Canadian VC approaches 2016 peak as top Q3 deals draw $572 mln

Venture capital message on white card hold by businessman; Photo courtesy of natasaadzic/iStock/Getty Images

Canada’s top 10 venture-capital financings in the third quarter won $572 million from investors, up 45 percent from the $395 million that went into the top 10 deals a year earlier.

The number is based on PE Hub Canada’s list of the largest deals announced from July through September, supplemented by preliminary data from Thomson Reuters. The list is headed by LeddarTech, which accounted for 2017’s fourth $100 million-plus round, Milestone, Absorb Software and Freshbooks.

Third-quarter data, when combined with the results of Q1 2017 and Q2 2017, suggest Canadian VC investment activity this year is poised to match or exceed the robust levels of 2016.

At the end of September, VC funds invested nearly $3 billion in innovative sectors in Canada, preliminary Thomson Reuters data show. That’s up 17 percent from the $2.6 billion invested in the first nine months of last year. Overall, VC invested hit $3.7 billion in 2016, a 15-year high.

Historically large round sizes are one of the reasons Canada’s venture market continues to show strength in 2017, despite early predictions of a pullback in activity.

Another factor is the growing diversification of deals beyond the IT and life-sciences sectors. LeddarTech, which focuses on Lidar technology for industrial applications, is perhaps illustrative of the trend.

1) LeddarTech (Québec City)

LeddarTech, a maker of laser sensor technology used in self-driving cars, secured almost $130 million (US$101 million) in a Series C financing. Strategic investor Osram led, with participation from Delphi, Magneti Marelli, IDT and Fonds de solidarité FTQ. LeddarTech’s other backers include BDC Capital and Go Capital.

2) Milestone Pharmaceuticals (Montréal)

Clinical-stage cardiovascular company Milestone raised more than $68 million (US$55 million) in a Series C. The round was led by Novo Holdings and joined by new and repeat investors, including Forbion Capital Partners, Tekla Capital Management, Domain Associates, Fonds de solidarité FTQ, BDC Capital, Pappas Capital and GO Capital.

3) Absorb Software (Calgary)

Absorb Software, a developer of learning and performance management software, collected $59 million in funding. The deal, led by Silversmith Capital Partners, marks the company’s first reported institutional investment.

4) FreshBooks (Toronto)

FreshBooks landed $57 million (US$43 million) in a Series B financing, bringing its total funding to close to $100 million. Georgian Partners led and was joined by Accomplice and Oak Investment Partners, all of them existing investors. Freshbooks is a provider of online billing and accounting tools to small businesses.

5) Ritual Technologies (Toronto)

Restaurant ordering app Ritual raised about $54 million (US$43.5 million) in a Series B, according to the Wall Street Journal. Insight Venture Partners was said to be the round’s leader. Ritual’s other backers include Golden Venture Partners, Greylock Partners, Mantella Venture Partners and Mistral Venture Partners.

6) Tulip Retail (Toronto)

Tulip, a mobile platform designed for retail sales associates, obtained about $50 million (US$40 million) of Series B financing. Kleiner Perkins Caufield & Byers, a new investor, led the round and was joined by repeat investors, such as Jump Capital. Tulip is also backed by iNovia Capital and SoftTech VC, among others.

7) Venus Concept (Toronto)

Venus Concept scored more than $48 million (US$38 million) in a follow-on investment. The deal was led by EW Healthcare Partners with participation from HealthQuest Capital and Madryn Asset Management. Venus Concept develops non-invasive devices for the medical aesthetics market.

8) Assent Compliance (Ottawa)

Compliance software and data management solutions provider Assent Compliance closed a $40 million Series B, according to TechCrunch. Greenspring Associates led. It was joined by Volition Capital, OpenText Enterprise Application Fund, BDC Capital, NRC, RBC and other investors that backed the company’s Series A last year.

9) PreciThera (Montréal)

After raising seed funding earlier in 2017, PreciThera secured $36 million in a Series A round. Investors in the most recent financing included Sanderling Ventures, Arix Bioscience, Fonds de solidarité FTQ, CTI Life Sciences and Emerillon Capital. PreciThera designs biological therapeutics to treat orphan bone diseases.

10) Power Survey and Equipment (Montréal)

Power Survey, a maker of power quality systems, won about $30 million (US$24 million) in Series A2 funding. The deal was initiated by majority investor EnerTech Capital and IQ alongside Cycle Capital Management, Fonds de solidarité FTQ and BDC Capital. The company used part of the proceeds to buy Power Standards Lab. 

Photo courtesy of natasaadzic/iStock/Getty Images

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