Canadian VC begins 2021 strongly with C$3.1bn invested

Venture capital investing in Canadian technology companies in Q1 2021 reflected stronger values relative to trends last year, with C$3.1 billion deployed to 157 financings.

Venture capital investing in Canadian technology companies in Q1 2021 reflected stronger values relative to trends last year, with C$3.1 billion deployed to 157 financings, final data released by Refinitiv show. This marked the most robust quarter in dollar terms ever, topping the prior record of C$2.8 billion in Q4 2019. Computer-related and internet companies led VC investing, securing 78 percent of the total. Canadian funds accounted for 42 percent of all disbursements in Q1 2021, while US funds took a 46 percent share.

 A full PDF report of the Q1 2021 Canadian venture capital market activity by Refinitiv is available here.

REPORT SUMMARY

Canada venture capital investment total $3.1 billion

Canadian venture capital totaled $3.1 billion invested across 157 rounds throughout the first three months of 2021. Although investment volumes were flat year-over-year, investment values rocketed to their highest level ever recorded, surpassing the previous record of $2.8 billion set in Q4 2019 by 10% and marking a year-over-year increase of 67% from Q1 2020. The average size of disclosed rounds was $23.1 million, up 77% from $13.1 million a year ago.

Nine rounds in the first quarter saw investment values in the nine-figure range. The top round for the period was the $385 million investment into blockchain-based game and entertainment company, Dapper Labs. The funding received by the Vancouver-based business was the second largest Canadian venture capital round of all time and was led by Coatue with support from a large group of firms and individuals. The second largest round for the quarter was obtained by digital home equity platform, Fraction, also based in Vancouver. The $289 million round was backed by Impression Ventures, Primetime Partners, Global Founders Capital, Panache Ventures, and others. Rounding out the top three was the $214 million investment into Montreal-based travel platform, Hopper, led by Capital One with support from Inovia Capital, WestCap, Goldman Sachs, and Citi Ventures.

Companies based within Ontario had $1.2 billion invested across 63 rounds, resulting in 9th place for dollar values and 4th place for volumes in the North American provincial & state rankings. Companies based in British Columbia had $1.0 billion invested across 26 rounds, resulting in 10th place for dollar values and 14th place for volumes. Both provinces more than doubled their value totals from the same period last year, with year-over-year increases of 101% and 106%, respectively. Alberta investment figures increased more than sixfold over the same period, with $234 million of investment across 16 rounds representing a 665% increase in values.

Domestic funds invested $1.1 billion in Canadian companies during the quarter, just a 42% share of all disclosed financings. This was down from their 57% share throughout the entirety of 2020 and lower than any annual share since 38% in 1992. Funds located within the United States supplied $1.2 billion, or 46%, of all funding, up from 36% throughout 2020.

A total of 14 Canadian VC funds recorded closes during the first three months of the year, raising a combined $1.5 billion in commitments, an increase of 265% compared to a year ago. Inovia Capital’s second growth fund was the largest fundraise for the period, with a close of $560 million in March.

Canadian companies completed 16 VC-backed exits worth $5.7 billion in the first quarter, the largest single quarter in dollar terms on record. The top completed exit was Nasdaq’s $3.6 billion cash purchase of Newfoundland-based financial security company, Verafin, announced in November and completed in February. The top newly announced exit for the quarter was the reverse takeover transaction to take Ontario-based lithium-ion battery recycling business, Li-Cycle, public via SPAC. The transaction valued the company at $1.2 billion prior to the deal proceeds.