Venture capital investment in Canadian technology companies declined in the third quarter of 2020, according to a report by the Canadian Venture Capital and Private Equity Association. A total of C$891 million was invested in 126 financings in Q3 2020, down 63 percent from the amount invested a year earlier and down 47 percent from Q2 2020. The CVCA report said there were fewer mega-rounds between July and September, which reduced average deal sizes.
CVCA Q3 2020 YTD Venture Capital Canadian Market Overview: VC Investment Experiences a QoQ Drop; CAD $3.5B Invested YTD
TORONTO – November 26, 2020 – The Canadian Venture Capital and Private Equity Association (CVCA) today released its quarterly report focused on Canadian venture capital (VC). In the third quarter of 2020, CAD $891M was invested over 126 deals , which is over 63% lower than the amount invested in the third quarter of 2019 and 47% lower than the previous quarter of this year (CAD $1.7B).
There were only three mega-deals (CAD $50M+) that closed in Q3 2020 versus eight in the previous quarter. As a result, the average deal size in Q3 2020 was only CAD $7M, bringing down the YTD average deal size to CAD $8.5M; in contrast to 2019, when the average deal size was $CAD 11M. The three mega-deals were:
• Vancouver-based Chinook Therapeutics $140M pre-IPO round with participation from Versant Ventures and Northleaf Capital Partners
• Kitchener-based ApplyBoard’s $70M Series C extension from a consortium of US-based investors
• Calgary-based Attabotics’ $66M Series C round, led by Ontario Teachers’ Pension Plan.
“The strength of Q2 was in many ways a combination of GPs further capitalizing their portfolio and the added capital injections of BDC and EDC matching programs. Q3, however, is more aligned with the challenges the pandemic has created for deal flow,” said Kim Furlong, CEO, Canadian Venture Capital and Private Equity Association. “While our members are finding ways to deploy capital, the realities of COVID and the continued strength of valuations is apparent in the deal flow.”
Later stage deals represented 45% of the total investment in the third quarter with CAD $1.6B invested over 57 deals, while 42% (CAD $1.5B over 189 deals) went to early stage and 8% (CAD $298M over 154 deals) went to seed stage companies.
The pace of VC-backed exits is on track relative to previous years, with 26 exits completed YTD.
For the first time, in partnership with Prospect, the CVCA is pleased to include employment numbers for VC-backed companies in Canada. A total of 18,419 people were employed by VC-backed companies YTD Q3 2020. These employment numbers represent only those positions in VC-backed companies that received VC funding Q3 YTD. Prospect is a free and fully aggregated talent network built by-and-for the Canadian tech startup ecosystem.
Canadian Venture Capital Highlights
• VC Dollars invested by geography:
• Ontario: 44% (CAD $1.5B across 168 deals)
• Quebec: 23% (CAD $796M across 117 deals)
• BC: 22% (CAD $758M across 53 deals)
• Toronto: 25% (CAD $869M across 129 deals)
• Vancouver: 20% (CAD $704M across 88 deals)
• Montreal: 20% (CAD $696M across 44 deals)
• Information, Communication & Technology: 53% (CAD $1.9B over 226 deals)
• Life Sciences: 29% (CAD $1B over 73 deals)
• Cleantech: 2% (CAD $75M over 15 deals)
• By Stage
• Late stage: 45% (CAD $1.6B over 57 deals, $27.8M in average deal size)
• Early stage: 42% (CAD $1.5B over 189 deals, $7.9M in average deal size)
• Seed stage: 8% (CAD $298M over 154 deals, $1.9M in average deal size)
About the CVCA
A thriving Canadian economy driven by private capital
CVCA’s mission is to help our members fuel the economy of the future by growing the businesses of today. We do this by supporting and connecting a vibrant private capital industry with advocacy, research, and education.
CVCA is also the nation’s ultimate resource for data on Canadian private capital investments. Please visit: http://www.cvca.ca.
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