Top Canadian VC deals draw C$522 mln in Q2 as focus shifts to early-stage

Canada’s venture capital market sustained robust levels of activity in Q2, despite somewhat fewer dollars going into the largest financings.

The top 10 second-quarter rounds secured C$522 million ($395 million) from VC funds. That’s down 4 percent from the C$542 million raised by the top 10 deals a year earlier, and down 16 percent from the C$625 million that went to the top deals in Q2 2017.

The estimate is based on Venture Capital Journal’s list of the largest financings announced from April through June, supplemented by preliminary data from Refinitiv. It indicates some moderation in the influence of big late-stage rounds, which dominated Canadian VC trends last year.

Overall, more than C$1.3 billion was deployed to IT-software, life sciences and other tech sectors in the second quarter, preliminary data from Refinitiv show.  That brings total investment at the end of June to C$2.7 billion, up 24 percent from the C$2.2 billion invested in first half of 2018.

Growth was led by early-stage activity, the data show. Seed, Series A and other early-stage financings saw C$787 million invested in the first half, more than double the amount invested a year earlier.

In contrast, late-stage activity, which accounted for the majority of Q2’s top deals, fell slightly in the first half. Series B, C, D and other late-stage financings took C$2 billion invested in this period, down 6 percent from H1 2018.

In 2018 as a whole, big late-stage rounds helped drive growth in the Canadian VC market to a nearly two-decade high, capturing C$3.6 billion—the largest amount since the dot-com era.

IT-software sectors continued to attract the lion’s share of dollars in Q2. Wealthsimple, ApplyBoard, Koho and other companies raised C$744 million, or 55 percent of the total.

Life-sciences companies, among them Lungpacer Medical and ABK Biomedical, secured C$309 million invested, or a 23 percent share.

And other tech picked up C$299 million in the second quarter, or 22 percent, thanks in part to cleantech companies such as Enerkem.

1) Wealthsimple (Toronto)

In Q2’s largest deal, Wealthsimple, an online investing service and trading app, landed C$100 million in follow-on funding.  Allianz X, the investment arm of Allianz Group, led the round, with participation from longstanding Wealthsimple backer Power Financial.

2) Enerkem (Montréal)

Waste-to-biofuels producer Enerkem took more than C$76 million in its latest round. New investor Suncor joined existing VCs, among them Braemar Energy Ventures, Cycle Capital, Fondaction, Fonds de solidarité FTQ, IQ, National Bank of Canada, Rho Ventures, Sunkem, Waste Management of Canada and Westly Group.

3) Lungpacer Medical (Vancouver)

Lungpacer Medical, developer of a therapeutic solution for strengthening the diaphragm muscle, raised a C$75 million investment, according to Refinitiv data and a regulatory filing. The company’s main investors reportedly include KCK Group and Valiance Asset Management.

4) ApplyBoard (Kitchener-Waterloo)

International student recruitment platform ApplyBoard closed a C$55 million Series B financing. The round was led by Anthos Capital and joined by returning VCs, among them Artiman Ventures, which led last year’s Series A. Other ApplyBoard investors include 500 Startups, Candou Ventures and Think+.

5) Koho (Toronto)

Koho wrapped up a Series B financing, securing C$42 million. Portag3 Ventures led and was joined by Greyhound Capital and other investors. Koho provides an app and reloadable card to help customers manage their spending and saving.

6)  ABK Biomedical (Halifax)

ABK Biomedical, a maker of embolic therapies for treating hypervascular tumors, picked up $30 million (C$40 million) in a Series B. F-Prime Capital and Varian Medical Systems co-led the round. The company was previously funded by Innovacorp and angel investors.

7) Dialogue (Montréal)

Virtual healthcare provider Dialogue also raised C$40 million in its latest deal, co-led by Caisse de dépôt et placement du Québec and Holtzbrinck Ventures. Also investing were First Ascent Ventures, Portag3 Ventures, White Star Capital, Walter Capital Partners and National Bank of Canada, most of which backed last year’s Series A.

8) Xanadu (Toronto)

Xanadu, a photonic quantum computing and artificial intelligence platform, landed C$32 million in a Series A financing. OMERS Ventures led, with participation from new and existing investors, among them Georgian Partners, Radical Ventures, Real Ventures and Silicon Valley Bank.

9) Mejuri (Toronto)

Direct-to-consumer fine jewelry brand Mejuri confirmed reports that it secured $23 million (C$31 million) in a Series B round. The deal leader was New Enterprise Associates. It was joined by BDC Capital, Dash Ventures, Felix Capital and Incite Ventures. Mejuri’s other backers include Real Ventures.

10) OSF Commerce (Québec City)

OSF Commerce also raised $23 million (C$31 million) in a financing led by Delta-v Capital. Also contributing was the venture capital arm of Salesforce. Following the investment, OSF, a retail consultant and commerce tech integrator, acquired U.K.-based Blueleaf.