Backed by US and foreign investors, Canadian VC sets record at $7.263B for 2019

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TORONTO, May 20, 2020 /CNW/ – Canadian venture capital (VC) disbursements reached historical high in 2019, completing 642 financings totalled $7.263 billion (excluding Verafin financing which is not a VC deal1), according to results released today by CPE Analytics, the data analytic division of CPE Media Inc. 

 Ethan McArthur on Unsplash

“These 2017-19 results clearly indicate that venture capital was full-throttle on the upswing of its regular business cycle with fund raising and disbursements both growing strongly across most categories, notably US and foreign investment,” commented Richard Rémillard, President of Remillard Consulting Group (RCG). “The strong 2017 – 2019 numbers should position VC-funded companies and VC funds themselves in good stead to withstand the ravages of COVID-19, particularly those firms that entered the pandemic crisis with substantial dry-powder remaining and who most likely raised considerable sums in the latter half of 2019.”

2019 – Venture Capital disbursements (where the funding went to – companies, not investors in recap and secondary transactions)

  • 642 financings totalled $7,263 million, up 28% and 48% respectively in number of financings and amount disbursed from 2018.
  • 26 large deals with deal value of $50 million or more attracted $3,418 million or 47% of the total disbursements.
  • Ontario and Quebec led all provinces with $2,812 million (39%) and $2,116 million (29%) respectively.
  • Three billion-dollar cities: Toronto – $2,027 million (28%), Montreal – $1,588 milion (22%), Vancouver – $1,475 million (20%)
  • Series A and B financing captured $1,162 million (16%) and $1,421 million (20%) respectively.
  • ICT and biotech companies raised $4,020 million (55%) and $1,594 million (22%) respectively.
  • Early stage companies raised $3,408 million or 47% of the total disbursements.
  • Small sized companies with the number of employees under 50 were dominating recipients of VC disbursements for the past three years, raising $1,874 million (48%), $2,280 million (49%) and $3,220 million (44%) respectively.
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1 The $515 million Verafin recapitalization backed by senior secured debt is not a venture capital deal. The deal was a recap in which new equity from a new group of investors/funds together with leveraged senior secured debt (secured by their equity stakes) was used to buy out a previous group of investors/funds (an exit event for them). Management managed to use the senior debt to increase their stakes following the recap.

2019 – Venture Capital funding sources (where the funding came from) – Canada’s Only Source

  • Canadian companies secured funding from investors from 45 countries or regions or overseas territories.
  • US investors – $3,321 million (46%), Canadian investors – $3,261 million (45%), European investors – $320 million (4%), Asian investors – $312 million (4%), all others – $48 million (1%).
  • Top five investor types: Private VC funds – $2,180 million (43%); Corporate – $936 million (18%); Family Offices – $491 million (10%); Angels – $293 million (6%) and Government – $289 million (6%).
  • Top five individual sub types: US Private VC – $1,615 million (32%); Canadian Private VC – $466 million (9%); US Corporate – $407 million (8%); Canadian Institutional VC – $408 million (8%); Canadian Government – $288 million (6%).

2019 – USA and Foreign Investment Breakdowns

  • BC companies attracted largest US investors with $1,087 million or 61% of total disbursements to BC companies. US and foreign investors together invested $1,387 million or 78% of the total disbursements.
  • Quebec and the Prairies attracted least amount of US and other foreign investments, securing 38% and 43% of their respective total disbursements.

2019 Fundraising by Canadian venture capital firms and top exits

  • 61 funds raised $4.4 billion, of which $3.1 billion by 46 private VC funds.
  • Top IPOs: Lightspeed POS Inc. (TSX: LSPD) – $276M raised with valuation of $1.4B; Milestone Pharmaceuticals Inc. (NASDAQ: MIST) – US $95 million raised with US $402 million valuation.
  • Top M&As: Wave HQ acquired by H&R Block for US $407M; Aeryon Labs acquired by FLIR Systems for US $206M; Mnubo acquired by Aspen for CDN $102 million.

2019 Active law firms 

  • Top five active VC law firms: Dentons Canada LLP, Osler, Hoskin & Harcourt LLP, Fasken Martineau DuMoulin LLP, LaBarge Weinstein LLP, Burstall LLP

The full report can be downloaded from financings.ca website:  https://www.financings.ca/reports/