Canadian venture-backed companies draw record funds in 2018

A report says that Toronto and Vancouver were the top markets in deal activity

Mario ToneguzziCanadian venture-backed companies raised a record US$3.5 billion in 471 deals in 2018, according to the MoneyTree Canada report from PwC and CB Insights.

The report said the year closed out strongly with a 79 per cent jump in funding to $983 million in the fourth quarter, up from $548 million in the previous quarter. Activity also increased to 116 deals, up from 96.

“2018 was another year of record highs for Canadian venture-backed companies. While deal count has risen across all stages of funding, the increase in total investment was mostly driven by larger cheque sizes in expansion and later-stage deals. Notable is the 26 per cent increase in average deal size of expansion-stage deals year over year, which is an indicator of scale in the sector,” said Michael Dingle, National Technology Sector Leader, PwC Canada, in a statement.

The report found that Toronto and Vancouver were the top markets in deal activity and also saw 47 per cent and 14 per cent funding increases respectively compared to 2017. Toronto funding increased for the fifth consecutive year to $1.3 billion and deal activity also increased, from 136 in 2017 to 160 in 2018.

The report said Montreal also saw funding and deal increases for the third consecutive year as Montreal-based companies raised $861 million in 2018, up from $669 million in 2017. Québec City funding and deals jumped with $427 million across 30 transactions in 2018, up from $184 million across 11 transactions in 2017. Calgary funding reached a six-year annual high as $126 million was invested across 20 deals in 2018.

“The Canadian startup ecosystem is doing well as funding and deals hit record highs this past year,” said Anand Sanwal, co-founder and CEO of CB Insights. “Sectors of strength include artificial intelligence, fintech, and digital health that all hit record funding highs in 2018. Investment and deals also increasingly flowed to top markets – Toronto, Vancouver, Montreal, Québec City and Calgary. Corporate investors will likely participate in more deals this coming year as investors recognize the growing market opportunity within Canada.”

Other key highlights from the report include:

  • Canadian AI funding increased for the second consecutive year, as AI companies raised $418 million in 2018, a 51 per cent jump compared to 2017; annual deal count rose for the fifth consecutive year to 43 transactions;
  • comparing sectors by annual deal totals, internet companies raised the highest number of deals at 169 in 2018, up from 146 deals in 2017; Canadian internet companies also saw a 77 per cent funding increase compared to the previous year with $1.3 billion invested;
  • annual Canadian financial technology funding and deal totals rose slightly in 2018, to $456 million across 47 deals compared $441 million across 42 deals in 2017;
  • annual funding and deals for Canadian VC-backed digital health companies saw record highs, as $177 million was invested across 30 deals in 2018;
  • the largest deals in 2018 include Montreal-based Enerkem ($224 million), Québec City-based Ocean Group ($112 million), Québec City-based Coveo ($100 million), Montreal-based Hopper ($100 million) and Ottawa-based Assent Compliance ($100 million);
  • the most active investors in Canadian companies were BDC, Real Ventures, Anges Québec, iNovia Capital and Panache Ventures.

– Mario Toneguzzi for Calgary’s Business


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