TORONTO, Feb. 27, 2014 /CNW/ - A key highlight for 2013 includes $2
billion of new venture capital investment up 31% invested in 2012,
while fundraising dropped 24%. These were among the findings of a
statistical report released today by CVCA- Canada's Venture Capital &
Private Equity Association and research partner Thomson Reuters.
Investment activity in Canada's venture capital (VC) market increased
significantly in 2013, especially in terms of dollars invested in
innovative companies. Investments made by VC funds totaled $2.0 billion
as of December 31st, 31% more than the $1.5 billion invested in 2012.
In fact, investments in 2013 were at their highest level since the peak
of the previous cycle in 2007.
During 2013 452 deals were completed, up 2% over the prior year, and in
contrast to prior years investment was slightly more skewed to
early-stage and expansion financings of Canadian innovative companies.
Canadian VC market activity was given a substantial boost in the final
quarter of 2013, when a total of $547 million was invested in 113
financing rounds. Dollars invested between October and December was 40%
more than the amount reported during the same fourth-quarter period in
Year-over-year growth in Canadian disbursements in 2013 was driven by a
number of major financings, including those completed for Vancouver's
HootSuite, one of the largest rounds of venture capital funding in
Canadian history, Ottawa-based Shopify, Burlington-based Anaergia and
Markham-based Real Matters. These and other transactions helped ratchet
up Canadian company financing sizes to an average of $4.3 million for
2013 as a whole, which improves on the $3.3 million averaged the year
Commenting on the results, Peter van der Velden, President of the CVCA
and Managing General Partner of Lumira Capital Corp. noted "The
investment results for 2013 are really encouraging and pushed Ontario,
Quebec and BC into the top 10 regions for VC ranking in North America.
Investment activity this year highlights Canada's phenomenal potential
as an innovation leader in the global economy and these investments
illustrate the both the importance and rationale for a strong domestic
Canadian venture capital ecosystem."
Larger domestic VC financings in 2013 had the effect of narrowing the
competitive gap in deal capitalization between Canada and the United
States. At the end of December, Canadian innovative companies garnered
54% of the dollars going to counterpart companies based in the United
States, compared to the 46% that was averaged in 2012. It is however
worth noting that the median investment size from Canadian investors
just under a third of the median investment from non-Canadian firms
suggesting that the foreign investors continue to focus their capital
on the bigger deals.
Trends by Sector
Canada's VC market activity continued to be driven primarily in
information technology (IT) sectors in 2013. As of December 31st, IT
companies secured $1.1 billion invested in total, or 54% of all
disbursements, and showed year-over-year growth of 19%. A major story
in trends last year was the role played by internet-related deals, as
these captured $497 million, compared to $217 million accounted for in
2012, helped by HootSuite and Shopify. Software took second spot in
2013, with $378 million invested.
Trends in Fundraising
The fundraising activity of Canadian VC firms which decreased in 2013
relative to the especially strong fundraising year that was recorded in
2012. New capital commitments to partnerships and other funds totaled
nearly $1.3 billion last year, which is 24% less than the $1.8 billion
that was committed the year before. The $1.3 was also skewed upward by
certain evergreen funds re-allocating capital to dedicated pools which
really do not reflect net new capital.
The number of domestic funds closing on new capital was also slightly
fewer, with these totaling 27 this time around as compared to the 33
funds of 2012.
Much of the overall drop in Canadian VC fundraising activity was
accounted for by private-independent funds, which brought $629 million
into the market in 2013, down 51% year over year. In contrast,
commitments to labour-sponsored and other retail VC funds, which
totalled $488 million last year, actually reflected an 18% increase
compared to their activity in 2012.
Commenting on 2013 fundraising, Mr. van der Velden said "Long term
sustainable capital still remains a big concern. If one nets out
re-allocations and retail VC funds it is evident that that private
sector venture capital funding is still materially below the level
required for a sustainable ecosystem. Continued performance by
independent partnerships and the implementation of programs such as the
federal Venture Capital Action Plan should help the sector to continue
to build on the positive momentum and hopefully encourage more
corporate and institutional investor commitments to top-tier Canadian
venture capital partnerships."
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The CVCA is the voice of Canada's venture capital and private equity
industry. The CVCA's members manage the vast majority of private
capital that is designated to grow Canadian businesses. The CVCA
fosters professional development, networking, communication, research
and education, and represents the venture capital and private equity
industry in public policy matters. The CVCA was founded in 1974. www.cvca.ca
SOURCE: CVCA - Canada's Venture Capital & Private Equity Association
For further information:
To arrange an interview with Peter van der Velden, President of the CVCA and Managing General Partner of Lumira Capital Corp, or Mike Woollatt, CVCA's CEO, please contact Lauren Linton, Director of Marketing, email@example.com .