective total disbursements.

2019 Fundraising by Canadian venture capital firms and top exits

  • 61 funds raised $4.4 billion, of which $3.1 billion by 46 private VC funds.
  • Top IPOs: Lightspeed POS Inc. (TSX: LSPD) – $276M raised with valuation of $1.4B; Milestone Pharmaceuticals Inc. (NASDAQ: MIST) ‚Äď US $95 million raised with US $402 million valuation.
  • Top M&As: Wave HQ acquired by H&R Block for US $407M; Aeryon Labs acquired by FLIR Systems for US $206M; Mnubo acquired by Aspen for CDN $102 million.

2019 Active law firms 

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

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

SOURCECPE Media Analytics

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