Record-high venture capital funding and deals in Canada in Q1’18 according to the MoneyTree Canada Report

  • AI companies riding even higher as waves of investment continue to grow
  • Internet quarterly funding up 155% and healthcare funding up 66%
  • Toronto funding increased by 165%, with a 73% increase in deals

 

TORONTO, April 25, 2018 – Reaching a six-year quarterly high, investment funding (all figures in USD) and number of deals to venture-backed Canadian companies increased significantly during the first quarter of 2018, according to the MoneyTree™ Report from PwC Canada and CB Insights. More than $1B, was invested across 105 deals. This represents a 52% increase in investments from the previous quarter and a 30% increase in the number of deals.

“With a record $1 billion in VC financing, Q1 sets a high bar and shows that 2018 is off to a great start. Canada continues  to be an innovative and attractive market when it comes to financing and it is set to continue,” said Chris Dulny, National Technology Industry Leader, PwC Canada.

“Investment in Canadian companies reached record highs this quarter, in both deals and dollars. Unlike financing to venture-backed companies in the US market, private investment increased in Canada,” stated Anand Sanwal, co-founder and CEO of CB Insights. “Canadian AI and digital health companies keep drawing attention as they received significant investment, helping contribute to this record quarter. It’ll be interesting to see if this quarter’s momentum in those noteworthy sectors continues.”

Total quarterly investments to Canadian AI companies increased 88% to $83M across 8 deals in Q1 ‘18. The majority of the deals are in the seed and early stages and compared to previous quarters, they are attracting larger investments.

Digital health companies also witnessed an upward trend as deal activity and funding increased to $22M across 6 deals, up from just one deal in Q4’17.  The types of projects that receive funding are split evenly between B2B and B2C all of which provide access to health information more efficiently.

Canadian Internet companies experienced the largest increase with 155% increase in funding to $355M across 41 deals, a 52% increase from the previous quarter, representing a return to a historical range recorded in Q2’17 and Q3’17. The report shows a notable increase in consumer retail, with 11 deals further delivering on the promise of omnichannel retail.

Funding to Canadian healthcare companies increased 66% with a total of $126M invested, while deals to the sector declined to 10 deals for the second straight quarter, down one from Q4’17.

Despite a successful Q4’17, investments to Fintech companies declined by 60%  from the previous quarter as only $88M was invested across 8 deals in Q1’18. Funding to Canadian Mobile & Telecom companies declined by 66% with $70M invested across 12 deals.

 

Key highlights for Q1’18:

  • Corporate participation declined, with 28% of all deals to Canadian companies featuring at least one participation by corporate venture capital investor compared to 30% in Q4’17.
  • Seed-stage activity remained flat as a percentage of overall deal activity, accounting for 28% of deals for the second quarter.  Early stage deal share increased 25% this quarter, up from 19% in Q4’17.
  • In terms of regional activity, Toronto saw a 165% increase in funding and 73% increase in deal activity as $321M was invested across 38 deals. Deal activity in Vancouver hit an eight-quarter high as total quarterly funding declined 31% compared to Q4’17. Montreal was up 96% in investments despite two fewer deals in Q1’18 as $399M was invested across 16 deals. Ottawa’s total quarterly funding increased to $14M as 5 deals were completed, up from three in Q4’17. Waterloo deal activity remained low, while funding increased 68%.
  • Most active investors included BDC, MaRS, iNovia Capital and Fonds de Solidarite FTQ.

The MoneyTree Report can be accessed here.

 

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