Strong Q2 2024 VC drives Canadian VC reaching $3.87B
Toronto outpacing all other cities
VC investments actually up after the much-criticized federal budget
All dollar ($) figures in Canadian dollars unless otherwise noted.
TORONTO, July 22, 2024 /CNW/ - Canadian venture capital (VC) totalled $3.87 billion* in first half (H1) of 2024, driven by strong second quarter in which $2.47 billion was raised by Canadian companies.
Q2 2024 VC investments totaled $2.47 billion, up by 76% from the $1.40 billion registered in Q1 2024. The Q2 figure is noteworthy as it directly counters all the purveyors of doom and gloom who had been predicting that tech investments in Canada would crater following the April 16 federal Budget's measures with respect to the treatment of the capital gains inclusion rate. In fact, just the reverse appears to have occurred. Granted, investments made in Q2 may have been agreed upon prior to the federal Budget in Q1 and only announced in Q2. Nevertheless, it appears that the battalions of Cassandras were quite simply wrong.
Key Observations
I. Ontario's share surpasses 50% for the first time since 2017
Companies from Ontario attracted $2.10 billion (54%), and, for the first time since 2017, accounting for more than half of the total disbursements.
II. Toronto VC Investments greater than those of all other cities combined
Toronto VC investments dwarfed those of any other city across the country by a country mile, thus cementing Toronto's leadership in the financial services overall and in VC in particular.
III. US Investment Funds, Corporate VCs and Private VCs – top three backers
The top three investors were all from the United States. Together they invested $1.96 billion or 51% of the total disbursements. US investors including US Private Investors and US family offices collectively invested $2.15 billion, accounting for 55% of the total amount.
IV. Fundraising
22 private VC funds raised $1.58 billion in the first half of 2024, almost unchanged from $1.59 billion and $1.57 billion for the same period in 2022 and 2023 respectively, but up significantly from $613 million for first half of 2023.
Canadian governments continue to the backbone of many of these funds. Without them, most of them will not be able to close. A life science fund in Montreal and an IoT fund in Toronto could literally be classified as "government" funds as more than half of the committed capital came from federal and provincial governments, not counting quasi-government funding.
V. Canadian governments out-invests Canadian private VCs
Canadian governments invested $458 million more than the $324 million invested by Canadian private VCs. The outpacing of government investments over Canadian private VCs has been the case since 2023.
"The data point to the ongoing small investment market share of private Canadian VCs which has fluctuated between 7 and 10% since 2021. The market penetration by the Canadian private VC fund segment would likely be even smaller without the huge contribution of federal and provincial government backing of most recent funds. To all intents and purposes the private VC fund industry in Canada could be regarded as a quasi-government entity in all but name. This begs the question of how much longer Ottawa, and its provincial counterparts will continue to provide this support in the forthcoming era of government retrenchment and re-prioritization that is now on the near-term horizon," commented Richard Rémillard, President of Rémillard Consulting Group (RCG).
"The data starkly reveal the dominant position of Toronto as the pre-eminent venture capital investment destination in the Canadian landscape. Just as Silicon Valley venture capital has dominated the US scene, so too the increasing concentration of venture capital investing activity in Toronto appears to have reached the critical mass required to be self-sustaining and self-reinforcing thereby heralding a new development in the Canadian venture capital ecosystem. Toronto's emergence as the pre-eminent locus of Canadian venture capital investing, unlike Silicon Valley, has been facilitated by the city's leading role in financial services in everything from banking to insurance, pension funds and mutual funds. Toronto's market share of venture capital investment is likely to increase over time, despite the efforts of governments to ensure a more evenly-distributed investment scene. This new situation will possibly compel governments to re-evaluate the policy and program tools currently employed to attract venture capital investment beyond Toronto," added Rémillard.
2024 H1 Highlights
Top 10 municipal cities
Companies from 52 Canadian municipal cities attracted capital in the first half of 2024.
Led by Toronto, the top 10 cities collectively raised $3.58 million, accounting for 92% of the total amount raised by all Canadian companies.
Municipal City | Province | # Financings | $ Millions |
Toronto | Ontario | 112 | 1,890 |
Calgary | Alberta | 37 | 455 |
Montreal | Quebec | 31 | 440 |
Vancouver | British Columbia | 45 | 247 |
Quebec City | Quebec | 11 | 197 |
Burnaby | British Columbia | 1 | 141 |
Ottawa | Ontario | 10 | 76 |
Richmond | British Columbia | 3 | 68 |
Waterloo | Ontario | 10 | 33 |
Surrey | British Columbia | 2 | 30 |
TOTAL | 262 | 3,578 |
Top 10 foreign funding sources
Investors from the top 10 foreign countries together invested $2.55 billion, accounting for 66% of total amount raised by Canadian companies.
Country | # Financings | $ Millions |
United States (USA) | 156 | 2,145 |
China | 6 | 69 |
Japan | 5 | 68 |
Sweden | 3 | 55 |
Netherlands | 6 | 54 |
France | 8 | 36 |
Switzerland | 9 | 35 |
United Kingdom (UK) | 7 | 31 |
Austria | 2 | 29 |
Germany | 6 | 28 |
TOTAL | 2,552 |
Top 10 Investor types
29 individual types of investors backed Canadian companies. Top 10 types of investors invested a combined $3.5 billion, accounting of 91% of the total disbursements.
Investor Type | # Financings | $ Millions |
Mutual/Hedge Fund - US | 8 | 828 |
Corporate - US | 27 | 628 |
Private VC - US | 64 | 506 |
Government - CDN | 69 | 458 |
Private VC - CDN | 68 | 324 |
Corporate - Foreign | 28 | 323 |
Private Investors - CDN | 150 | 127 |
Private VC - Foreign | 15 | 126 |
Family Office - CDN | 63 | 102 |
Private Investors - US | 72 | 87 |
Top 10 VC law firms
37 law firms participate in Canadian VC financings. Top 10 law firms are ranked as following, as reported by law firms in their regulatory filings or direct reporting to CPE Analytics.
Law Firm | Rank | # Financings | $ Millions |
Fasken Martineau DuMoulin LLP | 1 | 34 | 302 |
Osler, Hoskin & Harcourt LLP | 2 | 32 | 943 |
Mintz LLP | 3 | 15 | 224 |
LaBarge Weinstein LLP | 4 | 14 | 165 |
Blake, Cassels & Graydon LLP | 5 | 9 | 350 |
McCarthy Tétrault LLP | 6 | 8 | 84 |
Borden Ladner Gervais LLP | 7 | 8 | 4 |
Harper Grey LLP | 8 | 8 | 2 |
Dentons Canada LLP | 9 | 7 | 14 |
Koffman Kalef LLP | 10 | 6 | 1 |
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/
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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. |
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]
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