VC Invested in Canada Hits $1.5B in 2012, Fund-Raising Up Sharply


Canada’s venture capital (VC) market steered a steady course in 2012, with levels of dollars invested matching activity in 2011, according to Thomson Reuters (publisher of peHUB Canada). VC invested totaled C$1.5 billion, and involved 395 clean-tech, IT, life sciences and other companies, which is up slightly from the year before. Fund-raising activity grew more substantially, with new capital commitments reaching their highest level in a decade. A total of C$1.8 billion was committed to 33 Canadian VC funds in 2012, up 73% from 2011, and surpassing activity in every year since 2002.

OVERVIEW

Canada’s Venture Capital Market in 2012

Venture capital (VC)  investment activity in Canada steered a steady course in 2012, matching levels of dollars invested in 2011, and showing moderate year-over-year expansion in the number of innovative company financings. The Canadian market also saw significant growth in VC fund-raising activity in 2012.

VC invested across Canada totaled $1.5 billion last year which, according to Thomson Reuters’ data, is the same amount that was
invested in 2011. Dollar flows in both 2012 and 2011 are the highest recorded since 2007, the most active year of the previous VC
market cycle. Year-end results were supported by a total of $321 million invested in Q4 2012, though this activity was down 15% on
a year-over-year basis.

The number of Canadian innovative companies which secured VC financing totaled 395 in 2012, up slightly from 393 companies financed the year before. VC-backed firms reported between October and December totaled 120, which is 6% below the number of firms reported during the same period in 2011.

VC deal capitalization levels in 2012 largely approximated those of 2011. Amounts invested per Canadian firm averaged $3.7 million last
year, compared to $3.8 million in 2011. Average company financing sizes in both years were moderately higher than in 2010, 2009 and 2008. In 2012, deal sizes benefited from an array of major financings, including the $80 million financing of Kitchener’s Desire2Learn Inc., the $50 million financing of Calgary’s Engineered Power Inc., the $35 million financing of Vancouver’s D-Wave Systems Inc., and the $35 million financing of Montréal’s Thrasos Innovation Inc.

These market trends had no effective impact on the on-going deal capitalization gap between Canada and the United States. Last year,
Canadian innovative firms captured only 44% of the VC invested in American innovative firms, a share that is unchanged from 2011 and 2010. Canadian VC funds were somewhat less active in international deal-making in 2012, investing a total of $201 million abroad, which is 16% below their activity the year before. Canadian investors backed a total of 63 companies based in the United States and other countries last year, which is also down from 2011.

Canadian VC funds were somewhat less active in international deal-making in 2012, investing a total of $201 million abroad, which is 16% below their activity the year before. Canadian investors backed a total of 63 companies based in the United States and other countries last year, which is also down from 2011.

Source: Thomson Reuters Canada, the official source of statistics for Canada’s Venture Capital and Private Equity Association.

To read the entire Canadian venture capital report, you can visit Thomson Reuters’ website.

 Photo courtesy of Shutterstock.

 

 

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