- 21% increase in deal activity and 110% increase in funding in Q3
- Deals and dollars increase as funding is on track for a US$2B+ year
- Artificial intelligence (AI) funding is having a record year, and fintech funding is on pace for a solid 2017
- Increase in early and expansion-stage deals
TORONTO, Oct. 25, 2017 /CNW/ - After two quarters of decline in investment, the flow of funds to VC-backed companies based in Canada has rebounded in Q3 2017, reaching an all-time high in the past two years, according to the MoneyTree™ report from PwC Canada and CB Insights.
Investors poured over $858M (all figures in USD) into Canadian startup companies across 81 deals, a 21% increase in deal activity and a 110% increase in total funding from the preceding quarter. Internet deal count was flat from Q2 2017, but funding increased 149% in the sector. Quarterly funding to mobile increased 404% to $131M, while Canadian healthcare companies saw both a spike in funding and deal activity.
"We're happy to see an increase in investments in Canadian technology companies this past quarter. Canada is truly a global technology force and a place where companies can turn their vision to reality as support from investors continues to flow," said Chris Dulny, National Technology Sector Leader, PwC Canada. "With this momentum, we look forward to a strong close to the year."
In terms of thematic areas, Canadian AI companies have already received a record year of funding through three quarters, and fintech funding is on pace for a solid 2017. So far in 2017, Canadian AI companies have received $191M across 22 deals, while fintech companies have received $200M across 27 deals.
"Q3 was a good comeback quarter for Canada after a lackluster Q2. The eight-quarter high came as the result of momentum across a broad group of sectors ranging from Mobile to Internet to AI," stated Anand Sanwal, co-founder and CEO of CB Insights. "In addition, there was strength at the early and later stages of Q3, which buoyed funding and which is also a good sign for the Canadian venture ecosystem."
- Seed-stage deals dipped while early and expansion-stage deals increased. Seed-stage deals accounted for 51% of deals in Q2 2017 but declined 19 percentage points to 32% in Q3 2017. However, early-stage and expansion-stage deals increased respectively to 27% and 21% of total deals.
- Corporate deal participation receded but remains strong. In Q3 2017, 21% of all deals between Canadian companies featured at least one corporate or corporate venture capital investor—this is down from 27% the quarter before.
- Internet quarterly funding increased substantially. Quarterly deal activity remained flat in Q3 2017, but quarterly funding increased 149% to $247M, which is up from $99M in Q2 2017.
- Mobile and Healthcare saw increases in financing activity. Deal activity in the Canadian Mobile and Telecom sector remained in range in Q3 2017, while total quarterly funding increased by 404% from $26M to $131M. Healthcare deal activity rebounded, increasing from 4 deals in Q2 2017 to 17 in Q3 2017, while funding rose 106% to $169M.
- Toronto financing activity is up, while Vancouver and Montréal activity is flat. Meanwhile, Waterloo saw a big investment round. Deals and dollars invested to Toronto companies were up in Q3 2017 as $279M was invested across 32 deals. Vancouver and Montréal both saw flat funding totals relative to the previous quarter, while total funding to Waterloo-based companies jumped from $11M to $112M.
- On a trailing-twelve-month basis, investors based in Canada represented 62% of all active investors at the seed stage while also representing 50%+ in early and expansion-stage deals. US investors, while also active at other stages, represented 56% of later-stage deals.
Access the MoneyTree™ report here.
About PwC Canada
At PwC, our purpose is to build trust in society and solve important problems. More than 6,700 partners and staff in offices across the country are committed to delivering quality in assurance, tax, consulting and deals services. PwC Canada is a member of the PwC network of firms, which comprises more than 236,235 people in 158 countries. Find out more by visiting us at www.pwc.com/ca.
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PwC refers to the Canadian member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see http://www.pwc.com/structure for further details.
About CB Insights
CB Insights is a Pilot-Growth- and National-Science-Foundation-backed software-as-a-service company that uses data science, machine learning and predictive analytics to help its customers predict what's next — the next investment they should make, the next market they should attack, the next move their competitors will make, the next customer they should target, or the next company they should acquire. The world's leading global corporations including the likes of Cisco, Salesforce, Castrol and Gartner as well as top-tier VCs including NEA, Upfront Ventures, RRE, and FirstMark Capital rely on CB Insights to make decisions based on data, not decibels.
SOURCE PwC (PricewaterhouseCoopers)