Canadian VC invested in H1 2021 hits record high of C$7.5bn

Canadian venture capital investing continued its record-setting pace in 2021, with C$4.3 billion deployed across 172 financings in Q2, final data released by Refinitiv show. This brought activity at the end of June to C$7.5 billion invested in 349 rounds, the highest first-half result on record. Computer-related and internet companies remained the main focus, securing 77 percent of the total. US funds were key to robust H1 2021 trends, supplying half of all VC invested.

A full PDF report of the H1 2021 Canadian venture capital market activity by Refinitiv is available here.

REPORT SUMMARY

Canada venture capital investment totals $7.5 billion

Canadian venture capital totaled $7.5 billion invested across 349 rounds throughout the first six months of 2021. Investment volumes increased by 5% year-over-year, and investment values continued their trajectory from the first quarter with an increase of 98% over the first half of 2020 and already tying the full year record of $7.5 billion set in 2019. The average size of disclosed rounds was $26.3 million, up 77% from $12.8 million a year ago.

Twenty rounds in the first half saw investment values in the nine-figure range. The top round for the period was the $476 million investment into identity verification software business, Trulioo, the second largest Canadian venture capital round of all time behind the 2019 $515 million investment into financial crime management software business, Verafin. The first quarter $385 million investment into blockchain entertainment company, Dapper Labs, retained the second spot in the half and the third largest round of all time. Rounding out the top three for the year to date was the newly added $365 million investment into Kitchener-based international student platform, ApplyBoard, led by Ontario Teachers’ Innovation Platform with support from existing investors Fidelity Investments, Business Development Bank of Canada, Harmonic, Index Ventures, Garage Capital, and Blue Cloud Ventures.

Companies based within Ontario saw $3.4 billion invested across 142 rounds, resulting in 5th place for dollar values and 4th place for volumes in the North American provincial & state rankings. Companies based in British Columbia saw $2.4 billion invested across 61 rounds, resulting in 11th place for dollar values and 12th place for volumes. Ontario more than doubled its value totals from the same period last year with a year-over-year increase of 120%, while British Columbia tripled its totals with an increase of 203%.

Domestic funds invested $2.6 billion into Canadian companies during the half, just a 39% share of all disclosed financings. This was down from their 54% share throughout the entirety of 2020 and lower than any annual share since the 38% in 1992. Funds located within the United States supplied $3.3 billion or half of all funding, up from 34% throughout 2020.

A total of 34 Canadian VC funds recorded closes during the first six months of the year raising a combined $3.7 billion in commitments, an increase of 108% compared to a year ago. Inovia Capital’s second growth fund’s March close remained the largest fundraise for the period at $560 million. Newly added in the second quarter was the Government of British Columbia’s InBC Strategic Fund, which raised $500 million to support startups within the province.

Canadian companies completed 38 VC-backed exits worth $7.2 billion in the first half, the largest half in dollar terms on record and more than any full year period other than the $8.9 billion in 2000. 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 was the reverse takeover transaction to take short-term rental business, Sonder, public via SPAC. The company, founded in Montreal but now headquartered in San Francisco, was valued at $2.7 billion prior to the deal proceeds.