Q3 2024 Canadian VC $2.34B, 2nd best Q3 quarter in history, 2024 poised to be 3rd best year behind 2021, 2022

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

TORONTO, Oct. 31, 2024 /CNW/ - Canadian venture capital (VC) totalled $2.34 billion* in Q3 2024 or $ 6.41 billion for the first nine months of 2024, continuing strong Q2 2024 in which $2.63 billion flowed directly into Canadian companies.

CPE Analytics tracks capital flow into the companies directly and excludes known secondary exits reported in transaction rounds. For example, Clio itself did not receive US $900 million of the total funding. A substantial of the funding **went to company's management and employees, and to existing investors.

Canadian VC investment trend: 2017 - first nine months of 2024 (CNW Group/CPE Media & Data Company)

With one quarter to go, 2024 Canadian VC disbursements are on track to be the third best year since 2017, behind the record year 2021 ($11.19 billion) and 2022 ($9.71 billion).

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* * 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.

** Precise details were not revealed publicly.

Key Observations

I. The gloom and doom scenario proven to be untrue
Q3 2024 ranked as 2^nd best 3^rd quarter in Canadian VC history and 2024 is on its track to be the 3^rd best year in Canadian history.  The investment impact of the 2024 federal Budget capital gain tax increase has yet to manifest itself in Canadian VC investments.  And may never.

II.  BC regains second place
BC companies raised $1.68 billion, replacing Quebec ($1.24 billion) as the second largest provincial VC recipient. Ontario companies continue to lead and received $2.82 billion. 

III.  Biotech replaces cleantech as second attracting sector
Biotech companies raised $1.38 billion, slightly ahead of cleantech companies which received $1.23 billion. 

IV.  Financial companies continue to struggle
Financial companies raised $267 million and saw their share of the total disbursements almost halved to 4.2% from 8.3% in 2022 and 2023. The share is well off of the highest share of 10% in 2019 and just ahead of 3% in 2017.

V. US investors increase their share to historic high
US investors invested $3.74 billion in Canadian companies, increasing their share to 58%, up from 55% in Q2 2024 and 43% in 2023.  US investors' share in Q3 2024 is the highest in Canadian history, besting the previous high of 56% recorded in the historical year on 2021.

VI.  VC fund fundraising continues to lag
48 funds raised $2.14 billion, ahead the historic low of $1.72 billion in 2023.  The 2024 fundraising for the full year will be likely well behind the record of $4.74 billion recorded in 2022.

VII.  Canadian governments continue to out-invest Canadian private VCs
With the continuing fundraising woes, Canadian private VCs invested $613 million, remaining out-invested by Canadian governments ($628 million).  Canadian governments and Canadian private VCs ranked as 4^th and 5^th active investor type behind US private VC, US mutual/hedge funds, and US corporate VCs.

"With 69% of venture capital investment stemming from abroad, mostly from the US, this data amply demonstrates Canada's position as a net importer of high tech financing. Most concerning, with mere days remaining in the US presidential elections and both parties' candidates espousing protectionist measures, it is evident that continued access to this source of venture capital is at risk. And, with private Canadian venture capital funds still experiencing considerable fundraising challenges of their own, the clear and present imperative is for Canada to more fully diversify that foreign capital reliance away from the almost total dependence on US sources and broaden the availability of foreign venture capital from Europe, Asia and the Middle East," commented Richard Rémillard, President of Rémillard Consulting Group (RCG).

"The data also point to other weaknesses, notably the halving of investment percentages in fintech and the weak pickup of social impact funds in 2024. The fintech numbers are particularly surprising given the innovation(s) taking place in this field around the globe from Africa to Asia and, should these numbers persist, may point to an increasing vulnerability of the entire financial sector," added Rémillard.

2024 First 9 Months Highlights

Top 10 municipal cities
Companies from 66 Canadian municipal cities attracted capital in the first 9 months of 2024.  The top 10 cities collectively raised $5.84 billion, accounting for 91% of the total disbursements.  

Municipal City	Province	# Fin's	$ Millions
Toronto	Ontario	149	2,233
Burnaby	British Columbia	7	886
Montreal	Quebec	51	842
Vancouver	British Columbia	84	594
Calgary	Alberta	53	546
Quebec City	Quebec	17	270
Kitchener	Ontario	11	144
Mississauga	Ontario	12	138
Richmond	British Columbia	5	97
Ottawa	Ontario	20	94
		409	5,844

Top 10 foreign funding sources
Investors from the top 10 countries accounted 66% of total capital flow into Canadian companies.

Country	# Financings	$ Millions
United States  (USA)	263	3,744
China	9	99
Japan	7	75
Switzerland	11	63
United Kingdom (UK)	15	58
Sweden	6	57
Netherlands	10	55
Germany	10	41
France	10	40
Austria	4	29
		4,261

Top 10 Investor types
Top 10 types of investors accounted of 91% of the total disbursements into Canadian companies.

Investor Type	# Financings	$ Millions
Private VC - US	105	1,639
Mutual/Hedge Fund - US	14	1,047
Corporate - US	41	735
Government - CDN	105	628
Private VC - CDN	118	613
Corporate - Foreign	39	404
Corporate - CDN	34	247
Private VC - Foreign	30	195
Private Investors - CDN	231	185
Family Office - CDN	91	177
		5,869

Top 9 VC law firms
44 law firms were tracked or reported to participate in Canadian VC financings in the first nine months of 2024.  

Law Firm	# Companies	# Financings	$ Millions
Osler, Hoskin & Harcourt LLP	22	46	1,989
Fasken Martineau DuMoulin LLP	14	55	379
LaBarge Weinstein LLP	12	26	190
Blake, Cassels & Graydon LLP	8	12	469
Dentons Canada LLP	7	9	16
McCarthy Tétrault LLP	6	12	99
Mintz LLP	4	19	37
Borden Ladner Gervais LLP	4	16	18
McInnes Cooper	4	9	33

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 almost 98,000 financing transactions, and continuing growing, its Canadian Financings database, CPE Analytics is Canada's undisputed leader in financing intelligence.  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 and from which types of investors).

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

Contacts: Ted Liu, CPE Media & Data Company, 647-782-8818, [email protected]; Richard Rémillard, Rémillard Consulting Group (RCG), 613-715-3055, [email protected]