Canadian VC sees biggest Q1 since dot-com era as top deals nab $927 mln

Canada, venture capital
Photo courtesy of suwichaw/iStock/Getty Images

Canada’s venture capital market has started the year with a bang.

The market’s top 10 first-quarter VC financings drew a substantial $927 million from investors. That’s up 40 percent from the $661 million raised by the top 10 deals a year earlier and close to twice the $491 million raised by the top 10 deals in Q1 2016.

The estimate is based on PE Hub Canada’s list of the largest rounds announced from January through March, supplemented by Thomson Reuters data. It suggests that last year’s historic deal sizes, backed by a growing number of local and cross-border funds, continue to influence market activity.

A clear illustration is seen in the period’s top financing, the $280 million invested in Enerkem. The round is not only the biggest recorded for a Canadian cleantech company, it is also one of the largest raised regardless of sector.

Preliminary data from Thomson Reuters also point to a robust beginning to 2018 dealmaking.

The preliminary data show $1.3 billion of VC invested in Canadian technology sectors in the first quarter, up 18 percent from the $1.1 billion invested a year earlier. If the former statistic holds in Thomson Reuters’ final data cut, Q1 2018 will be the most active quarter in dollar terms since the dot-com era.

And if this trend is sustained, we may be heading into a seventh straight year of growth in Canada’s market. VC invested reached $4 billion in 2017, up 12 percent from 2016 and marking a 16-year high.

1) Enerkem (Montréal)

Enerkem, a producer of biofuels and renewable chemicals from waste, raised $280 million, bringing total funding to $600 million-plus. The round was backed BlackRock, Braemar Energy Ventures, Cycle Capital, Fondaction CSN, Fonds de solidarité FTQ, IQ, National Bank, Rho Capital Partners, Sinobioway, Waste Management and Westly Group.

2) PointClickCare Technologies (Toronto)

Dragoneer Investment Group invested about $186 million (US$146 million) in PointClickCare Technologies, a cloud software platform for the post-acute-care market. Dragoneer acquired shares from other existing investors, increasing its stake to more than 20 percent. The company is also backed by JMI Equity.

3) Ecobee (Toronto)

Smart Wi-Fi thermostat maker Ecobee secured $80 million (US$61 million) in a Series C financing. Energy Impact Partners led and was joined by Amazon Alexa Fund, EDC, GXP, Northleaf Capital Partners, Ontario Capital Growth Corp, Relay Ventures, Tech Capital and Thomvest. As a result, Ecobee has raised nearly $188 million to date.

4) Wealthsimple (Toronto)

Wealthsimple landed an additional $65 million in funding from Power Financial, its majority shareholder. The deal brought Power’s total investment to $165 million. Wealthsimple, a digital investment manager, is also backed by Impression Ventures.

5) Wattpad (Toronto)

Wattpad, a multiplatform entertainment company for original stories, took in more than $61 million (US$51 million) in follow-on financing. Tencent Holdings, BDC Capital, Kickstart Ventures, Peterson Group and Raine were among the investors. Wattpad’s other backers include OMERS Ventures, Union Square Ventures and Version One Ventures.

6) Igloo Software (Kitchener, Ontario)

Igloo Software secured about $60 million (US$47 million) in funding from Frontier Capital, a new investor. Igloo, a provider of digital workplace solutions for employee engagement, saw its longstanding backer Information Venture Partners exit the company as a result of the deal.

7) Tilray (Nanaimo, British Columbia)

Like Igloo, medical-cannabis cultivator and processor Tilray pulled in $60 million in a Series A financing. The round’s first-time institutional investors were not identified. The company has been owned and capitalized since its founding in 2014 by Privateer Holdings.

8) BuildDirect (Vancouver)

BuildDirect, a home-improvement tech company, raised about $55 million (US$43 million). About $36 million of the total is new, with the rest converted from interim funding obtained during BuildDirect’s creditor protection. Mohr Davidow Ventures led and was joined by Fidelity Investments Canada, Pelecanus Investments, Lyra Growth Partners and Beedie Capital.

9) Rubikloud Technologies (Toronto)

Rubikloud Technologies, a provider of intelligent decision automation to the retail sector, garnered more than $46 million (US$37 million) in a Series B financing. Intel Capital led and was joined by new and existing investors Access Industries, Horizon Ventures, iNovia Capital and OpenText Enterprise Apps Fund.

10) Profound Medical (Toronto)

The listed Profound Medical closed a bought deal financing of more than $34 million that included a commitment from Genesys Capital, the company’s founding investor. Profound, a maker of medical devices for treating prostate cancer and other diseases, is also backed by BDC Capital.

Note: In another major, non-equity deal done in Q1 2018, Vancouver social media management platform Hootsuite raised up to $65 million (US$50 million) via a credit financing agreement with CIBC Innovation Banking.

Photo courtesy of suwichaw/iStock/Getty Images

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