Still robust Canadian VC investing reached C$6.0bn in 2020

Venture capital investment in Canadian technology companies in 2020 fell from the record-breaking 2019 but still remained strong, with C$6.0 billion deployed across 576 rounds.

Venture capital investment in Canadian technology companies last year fell from the record-breaking 2019 but still remained strong, with C$6.0 billion deployed across 576 financings. This marked the third strongest year in dollar terms on record in the domestic market, final data released by Refinitiv show, after the previous year and 2000. Seed-stage companies accounted for less than 3 percent of all rounds, lower than any prior annual share. Canadian investors reclaimed their top spot in the year, contributing 58 percent of total VC invested, up from 45 percent in 2019.

A full PDF report of the 2020 Canadian venture capital market activity by Refinitiv is available here.

REPORT SUMMARY

Canada venture capital investment totals $6.0 billion in 2020

Canadian venture capital totaled $6.0 billion invested across 576 rounds throughout the entirety of 2020. Investment values saw a year-over-year decrease of 20% but still remained the third strongest year on record, after the $7.5 billion invested in 2019 and $6.4 billion in 2000. Volumes were down 7% from the previous year. The fourth quarter alone saw $1.0 billion invested across 101 rounds, resulting in year-over-year value and volume declines of 45% and 34%, respectively.

The ten largest rounds in the year all saw investment values greater than $100 million. Three rounds were newly added to this group in the final three months of the year. One was the $153 million private placement financing provided by both new and existing investors to clinical-stage biopharmaceutical company, Chinook Therapeutics, in parallel to its merger with Aduro Biotech. Another was the $126 million private placement for automated pharmacy kiosk manufacturer, MedAvail Technologies, led by Ally Bridge Group. Finally, digital investment management platform, Wealthsimple, raised $114 million in a new funding round led by TCV, bringing its total valuation up to $1.4 billion.

Companies based within Ontario had $2.6 billion invested across 254 rounds, resulting in 10th place for dollar values and 4th place for volumes in the North American provincial & state rankings. Dollar values for the province were down 9% from 2019 while transaction volumes were up 1%. Québec followed with $1.6 billion invested across 156 deals for dollar and volume rankings of 14th and 7th place, respectively, and year-over-year declines of 15% in values and 16% in volumes. Companies within Alberta saw their level of overall investment increase 20% to $230 million across 35 rounds in 2020, while investment values within Nova Scotia saw an increase of 91% to $100 million.

Domestic funds invested $2.8 billion in Canadian companies during the year, a 58% share of all disclosed financings. This was up from their 45% share throughout the entirety of 2019 and higher than any annual share since the 69% in 2012. Funds located within the United States supplied only 36% of funding during the period, lower than any annual share since the 35% in 2015.

A total of 21 Canadian VC funds recorded closes during the year, raising a combined $2.1 billion in commitments, a decrease of 61% compared to a year ago. Six funds completed raises during the fourth quarter with commitments of $181 million, led by TELUS’ $100 million raise for its Pollinator Fund for Good, a social impact fund.

Canadian companies completed 57 VC-backed exits worth $1.8 billion in 2020, a 14% decline in values but a 21% increase in volumes relative to 2019. The top two exits for the year both occurred in the fourth quarter. These were the $3.6 billion cash purchase of Newfoundland-based financial security company, Verafin, by Nasdaq, as well as the IPO of British Columbia-based biotechnology company, AbCellera, which generated gross proceeds of $708 million.