Canadian VC funding maintains strong volumes and activity in the first half of 2018, according to MoneyTree™ Canada Report

• Deals and funding to Canadian artificial intelligence (AI) companies reached an all-time high

• Canadian mobile & telecom companies saw a 167% increase in funding

• Toronto leads in deal volume and funding for Canadian VC-backed companies

• Calgary and Québec City saw significant increases in both funding and deals

TORONTO, July 26, 2018 – The number of deals to Canadian venture-backed companies increased in the second quarter of 2018, according to the MoneyTree™ Report from PwC Canada and CB Insights. The increase occurred despite a marginal decline in investment dollars compared to the previous quarter. This past quarter, Canadian venture-backed companies closed 116 deals, up from 112 in Q1. Meanwhile, total venture capital funding (all figures in USD) totaled $900M in Q2’18, a 7% decline in investment from last quarter.

“From coast to coast, we have seen strong venture capital activity in the first half of 2018. A recent rebound in seed-stage deal activity and a lift in later-stage deals show broad levels of investment support across all stages of funding,” said Michael Dingle, National Deals Technology Leader, PwC Canada.

"Canadian AI companies saw record highs in funding and deals this past quarter, as that sector attracts increasing investor interest," stated Anand Sanwal, co-founder and CEO of CB Insights. "With funding to AI companies jumping 104% in Q2'18, the sector is on pace for a record funding year."

Funding and deal activity for Québec City and Calgary increased dramatically in Q2’18. Québec City-based companies raised $147M over 5 deals in Q2’18, a significant increase from just one $8M deal in Q1. This funding increase was driven by Coveo’s $100M round– the largest Q2’18 Canadian deal, and La Maison Simons’ $34M round.

Calgary-based companies raised $99M over eight deals in Q2’18, compared to $900,000 across three deals in the previous quarter. Calgary’s massive increase in Q2 funding was driven by Greengate Power’s $78M round–the second largest Q2’18 Canadian deal, and Circle Cardiovascular Imaging’s $12M round.   

Toronto continues to lead in deals for Canadian VC-backed companies. It was also the top market for funding in Q2’18 with $290M invested across 33 deals despite a 11% decline from last quarter.

Deal activity in Vancouver hit an eight-quarter high with 28 deals. Total funding for Vancouver companies also jumped 21%, with $126M invested in Q2’18.

Montréal saw 16 deals (compared to 17 last quarter) and experienced a 74% decline in funding (from $389M to $103M), returning to its historical range, following an active Q1’18.

Key highlights for Q2’18:

• Seed-stage deal share increased to 32% of deal activity in Q2’18, after declining for three straight quarters.

• Total quarterly deals and investment in Canadian Artificial Intelligence companies reached an all-time high in Q2’18. Funding increased 104% with $169M invested across 13 deals.

• Mobile & telecom companies saw the biggest funding increase at 167% as $186M was invested across 13 deals. This jump in funding was driven by large rounds to Ritual Technologies ($70M) and TouchBistro ($54M).

• Despite a strong quarter, funding to Canadian fintech companies was down for a second straight quarter, declining by 10% to $79M in Q2’18. However, deal activity increased to 13 deals, up from 8 deals in Q1’18.

• Early-stage, expansion-stage, and later-stage deal shares all declined with early-stage deal shares falling the most to 19%, down from 26% in Q1’18.

• The most active investors in Canadian companies were BDC, Real Ventures, Export Development Canada, and 500 Startups.
  

The MoneyTree Report can be found here.

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