[August 23, 2018]

CVCA H1 2018 VC Canadian Market Overview: Third $1B Quarter In Last Twelve Months Propels VC Momentum

Venture capital investment in Canada continued its five-year upward trajectory in the first half of 2018 showing no signs of slowing for the remainder of the year. Almost $1B was invested over 166 deals in Q2, bringing the year-to-date (YTD) total VC investment to $1.7B-7% higher than H1 2017. Q2 2018 is the third time since January 2017 where VC investment in Canada has surmounted $1B.

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"Innovation in Canada is enjoying the best venture capital investment climate in well over a decade," says Mike Woollatt, Chief Executive Officer, Canadian Venture Capital and Private Equity Association. "We're consistently observing an increase in size and volume of deals at all stages; plus, a welcome resurgence in exits. We're bracing for 2018 to be another record year."

There were 16 exits so far in 2018 continuing the rebound from last year. These included the $141M corporate acquisition by Eli Lilly of AurKa Pharma, a TVM Life Sciences Management portfolio company and the $100M transaction in Coveo Solutions Incorporated by a U.S.-based private equity firm.

Keeping pace with the last two years, there were seven mega deals ($50M+) in the first half of 2018, totalling almost a half a billion dollars. Of the seven, Toronto-based Ritual raised $90M in a series C round led by Georgian Partners. Toronto-based ecobee Inc received $80M in series C financing which included participation from Relay Ventures. Ecobee Inc also received a $47M follow-on investment from BDC Capital and Caisse de dépôt et placement du Québec. Toronto-based TouchBistro Inc. raised $72M in a series D round from a syndicate led by OMERS Ventures and included participation from BDC IT Venture Fund and Relay Ventures.

ICT companies continue to receive the majority (64%) of total VC dollars invested in the first half of 2018 ($1.1B over 189 deals) with life sciences ($204M over 48 deals) and cleantech ($192M over 28 deals) companies receiving an equal 12% share.

Canada Venture Capital Highlights

• Almost $1B was invested over 166 deals in the second quarter this year, bringing the YTD total VC investment to $1.7B which is 7% higher than the first half of last year. This is the third quarter since the beginning of 2017 where VC investment has surmounted $1B. The five-year upward trend shows no signs of slowing for the remainder of 2018.
• The average deal size was $6M, a 28% increase from the previous quarter and 13% higher than the average deal size in the five-year period between 2013-2017 ($5.3M (News - Alert)).
• The top 10 disclosed deals in H1 amounted to $624M, capturing a 38% share of total dollars invested-the largest share since 2013 where they accounted for 34% of total dollars invested.
• The flotilla of $50M+ mega deals continued the same pace as the previous two years: seven deals totalling almost $0.5B and included:
  • Toronto-based Ritual secured a $90M series C round led by Georgian Partners Inc.
  • Toronto-based ecobee Inc. closed its series C financing: an $80M round from an investor syndicate that included Relay Ventures and a follow on $47M investment from BDC Capital (News - Alert) and Caisse de dépôt et placement du Québec (CDPQ).
  • Toronto-based TouchBistro Inc. raised a $72M series D round from a syndicate led by OMERS Ventures Management Inc. which included BDC IT Venture Fund and Relay Ventures.
• Deals between $1M-$5M captured 14% of total dollars invested, representing a 4% point gain from its share last year.
• Ontario-based companies received 55% of investment ($907M), up from their 39% share last year; Quebec-based companies received 19% ($319M) followed closely by BC-based companies with a 17% ($276M) share.
• Toronto-based companies received almost half ($793M over 89 deals) of total dollars disbursed, with Vancouver-based companies receiving a 16% ($264M over 38 deals) and Montreal-based companies a 15% share ($254M over 64 deals).
• ICT companies grabbed the lion's share (64%) of total dollars invested in H1 2018 ($1.1B over 189 deals) with life sciences and cleantech companies receiving an equal 12% share ($204M over 48 deals and $192M over 28 deals respectively).
• There was a marked increase toward later-stage companies which received 54% ($901M) of total dollars compared to its 41% from last year; early stage companies received 37% ($612M) of investment, down from its 52% share in 2017.
• The market for exits continued the rebound from last year with 16 exits which included:
  • the $141M corporate acquisition of TVM Life Science Management portfolio company AurKa Pharma by Eli Lilly
  • the $100M transaction in Coveo (News - Alert) Solutions Inc. from a US private equity firm

Digital Resources:

H1 2018 VC & PE Canadian Market Overview

About the CVCA

The CVCA is the voice of Canada's venture capital and private equity industry. We are focused on improving the private capital ecosystem by broadening industry awareness and providing market research, networking, and professional development opportunities. We also advocate on behalf of the industry to ensure sound public policy that encourages a favourable investment environment. The CVCA works alongside its members, who represent the vast majority of private capital firms in Canada, to improve the industry and drive innovation and growth. Please visit: http://www.cvca.ca.

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