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Venture capital financing regains its pulse

Startup hedge funds, private equity funds and venture capital funds in Canada are struggling to raise money.

MARK BLINCH/Mark Blinch/Reuters

Financing levels for Canada's venture capital market are still far off their highs from a decade ago, but there is reason to be optimistic because the industry appears to have a pulse.

The latest fundraising statistics, released by Canada's Venture Capital and Private Equity Association, aren't exactly breathtaking, but they do exhibit some momentum. For a market that was so recently as devastated as venture capital, any momentum is a good thing.

Last year, 444 Canadian startups raised $1.5-billion, up from the $1.1-billion raised in 2010. That averages to about $3.4-million per firm, which shows some improvement, but is still off the highs.

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For a dose of reality, keep in mind that at the height of the tech bubble in 2000, $5.9-billion was invested in 1007 Canadian startups, according to Thomson Reuters.

Quebec dominated the venture cap league tables last year, with Enerkem Technologies taking the top prize for its $59-million financing. (It's worth noting that Enerkem has since launched an IPO and is in the process of marketing it.) Enobia Pharma's $38-million deal, also in Quebec, was the second largest, and online retailer Beyond the Rack's $36-million financing came in third.

While Canada's market has yet to fully take off, startups can take comfort in knowing that we're currently tracking the typically robust U.S. venture capital market, which means the recovery isn't happening any faster south of the border. However, as always, even if you multiplied our 2011 VC fundraising levels by 10, to account for the difference between populations, Canadian startups still only raise about half of what U.S. startups raked in.

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About the Author
Reporter and Streetwise columnist

Tim Kiladze is a business reporter with The Globe and Mail. Before crossing over to journalism, he worked in equity capital markets at National Bank Financial and in fixed-income sales and trading at RBC Dominion Securities. Tim graduated from Columbia University's Graduate School of Journalism and also earned a Bachelor in Commerce in finance from McGill University. More

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