Report shows that there have been two consecutive quarterly drops in the first half of 2020
The total value of Canadian venture capital (VC) financings was $2.59 billion in the first half of 2020.
This came from 281 financings with activity down 22% and 19% respectively from the same period in 2019 and accompanied by two sharp consecutive quarterly drops from Q3 and Q4, 2019.
But CPE Analytics’ Canadian Venture Capital Report also shows that apart from steep drops in disbursements in May and June, the year is so far performing fairly compared to 2019. (The disbursement figure for July 2020 is incomplete and it is still being compiled).
"The data for H1, 2020 indicate that venture capital investing has been significantly affected by the eruption of COVID-19, much like the broader economy,” said Richard Rémillard, President of Rémillard Consulting Group (RCG). “The data reflect some particularities of venture capital too as this part of the financial services industry has long relied on face-to-face meetings with startup and early stage firm entrepreneurs prior to making investment decisions.”
A recent report shows that family offices are significant funders of innovative companies.
US investors pull back
Looking back over the past three years, US venture capitalists have played a key role in supporting Canadian startups, with their share of VC investments above 40%.
However, this has slipped sharply in 2020, with US investors accounting for just 30% of disbursements.
“Of note is the decline in the percentage contribution of US-led investment across the board, but acutely in certain parts of the country, notably Québec," added Rémillard.
Investment in Canadian firms came from 31 countries and the top funding sources were: Canada ($1,500 million), US ($789 million), South Korea ($69 million), United Kingdom ($34 million), and Denmark ($24 million).
H1 2020 - Venture Capital disbursements - where the funding went:
- 9 large deals with deal value of $50 million or more attracted $861 million or 33% of the total amount.
- Top three provinces: Ontario ($1,048 million), Quebec ($700 million) and BC ($553 million), representing 41%, 27% and 21% of the total amount respectively.
- Million-dollar cities: Toronto ($522 million), Vancouver ($471 million), Montreal ($406 million), Quebec City ($284 million), Kitchener, ON ($268 million), Calgary ($112 million).
- Series A and B financing captured $358 million (14%) and $552 million (21%) respectively.
- ICT and biotech companies raised $1,635 million (63%) and $592 million (23%) respectively.
- Early stage companies raised $1,497 million or 58% of the total amount.
- Companies with the number of employees under 50 raised $1,414 million or 55% of the total amount.
