Canadian VC investing vigorous in Q1 despite fall in deal count

Canada’s venture capital market saw C$4.5 billion invested across 196 financings in Q1 2022, the second-highest quarterly deployment on record, a report by the Canadian Venture Capital and Private Equity Association found. VC deal count in this period, however, experienced its third consecutive quarter-over-quarter decline. Led by 1Password’s financing, 17 mega-deals ($50 million or greater) accounted for nearly three-quarters of all dollars invested.

Access the full report here.

PRESS RELEASE

CVCA’s Q1 2022 Canadian VC Market Overview: CAD $4.5B Venture Capital Invested Across 196 Deals

May 17, 2022– Toronto, ON – Today, the Canadian Venture Capital and Private Equity Association (CVCA) released its Q1 2022 report on venture capital (VC) activity in Canada. CAD $4.5B was invested across 196 deals in Q1, the second-highest quarterly VC (CAD $5.2B, Q2 2021) investment on record. While investment value remains on par with 2021 levels, VC deal count in Q1 experienced the third consecutive quarter-over-quarter decline.

The average disclosed deal size in Q1 was CAD $28.4M, surpassing the five-year average of CAD $12.7M. There were 17 mega deals (+$50M) valued at CAD $3.3B and accounting for nearly three quarters of all dollars invested, including four deals valued above CAD $200M. Deals of note in Q1 include Toronto-based 1Password’s CAD $775M raise from U.S.-based investors, and Montreal-based Paper’s CAD $342 Series D from Framework Venture Partners and BDC Capital.

“We’re seeing the lingering effects of 2021’s recording breaking VC performance,” said Kim Furlong, Chief Executive Officer, CVCA. “There are several variables at play including inflation, geopolitics, and the dollars from the last Venture Capital Catalyst Initiative (VCCI) have been allocated which could impact capital deployment moving forward. These forces all impact investment performance. We will continue to monitor as we head towards H1.”

The exit environment in Q1 saw 12 exits with no IPOs for a total of CAD $186M. A notable exit in Q1 was Ontario-based Inkbox’s acquisition by BIC for CAD $81M.
For a deeper look into the performance of Q1 as well as the trends uncovered in 2021, the Canadian private capital industry will be gathering for CVCA’s Invest Canada ’22 from May 25-27 in Ottawa. This year, there are several expert-led panels dedicated to exploring current themes. For more information, visit the Invest Canada website.