Scaling strategies drive $562 mln raised by Canada’s top VC deals in Q2


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Canada’s venture capital market showed no signs of slowing in Q2.

The market’s top 10 second-quarter VC financings raised $562 million from investors. That’s on par with the $561 million drawn by the top 10 deals a year earlier and up 12 percent from the $501 million that went to the top 10 deals in Q2 2016.

The estimate is based on PE Hub Canada’s list of the largest rounds announced from April through June, supplemented by Thomson Reuters data. It suggests that VC investment activity this year is continuing to keep pace with the robust trend lines of 2016-2017.

In fact, preliminary Thomson Reuters data point to growth in dollars flowing to technology sectors in the first half of 2018.

Since January, more than $2.2 billion of VC has been invested in Canadian tech companies, up from $2.1 billion deployed in the year-earlier period.

H1 2018’s strong showing owes in large part to dealmaking between January and March, the most active quarter in dollar terms since the dot.com era.

Another key variable is the high proportion of Series B, C, D and other late-stage rounds, which are pushing up deal sizes.

Many of the second quarter’s biggest financings backed companies in scaling mode, among them Coveo, Ritual, TouchBistro, BreatherEcobee and Elastic Path.

1) Coveo (Québec City)

Coveo, a provider of artificial-intelligence-powered insight engines, raised $100 million in follow-on funding. The round was led by Evergreen Coast Capital, which acquired a 27 percent stake as a result. Coveo’s other backers include BDC Capital, Fonds de solidarité FTQ, Tandem Expansion Fund and Telesystem.

2) Ritual (Toronto)

Workplace food-ordering app Ritual secured more than $90 million (US$70 million) in a Series C financing. Georgian Partners led the round. The other participants were Greylock Partners, Insight Venture Partners and Mistral Venture Partners, all of which invested in last year’s Series B, reportedly valued at about $54 million.

3) TouchBistro (Toronto)

TouchBistro closed a Series D financing of $72 million, bringing its overall funding to $117 million. The Series D was led by OMERS Ventures and JP Morgan Chase. They were joined by Napier Park Financial Partners, Recruit Holdings, BDC Capital and Relay Ventures. TouchBistro is a restaurant point-of-sale software platform.

4) Breather (Montréal)

Breather, a flexible-workspace provider, took $60 million in follow-on financing. The round, which grew total funding to $150 million, was led by Caisse de dépôt et placement du Québec and Temasek and joined by Ascendas-Singbridge. Breather’s other investors include Menlo Ventures, Valar Ventures, RRE Ventures, Slow Ventures and Real Ventures.

5) Flexiti Financial (Toronto)

Flexiti Financial, a point-of-sale financing and payment technology company, received a $50 million investment from Globalive Capital. The deal, which gave Globalive a controlling interest, helped fund Flexiti’s buy of a $250 million private-label credit card portfolio from TD Financing Services.

6) Ecobee (Toronto)

Smart-Wi-Fi-thermostat maker Ecobee landed an additional $47 million for its Series C financing, increasing it to over $127 million. Caisse de dépôt et placement du Québec, AGL Energy and BDC Capital led the investment, which brought Ecobee’s total funding to more than $200 million. Energy Impact Partners led the round’s first tranche.

7) Elastic Path (Vancouver)

Elastic Path raised $43 million in a Series B financing led by Sageview Capital. Existing investors Yaletown Partners and BDC Capital also participated. As a result, Elastic Path, a provider of API-oriented commerce solutions to enterprises, grew its overall funding to more than $63 million.

8) Uberflip (Toronto)

Uberflip, a cloud-based content experience platform for marketers, closed a Series A financing of about $41 million (US$32 million). The round was led by Updata Partners. The company was previously funded by SaaS Capital and several angel investors.

9) Canary Medical (Vancouver)

Canary Medical secured more than $33 million (US$26 million) in its first disclosed financing. The global health sciences fund of Quark Venture and GF Securities accounted for US$10 million, with the rest invested by BioScience Managers and Relentless Venture Fund. Canary is a smart-medical-device maker.

10) SoundBite Medical Solutions (Montréal)

SoundBite Medical Solutions, a developer of cardiovascular shockwave technology, collected over $25 million in a Series A financing. The round was backed by new and existing investors, including Fidelity Investments Canada. SoundBite’s pre-Series A backers include Anges Québec.

Note: In another major, non-equity deal done in Q2 2018, Montréal information-technology-modernization specialist Fresche Solutions raised about $77 million (US$60 million) from lenders led by National Bank of Canada.

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