Summary
PwC Canada and CB Insights recently released their Q1 2018 MoneyTree Canada Report (the "Report"). The Report provides an in-depth analysis of Canadian venture capital (VC) trends from a global perspective, noting top sectors, markets and investors for the year to date.
Record US$1 Billion in Canadian Investment
Total financing activity in Canada increased 52% over the last quarter, with over US$1 billion in total investment across 105 deals. This figure is up from US$552 million in Q1 2017 and US$669 million in Q4 2017. According to PwC, Canadian investment in Q1 2018 represents the largest amount seen since 2012, when CB Insights began collecting data for the Canadian MoneyTree reports. Investment was led by Montreal-based energy company Enerkem, which raised US$224 million, and Ancaster-based healthcare company The Green Organic Dutchman, which raised US$90 million.
"A record US$1 billion in VC financing this quarter is a sure sign that the world continues to focus on the strength of Canadian innovation. With a 52% increase in funding from last quarter over 105 deals, 2018 is off to a great start," said Chris Dulny, National Technology Industry Leader, PwC Canada. If investment in Canadian companies continues at this pace, the country could see its strongest year to date.
VC Activity by Region
Consistent with past reports, deal activity in Toronto, Vancouver, Montreal and Ottawa continued to grow. Notably, Toronto saw a 165% increase in funding with US$321 million invested across 38 deals. Vancouver deal activity hit an eight-quarter high, with US$103 million invested across 20 deals, seven more deals than Q4 2018, and VC investment in Montreal nearly doubled to US$399 million, led by Enerkem as noted above. Waterloo also saw a 68% growth in VC investment, as US$52 million was spread across three deals, compared to US$31 million in Q4 2017.
The six largest deals were all with companies based in Ontario or Quebec and were all expansion stage or later stage companies. Despite the investment concentration of Canada's larger urban centres, investment in the Prairies and Atlantic Canada continues to stay strong, with US$15 million over seven deals and US$7 million over six deals, respectively.
VC Activity by Sector
Investment in Canadian internet companies made an impressive 155% leap from Q1 2017, with US$355 million invested across 41 deals. Investment in Canadian artificial intelligence companies grew 88% from Q1 2017 to US$83 million across eight deals, and Canadian healthcare companies received US$126 million across ten deals, a 66% growth rate from Q1 2017. Despite only four deals in the sector, energy & utilities companies received US$295 million in investment. Canadian FinTech companies received US$88 million invested across eight deals in Q1 2018, a 60% decline from Q4 2017, however PwC noted total quarterly funding in Q4 2017 was driven by Lightspeed's US$136 million mega-round.
The increase in VC activity in Q1, particularly with internet companies, is further evidence that Canada's technology sector continues to thrive and that the focus at all levels on growing the infrastructure to support these early stage companies is starting to reap the rewards. With 60% of corporate VC investment coming from non-Canadian investors, it is clear the world is taking notice of this thriving ecosystem.
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