Montreal a bright spot, seeing deal activity rise in the quarter
TORONTO, April 25, 2017 /CNW/ - Investors invested $460M (all figures in USD) in Venture Capital (VC) backed companies based in Canada in Q1 2017, a 10% increase from Q1 2016 according to the MoneyTree™ Report from PwC Canada and CB Insights. Despite the increase in dollars, the quarterly deal figure was the lowest since the 54 deals in Q3 2015.
"The trends we're seeing in the market, year-over-year are encouraging. Total funding dollars and average deal size in Q1 indicate growing confidence and capacity within the venture capital community as well as the continuing solid fundamentals of the Canadian technology industry," says Chris Dulny, Partner, National Technology Industry Leader, PwC Canada.
From a regional view, dollars invested were down from Q4 across the top markets of Toronto, Montreal, and Vancouver. However, Montreal saw deal activity rising 56% for the quarter. On a year-over-year basis, investment in the leading hub of Toronto increased, with dollars up 239% and deals up 4% from Q1 2016. From a sector perspective, Internet deal activity continued its slide since peaking in Q1 2016. In contrast, healthcare deals reached a new quarterly high of 14 deals.
"Although quarterly funding saw a pullback to start the year, there were a number of positive indicators for the Canadian financing environment," stated Anand Sanwal, co-founder and CEO of CB Insights. "Namely, the presence of international firms continues to complement Canada's home-grown investor ecosystem, and the influx of corporate backers this quarter also represents a growing source of capital."
- Toronto, Montreal, and Vancouver ranked as the top three regions of Q1 2017 by deal count. All saw quarterly dollars invested decline from Q4 2016, although Montreal was an exception in deal activity terms, with quarterly deal count rising 56% to 14 for the quarter.
- The leading hub of Toronto saw $227M invested, an increase of 239% from Q1 2016, across 26 deals in Q1, up 4% from 2016.
- Seed-stage financings into Canadian companies continued to show healthy participation by Canadian investors into local companies to start the year. A total of 65% of investors participating in seed-stage deals to companies in Canada were themselves Canadian. Only 27% of investors to late-stage Canadian companies were Canada-based. US-based firms feature more prominently for these later rounds.
- However, Canadian investor participation declined for larger, more mature rounds. UK and European firms represented 14% of active investors in expansion-stage financings, versus just 3% for seed-stage rounds.
- Corporates and corporate VCs were a bright spot of activity, with 23% of all deals to Canadian companies featuring at least one corporation or corporate venture capital arm participating.
- Seed activity accounted for just 31% of all deals in Q1 2017, reaching a 8-quarter low. On the other hand, early-stage share stood at 28%, representing an 8-quarter high.
- Internet deal activity stagnated, as the top sector, saw quarterly deal count drop 21% (23 from 29) from the previous quarter. Deals to Internet companies have steadily fallen since peaking at 41 in Q1 2016.
- Healthcare reached a two-year quarterly high of 14 deals. Healthcare share as a proportion of all deals also reached an 8-quarter high.
The MoneyTree Report can be accessed here.
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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 our customers predict what's next—their next investment, the next market they should attack, the next move of their competitor, their next customer, 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)