It wasn't long ago that the big knock against the Canadian venture scene was a lack of later-stage funding for surging tech companies. New data suggest capital-raising beyond the seed stage is less of an issue for Canadian startups than it once was, despite a recent softness in the market for tech initial public offerings.
According to Thomson Reuters, Canadian companies raised $869-million in venture capital (VC) in the first quarter of 2016, up 61 per cent year over year, making it "the best quarter for Canadian capital" since the third quarter of 2001, the firm said. Canadian companies raised $2.7-billion in venture capital last year, according to Thomson Reuters, the best showing in years.
More significantly, the growth was driven by large-capitalization VC deals, as 10 companies each raised $20-million or more, Thomson Reuters said. To put that in perspective, that's twice the level as the same period a year ago and puts Canada on track to have one of the biggest years for big VC financings on record.
The peak year for $20-million-plus financings (not adjusted for inflation) was 2000, the peak year of the Internet bubble, when there were 60 such deals, followed by 2001, when there were 32.
Last year, there were 27 VC deals for $20-million or more, up from 25 in 2014 and just 13 in 2013; the number of similarly-sized deals was in the single digits from 2008 to 2010, inclusive. So far this year, the average equity per deal among these big financings is $49-million, up more than $9-million from the comparable average last year.
Biotherapeutics developer Zymeworks of Vancouver scored the biggest deal of the quarter, raising $87.8-million from BDC Capital, Teralys Capital, Eli Lilly and Co., and others; entertainment device maker Triotech Amusement of Montreal was next, raising $80-million from the two biggest institutional investors in its home province, the Fonds de Solidarité FTQ and the Caisse de dépôt et placement du Québec; and Montreal cryptorcurrency developer Blockstream tapped an international group of VCs including Khosla Ventures and AXA Strategic Ventures for $75.8-million.
The big deals continue to flow this quarter: On Tuesday, Vancouver-based accounting software firm Bench said it raised $20-million in a Series B financing, while on Wednesday, Ottawa-based Assent Compliance – an 11-year-old software firm that helps companies streamline their supply chain management – is set to announce a $20-million growth capital financing, led by Boston-based Volition Capital and backed by Open Text, BDC, Royal Bank of Canada and others.