2023 VC fund fundraising lowest since 2019

Canadian VC reported $6.07B, down 37% from 2022
$1.72B raised by VC funds, worst since 2019

All dollar ($) figures in Canadian dollars unless otherwise noted.

TORONTO, March 18, 2024 /CNW/ - Canadian venture capital (VC) recorded $6.07 billion*, continuing to lag 2022 and 2021.  The total amount raised by Canadian companies in 2023 represent 37% and 57% decreases respectively from the total amounts raised in 2022 and 2021.  2023 Canadian VC fundraising became the worst fundraising year in recent history, raised less than $2 billion ($1.717 billion).

2023 VC funding sources

In 2023, Canadian investors invested $2.62 billion slightly ahead of $2.53 billion invested by US investors.  US and international investors, together invested $3,453 million, accounting for more than 50% (57%) of the total amount in 2023.  

Investors from 46 countries and regions invested in Canadian companies.

Ontario investors invested $1,164 million, accounting 19% of the total amount. Quebec, European and BC investors, along with US and Ontario investors made up of the top five funding sources, investing $896 million, $551 million, and $450 million respectively.

Private VC and Corporate VC investors, both Canadian and US/International, invested $1,829 million and $1,359 million respectively.  Government investors, primarily Canadian government investors, invested $873 million.  

US Private VC led all individual investor types with $1,134 million investments.  Canadian government investors have taken prominent roles investing $851 million while Canadian Private VC invested $486 million.

$4,963 million invested by the top 10 investor types accounted for 82% of the total amount in 2023.

_____________________________

* CPE Analytics' dataset is distinguished by a rigorous application of proper methodological practice which, for instance, does not include M&A transactions completed by VC-backed portfolio companies or other secondaries transactions.

Top 10 Investor Types	$ Invested (Mil)
US Private VC	1,134
CDN Government	851
Foreign Corporate VC	495
US Corporate VC	490
CDN Private VC	486
CDN Corporate VC	373
CDN Family Office	348
US Private PE	273
CDN Private Investors	261
US Mutual/Hedge Fund	250
	$4,963 (82 %)

2023 VC disbursements

Provinces
Companies from Ontario, Quebec, BC, Alberta and Nova Scotia raised $2,635 million, $1,468 million, $1,055 million, $706 million and $112 million respectively.

Municipal Cities
Toronto, Montreal, Vancouver, Calgary, Kitchener, Ottawa and Edmonton are the top 7 VC investment recipient municipal cities, together raised $5,142 million representing 85% of the total amount in 2023. Toronto and Montreal are only two $1 billion plus cities receiving $1,774 million and $1,300 million respectively.

Sectors
ICT companies raised $3,226 million or 53% of the total amount.   Cleantech and Biotech companies raised $1,014 million and $937 million respectively.

Stages
Early stage and growth/late-stage financings raised $2,919 million and $1,977 million respectively.

Seed/pre-seed stage financings raised $581 million from 148 financings.

Early stage and pre-seed/seed stage financings, together, represent 69% of the total number of financings and 58% of the total amount.

Company size
Companies with 0-49 employees raised $3,285 million or 54% of the total amount.  Companies with 50-99, 100-499 and 500+ employees raised $782 million, $1,628 million and $381 million respectively.

2023 VC fund fundraising

42 Canadian VC funds raised $1,717 million in aggregate, the worse fundraising by Canadian VC funds since 2019.  36 private VCs raised $1,498 million in 2023. 

Though US and international investors have been very important components in Canadian VC ecosystem, Canadian VC's ability or inability of raising capital is most worrisome. In 2023, Canadian private VCs invested $486 million; at this pace, the $1,498 million raised in 2023 would last at approximately three years.

"2023 turned out to be another very difficult year for venture capital in Canada after a disappointing 2022. Investment volume was at its lowest level since 2019 while industry fundraising was equally morose. The industry continues to be dominated by US, particularly, and foreign sources of capital even from the likes of China. At the same time, 2023 registered a complete lack of interest in the venture asset class by corporate Canada as no new corporate funds were raised. Zero. Even clean tech's relative contribution to overall investments declined from 20% of the total in 2022 to 17% in 2023. The new venture funding environment of 2023 is readily captured by the average funding round size of just under $10 million ($6.07 billion invested into 693 firms) and fund raising by the VC industry with an average amount raised of $41 million ($1,717 B raised by 42 funds),"  commented Richard Rémillard, President of Rémillard Consulting Group (RCG).

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

Methodology
Included

• Equity and quasi-equity investments in companies directly.

Excluded

• Secondary transactions (investor/shareholder exit events) in which companies received no money.
• Acquisition for expansions (M&As)
• PE transactions
• Financing by foreign headquartered/domiciled companies with Canadian subsidiaries.

Rémillard Consulting Group (RCG)
Rémillard Consulting Group (RCG) is a unique, Ottawa-based, bilingual consulting firm specializing in providing private sector, government & trade association clients with creative, research-grounded solutions to business issues and public policies involving the Canadian financial services industry. For more information: [email protected]

CPE Analytics
With over 93,000 financing transactions in its Canadian Financings database, CPE Analytics is Canada's leading all financing intelligence provider.  We provide comprehensive, verified, unbiased and unmatched insights and intelligence on private and public financings, initial public offerings (IPOs), M&As, professional investment firm fundraising activities.

We cover all aspects of VC information, not limited to but including Canada's only information on VC firm fundraising, VC funding sources (where all the VC came from).

CPE Analytics is the data analytics division of CPE Media & Data Company.  More Info: https://cpeanalytics.ca,  https://financings.ca

CPE Media & Data Company
Founded by Canada's the most experienced private capital and financing research experts, CPE Media & Data Company is Canada's leading all financing news and intelligence provider. More information: https://cpecompany.ca/

SOURCE CPE Media & Data Company

Ted Liu, CPE Media & Data Company, 647-782-8818, [email protected]