Canadian VC climbs to 18-year high in 2018 as top deals raise $1.4 bln

Canada’s venture capital market broke records in 2018, its ninth straight year of growth.

The milestones included the most financings sized $100 million or more – ever.

Eight such megarounds closed last year, exceeding the prior record of five set in 2017.

That made the market’s top 10 VC financings especially cash-intensive.

In all, they drew $1.4 billion from investors, up 17 percent from the $1.2 billion raised by the top 10 deals in 2017 and up 22 percent from the $1.1 billion raised by the top 10 deals in 2016.

The number is based on PE Hub Canada’s list of the largest financings announced in 2018, supplemented by preliminary data from Refinitiv. It points to the considerable influence of late-stage rounds in investment activity.

Series B, C, D and other late-stage financings captured $3.3 billion last year, the largest amount since the dot-com era. The trend was reflected in the top 10 deals, nine of which engaged tech companies in scaling mode.

Late-stage activity was also a factor in deal sizes elsewhere on the VC spectrum.

On balance, rounds of $20 million or greater took $2.6 billion in 2018, the most since 2000, while rounds of $50 million or greater took $1.8 billion, an all-time-high.

As a result, VC invested in Canadian tech sectors reached a total of $4.3 billion last year, edging out by 6 percent the $4.1 billion invested in 2017. If the former statistic holds in Refinitiv’s final count, 2018 will mark a nearly two-decade high in dollar flows.

The bulk of the money went to IT-software, cleantech and other innovative sectors.

1) Enerkem (Montréal)

In 2018’s biggest deal, Enerkem, a producer of biofuels and renewable chemicals from waste, raised $280 million. The investors were BlackRock, Braemar Energy Ventures, Cycle Capital, Fondaction CSN, Fonds de solidarité FTQ, IQ, National Bank, Rho Capital Partners, Sinobioway, Waste Management and Westly Group.

2) PointClickCare Technologies (Toronto)

Dragoneer Investment Group invested about $187 million (US$146 million) in PointClickCare Technologies, a cloud software platform for the post-acute-care market. Dragoneer acquired shares from other existing investors, increasing its stake to more than 20 percent. The company is also backed by JMI Equity.

3) Clearbanc (Toronto)

Clearbanc, a provider of marketing capital for e-commerce brands, secured about $160 million (US$120 million) in two rounds only weeks apart. The first was funded by 8VC, Berggruen, CoVenture, Emergence Capital, FJ Labs, Founders FundiNovia Capital, Portag3 Ventures, PrecursorReal VenturesSocial Capital and WTI, and the second by Upper90.

4) Assent Compliance (Ottawa)

Supply-chain data management company Assent Compliance closed a $130 million investment from Warburg Pincus. Warburg joined BDC Capital, Greenspring Associates, OpenText Enterprise Apps Fund and Volition Capital, which backed Assent’s Series A and B financings.

5) Hopper (Montréal)

Hopper raised a Series D financing of about $128 million (US$100 million), led by OMERS Ventures. Other new and existing investors also signed on, including Accomplice, BDC Capital, Brightspark, Citi Ventures, Caisse de dépôt et placement du Québec and IQ. Hopper is a travel booking app.

6) Ecobee (Toronto)

Smart Wi-Fi thermostat maker Ecobee landed a Series C that eventually hit $127 million. Energy Impact Partners led the first tranche and was joined by Amazon Alexa Fund, EDC, GXP, Northleaf Capital Partners, OCGC, Relay Ventures, Tech Capital and Thomvest. AGL Energy, BDC Capital and Caisse de dépôt et placement du Québec supplied the top up.

7) Milestone Pharmaceuticals (Montréal)

Milestone Pharmaceuticals, a developer of cardiovascular drugs, took about $105 million (US$80 million) in a round led by RTW Investments. BDC Capital, Domain Associates, Fonds de solidarité FTQ, Forbion, GO Capital, Novo Holdings, Pappas Capital, Tavistock Group, Tekla Capital Management and Venrock also invested.

8) Coveo (Québec City)

Coveo closed a $100 million follow-on financing. The deal’s leader, Evergreen Coast Capital, acquired a 27 percent interest. Coveo, a provider of artificial-intelligence-powered insight engines, is also backed by BDC Capital, Fonds de solidarité FTQ, Tandem Expansion Fund and Telesystem.

9) Ritual (Toronto)

Workplace food-ordering app Ritual secured more than $90 million (US$70 million) in a Series C financing. Georgian Partners led, with participation from Greylock PartnersInsight Venture Partners and Mistral Venture Partners, all of which invested in the company’s Series B round in 2017.

10) TouchBistro (Toronto)

TouchBistro, a restaurant point-of-sale software platform, wrapped up a Series D financing of $72 million led by OMERS Ventures and JP Morgan Chase. Also contributing to the deal were BDC CapitalNapier Park Financial PartnersRecruit Holdings and Relay Ventures.