Venture capital funding in Canada reaches an all time high according to the MoneyTree Canada Report

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Fintech and Artificial Intelligence remain bright spot for the market

  • 2017 was another record-breaking year for VC funding in Canada as average deal size increased
  • Fintech and Artificial Intelligence saw healthy funding levels
  • Financing activity in Montréal was up 64% increase from 2016
  • Corporate participation levels jumped up compared to 2016

 

TORONTO, January 24, 2018 – Investment funding (all figures in USD) to venture-backed companies based in Canada increased in 2017 but deal activity declined, according to the MoneyTree™ Report from PwC Canada and CB Insights. Investors deployed $2.7B across 333 deals in 2017. Total and average funding increased 7% and 31% respectively, while deal activity decreased by 12%.

“2017 was another record year. Investment in Canada's technology sector surpassed itself once again with a total of $2.7B. Average deal size increased from $8.3M to $10.9M – a rise of 31% from 2016 – clearly shows consistent and sustained growth. With a deep talent pool and a growing technology sector, Canada is just getting started when it comes to attracting capital,” said Chris Dulny, National Technology Industry Leader, PwC Canada.

Q4’17 saw softer investment but was second-largest quarter for funding in 2017. A total of $757M was distributed across 76 deals in the fourth quarter, a 14% decline in funding from the previous quarter, while 22 fewer deals were recorded in Q4’17.

Sector-wise, Internet financing declined as $753M was invested across 132 deals, down from 166 deals in 2016. Canadian Mobile companies saw eight less deals in 2017, whereas funding increased by 66% for a total $434M. Healthcare companies saw six more deals in 2017, while funding declined 24%.

Regionally, Montréal had $800M invested across 63 deals, a 64% increase from 2016. Financing activity in the Toronto market declined with 11 fewer deals completed and 22% less funding invested.  In Vancouver funding increased 4% despite seeing 10 fewer deals.

“Like venture globally, venture funding into Canada reached highs while there was a decline in deal activity,” stated Anand Sanwal, co-founder and CEO of CB Insights. “One bright spot for the market has been funding to Canadian AI and Fintech companies. It is worth keeping an eye on these sectors going forward as market leaders in these areas have the potential to draw more significant venture funding in the coming years.”

PwC Canada will be hosting a national launch event for the annual report in Montréal on Thursday, February 1.

 

Key highlights:

  • Corporate participation increased compared to 2016. Participation by corporations and corporate venture arms increased in 2017, as 28% of all deals to Canadian companies featured at least one corporate or corporate venture capital investor in 2017, up from 16% in 2016.
  • Seed-stage investment receded in the second half of 2017 from its high in Q2’17. Early-stage investment fluctuated throughout the year, declining eight percentage points in Q4’17 to 20%.
  • Canadian AI and Fintech are bright spots for the market. Funding to Canadian AI companies surpassed 2016 full-year totals by a wide margin, as $252M was invested across 31 deals. Total annual funding to Canadian Fintech companies increased to $456M, up from $450M in 2016. Deal activity to Fintech declined from 43 deals in 2016, to 37 in full-year 2017.
  • Internet and Mobile deals decreased. Healthcare deals were up but experienced lower funding. Internet financing activity declined in 2017, as $753M was invested across 132 deals, down from 166 deals in 2016. Canadian Mobile companies saw eight fewer deals in 2017, as $434M was invested across 45 deals, a 66% increase in funding. Healthcare companies saw six more deals in 2017, as $432M was invested across 52 deals. Total annual funding declined 24%.

The MoneyTree Report can be accessed here.

 

About PwC Canada

At PwC, our purpose is to build trust in society and solve important problems. More than 6,700 partners and staff in offices across the country are committed to delivering quality in assurance, tax, consulting and deals services. PwC Canada is a member of the PwC network of firms with more than 236,235 people in 158 countries. Find out more by visiting us at www.pwc.com/ca.

© 2017 PricewaterhouseCoopers LLP, an Ontario limited liability partnership. All rights reserved.

PwC refers to the Canadian member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see http://www.pwc.com/structure for further details.

 

About CB Insights

CB Insights is a Pilot Growth and National Science Foundation backed software-as-a-service company that uses data science, machine learning and predictive analytics to help our customers predict what’s next—their next investment, the next market they should attack, the next move of their competitor, their next customer, or the next company they should acquire. The world’s leading global corporations including the likes of Cisco, Salesforce, Castrol and Gartner as well as top-tier VCs including NEA, Upfront Ventures, RRE, and FirstMark Capital rely on CB Insights to make decisions based on data, not decibels.

 

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