Canadian VC funding sees strong growth in digital health and fintech, according to MoneyTree™ Canada Report

• Canadian funding in Q3’18 dropped by 42% to $541M
• Early-stage deals increased to 30%, up from 20% in Q2
• Corporate participation in deal activity increased for the third consecutive quarter
• Toronto and Vancouver continued to drive the highest number of deals

TORONTO, October 25, 2018 – Funding to Canadian venture-backed digital health and fintech companies increased in the third quarter of 2018 according to the MoneyTree™ Report from PwC Canada and CB Insights. This past quarter, Canadian venture-backed companies closed 87 deals, down from 127 in Q2. Meanwhile, total venture capital funding (all figures in USD) totaled $541M in Q3’18, a 42% decline in investment from last quarter.

“The first half of 2018 saw a new high in venture capital investment in Canada, and yet we have seen a marked decrease in deal activity in the third quarter. While a decrease does not come as a surprise, we will be sure to keep a close eye on investment trends for the following quarters as the tech sector in particular seeks to maintain funding levels,” said Michael Dingle, National Deals Technology Leader, PwC Canada.

"While overall funding and deal activity among Canadian startups fell this quarter, there were bright spots like digital health and fintech," stated Anand Sanwal, co-founder and CEO of CB Insights. "The digital health sector saw a 168% spike in funding -- the third-straight quarterly increase in this industry and well above the funding range in recent years."

While Vancouver and Toronto remained the top markets in deal activity, funding and deal activity for these cities decreased slightly in Q3’18 to $104M across 21 deals and $248M across 30 deals, respectively. Montréal also saw a slight decline, falling to $95M over 16 deals during Q3’18, compared to $105 over 17 deals in Q2’18.

Québec City experienced a significant decline in funding (from $147M to $14M), returning to its historical range, following a massive Q2’18. Fredericton saw three deals this past quarter, well above the historical range for the city.

Key highlights for Q3’18:

• Early-stage rounds increased to 30% of all Canadian deals, while seed stage deals declined to 25% of all deals
• Corporate investment in Canadian startups has been rising steadily in recent quarters, and it increased to 39% of all deals in Q3’18
• Comparing deal share by sector, Canadian Internet companies saw deal share jump to 42% in Q3’18, up from 33% in Q2’18. Healthcare companies saw deal share increase for the second quarter in a row, rising to 13% of all deals
• Investment in Canadian Digital Health companies jumped 170% to $83M, the third-straight quarterly increase
• Funding to Canadian fintech companies increased to $115M, up from $79M in Q2’18
• Following a record Q2, funding to Canadian AI companies fell to $106M over 9 deals in Q3’18
• The largest deals in Q3’18 include Kira ($50M), LEAGUE ($47.2M), and Nuna Logistics ($42.5M)
• The most active investors in Canadian companies were BDC, Anges, Panache Ventures, Real Ventures, and iNovia Capital

The MoneyTree Report can be found here.

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