Despite a global slowdown in venture-capital investing in 2016, the Canadian startup scene had its best year since the heart of the dot-com boom.
New figures from Thomson Reuters show 459 Canadian companies raised a combined $3.7-billion in venture financing last year. That amounted to a 15-year high in dollars raised and a 36-per-cent increase over the previous year, "a year-over-year leap not seen since the year 2000," the information company said.
But with no IPOs in Canada, the tech scene had its quietest year for "exits" since 1998, with only 35 transactions.
The number of companies receiving financing actually fell by 7 per cent by the previous year, but the financing landscape was marked by a surge in the number of sizable deals – 14 exceeding $50-million in size, ahead of the record 12 at that level in 2000. There were four deals exceeding $100-million in value, compared with prior years where that level was rarely breached.
But while average VC deal rounds increased to $6.5-million, that lagged well behind averages in the U.S. ($16.7-million), U.K. ($13.9-million) and Israel ($14.4-million).
Meanwhile, Canadian investors were active abroad, with VC investing in non-Canadian companies reaching levels unseen since 2008, led by Ontario Teachers' Pension Plan's investment in a $277-million funding deal for online shopping firm Jasper Infotech of India.
Venture capitalists are hoping the federal government renews a popular program this year that saw Ottawa inject $400-million into the risk-capital funding sector, drawing an additional $900-million in private capital. That helped spur on the best year for fundraising by VC firms since 2002, as 26 Canadian VC funds raised $2.2-billion in 2016, up 81 per cent over 2015. Data shows returns by Canadian VCs have climbed into positive territory in the past three years but still lag well behind those in the U.S.
Some were dismayed earlier this week when Finance Minister Bill Morneau's council of economic advisers didn't call for such a move, instead calling for the creation of a private-sector-led and financed "growth fund" as well as a government-seeded program to provide matching loans to startups that raise capital from private capital investors.
Thomson Reuters data shows that governments and affiliated agencies were among the biggest backers of VC deals, led by the Business Development Bank of Canada.