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VC dollar flows to Canadian tech companies total C$1.6bn in Q1

Venture capital investment in Canadian technology companies started strong in Q1 2020, with C$1.6 billion deployed across 134 rounds.

Venture capital investment in Canadian technology companies started strong in Q1 2020, with C$1.6 billion deployed across 134 rounds. This marked the most active first quarter in dollar terms on record in the Canadian market, final data released by Refinitiv show. The number of financings in Q1 2020 also rose 3 percent year over year. Early-stage companies accounted for 43 percent of all rounds, more than any prior annual share. Canadian investors reclaimed their top spot in the first quarter, contributing 68 percent of VC invested, up from 45 percent in all of 2019.

A full PDF report of Q1 2020 Canadian venture capital market activity by Refinitiv is available here.

REPORT SUMMARY

Canada venture capital investment totals $1.6 Billion in Q1

Canadian venture capital continued its healthy pace following a record-setting 2019 with $1.6 billion invested across 134 rounds in the first quarter of 2020. This total was up 14% year-over-year, was the strongest first quarter ever recorded, and marked the sixth consecutive quarter with investment greater than $1 billion.

Only two venture capital rounds surpassed the nine-figure mark through the end of March, down from the average set by the twelve such rounds completed throughout 2019. Topping the list for the quarter was the $270 million merger between non-destructive testing (NDT) companies Eddyfi and NDT Global, backed with equity provided by Novacap and Caisse de dépôt et placement du Québec with additional debt financing from National Bank of Canada and Investissement Québec. AI-applied traffic management business, Miovision, also raised $120 million in a round led by TELUS Ventures with support from McRock Ventures in order to accelerate growth and hire additional employees. Rounding out the top 3 for the quarter was the $99 million investment into Vancouver-based precision farming platform SemiosBio Technologies, led by the Boston-based Morningside Group.

Companies based within Quebec saw $621 million invested across 45 deals, resulting in 7th place for dollar values and 5th place for volumes in the provincial & state rankings. Ontario followed closely behind in both with $599 million financed across 44 deals for dollar and volume rankings of 8th and 6th, respectively.

Domestic funds invested $870 million in Canadian companies through the end of March, a 68% share of all disclosed dollars. This was up from the 45% share throughout the entirety of 2019 and higher than any annual share since 2012. Funds located within the United States supplied only 27% of the funding during the quarter, lower than any annual share since the 25% in 2008.

A total of 6 Canadian VC funds recorded closes during the first quarter, raising a combined $398 million in commitments, a decrease of 75% compared to a year ago. Round13 Ventures led the way with $225 million in commitments across two funds in the quarter, $125 million going to its second flagship venture fund and $100 million for the first closing of a new growth equity fund. The largest closing during the quarter was $151 million of additional commitments for Georgian Partners Growth Fund V, bringing its total commitments to $1.1 billion.

Canadian companies completed 8 VC-backed exits during the quarter worth $2.7 billion, a 33% decline in the number of exits but a 261% uptick in values when compared to the first quarter of 2019. The increase in values was largely thanks to the secondary purchase of Ontario-headquartered Kissner Milling Company by Stone Canyon Industries, a California-based industrial holdings company, with exits by Metalmark Capital Holdings and Silvertree Capital.