Deloitte report is a first-of-its-kind look at Canada's evolving CVC landscape
Canada’s startups, corporations, investors, and the economy could all benefit if more large businesses capitalize on a significant opportunity in corporate venture capital (CVC) investing.
A new first-of-its-kind report from Deloitte, published today (May 14) in association with BDC Capital, reveals that Canadian corporates are lagging U.S. peers in their participation and disclosure of their CVC investments. Just 6% of corporations generating $1 billion or more annual revenue are doing so compared to 40% of similar U.S. corporates. Canadian corporations in financial services and TMT industries are the most active currently.
CVC benefits startups through minority investments from large corporates in early-stage or growth-stage ventures and Talia Abramowitz, managing partner of Deloitte Ventures, Deloitte Canada’s $150 million venture capital initiative, says that the benefits are clear.
"More engagement from Canadian corporates in venture capital can yield a ‘triple-win’ for Canada, benefiting corporations, start-ups, and the Canadian economy at large,” she said. “Corporates can benefit financially as well as through strategic insight and exposure to new technologies, markets, and customers. Start-ups gain access to the resources, market expertise, and brand power of large corporations and simultaneously, the economy prospers as tech clusters generate job opportunities, enhance productivity, and foster more innovative solutions at competitive prices.”
Investors could see benefits at both ends of the equation, with both the startups and large corporates they invest in seeing gains.
Backing Canada
By backing Canadian startups involved in growing technologies such as AI and robotics, stronger CVC activity would also help grow Canada’s technological advantage and boost the economy.
"CVC's impact goes beyond just boosting profits,” added Abramowitz. “It can also bring invaluable innovations to its parent companies. By fostering new ideas and technologies, a robust CVC unit strengthens the core business, ensuring long-term resilience and prosperity."
However, the report also highlights that Canadian corporates are allocating a larger share of their CVC investing to international startups (53% vs. 47% domestic), although this is slowly shifting in favour of Canadian firms. The proportion of domestic firms backed by U.S. corporates is far greater, but this is due to the sheer size of the market.
The full report is available from Deloitte Canada.
