Toronto outpacing all other
cities
VC investments actually up after the much-criticized federal
budget
All dollar ($) figures in Canadian dollars unless otherwise
noted.
TORONTO, July 22,
2024 /CNW/ - Canadian venture capital (VC) totalled
$3.87 billion* in first half (H1) of
2024, driven by strong second quarter in which $2.47 billion was raised by Canadian
companies.
Q2 2024 VC investments totaled $2.47
billion, up by 76% from the $1.40
billion registered in Q1 2024. The Q2 figure is noteworthy
as it directly counters all the purveyors of doom and gloom who had
been predicting that tech investments in Canada would crater following the April 16 federal Budget's measures with respect
to the treatment of the capital gains inclusion rate. In fact, just
the reverse appears to have occurred. Granted, investments made in
Q2 may have been agreed upon prior to the federal Budget in Q1 and
only announced in Q2. Nevertheless, it appears that the battalions
of Cassandras were quite simply wrong.
Key Observations
I. Ontario's share surpasses
50% for the first time since 2017
Companies from Ontario
attracted $2.10 billion (54%), and,
for the first time since 2017, accounting for more than half of the
total disbursements.
II. Toronto VC Investments greater than those of all
other cities combined
Toronto VC investments dwarfed those of any other city across
the country by a country mile, thus cementing Toronto's leadership in the financial services
overall and in VC in particular.
III. US Investment Funds, Corporate VCs and Private VCs – top
three backers
The top three investors were all from the United States. Together they invested
$1.96 billion or 51% of the total
disbursements. US investors including US Private Investors
and US family offices collectively invested $2.15 billion, accounting for 55% of the total
amount.
IV. Fundraising
22 private VC funds raised $1.58
billion in the first half of 2024, almost unchanged from
$1.59 billion and $1.57 billion for the same period in 2022 and
2023 respectively, but up significantly from $613 million for first half of 2023.
Canadian governments continue to the backbone of many of these
funds. Without them, most of them will not be able to
close. A life science fund in Montreal and an IoT fund in Toronto could literally be classified as
"government" funds as more than half of the committed capital came
from federal and provincial governments, not counting
quasi-government funding.
V. Canadian governments out-invests Canadian private
VCs
Canadian governments invested $458
million more than the $324
million invested by Canadian private VCs. The outpacing of
government investments over Canadian private VCs has been the case
since 2023.
"The data point to the ongoing small investment market share of
private Canadian VCs which has fluctuated between 7 and 10% since
2021. The market penetration by the Canadian private VC fund
segment would likely be even smaller without the huge contribution
of federal and provincial government backing of most recent funds.
To all intents and purposes the private VC fund industry in
Canada could be regarded as a
quasi-government entity in all but name. This begs the question of
how much longer Ottawa, and its
provincial counterparts will continue to provide this support in
the forthcoming era of government retrenchment and
re-prioritization that is now on the near-term horizon," commented
Richard Rémillard, President of Rémillard Consulting Group
(RCG).
"The data starkly reveal the dominant position of Toronto as the pre-eminent venture capital
investment destination in the Canadian landscape. Just as Silicon
Valley venture capital has dominated the US scene, so too the
increasing concentration of venture capital investing activity in
Toronto appears to have reached
the critical mass required to be self-sustaining and
self-reinforcing thereby heralding a new development in the
Canadian venture capital ecosystem. Toronto's emergence as the pre-eminent locus
of Canadian venture capital investing, unlike Silicon Valley, has
been facilitated by the city's leading role in financial services
in everything from banking to insurance, pension funds and mutual
funds. Toronto's market share of
venture capital investment is likely to increase over time, despite
the efforts of governments to ensure a more evenly-distributed
investment scene. This new situation will possibly compel
governments to re-evaluate the policy and program tools currently
employed to attract venture capital investment beyond Toronto," added Rémillard.
2024 H1 Highlights
Top 10 municipal cities
Companies from 52 Canadian municipal cities attracted capital in
the first half of 2024.
Led by Toronto, the top 10
cities collectively raised $3.58
million, accounting for 92% of the total amount raised by
all Canadian companies.
Municipal
City
|
Province
|
#
Financings
|
$
Millions
|
Toronto
|
Ontario
|
112
|
1,890
|
Calgary
|
Alberta
|
37
|
455
|
Montreal
|
Quebec
|
31
|
440
|
Vancouver
|
British
Columbia
|
45
|
247
|
Quebec City
|
Quebec
|
11
|
197
|
Burnaby
|
British
Columbia
|
1
|
141
|
Ottawa
|
Ontario
|
10
|
76
|
Richmond
|
British
Columbia
|
3
|
68
|
Waterloo
|
Ontario
|
10
|
33
|
Surrey
|
British
Columbia
|
2
|
30
|
TOTAL
|
|
262
|
3,578
|
Top 10 foreign funding sources
Investors from the top 10 foreign countries together invested
$2.55 billion, accounting for 66% of
total amount raised by Canadian companies.
Country
|
#
Financings
|
$
Millions
|
United
States (USA)
|
156
|
2,145
|
China
|
6
|
69
|
Japan
|
5
|
68
|
Sweden
|
3
|
55
|
Netherlands
|
6
|
54
|
France
|
8
|
36
|
Switzerland
|
9
|
35
|
United Kingdom
(UK)
|
7
|
31
|
Austria
|
2
|
29
|
Germany
|
6
|
28
|
TOTAL
|
|
2,552
|
Top 10 Investor types
29 individual types of investors backed Canadian
companies. Top 10 types of investors invested a combined
$3.5 billion, accounting of 91% of
the total disbursements.
Investor
Type
|
#
Financings
|
$
Millions
|
Mutual/Hedge Fund -
US
|
8
|
828
|
Corporate -
US
|
27
|
628
|
Private VC -
US
|
64
|
506
|
Government -
CDN
|
69
|
458
|
Private VC -
CDN
|
68
|
324
|
Corporate -
Foreign
|
28
|
323
|
Private Investors -
CDN
|
150
|
127
|
Private VC -
Foreign
|
15
|
126
|
Family Office -
CDN
|
63
|
102
|
Private Investors -
US
|
72
|
87
|
Top 10 VC law firms
37 law firms participate in Canadian VC financings. Top 10 law
firms are ranked as following, as reported by law firms in their
regulatory filings or direct reporting to CPE Analytics.
Law
Firm
|
Rank
|
#
Financings
|
$
Millions
|
Fasken Martineau
DuMoulin LLP
|
1
|
34
|
302
|
Osler, Hoskin &
Harcourt LLP
|
2
|
32
|
943
|
Mintz LLP
|
3
|
15
|
224
|
LaBarge Weinstein
LLP
|
4
|
14
|
165
|
Blake, Cassels &
Graydon LLP
|
5
|
9
|
350
|
McCarthy Tétrault
LLP
|
6
|
8
|
84
|
Borden Ladner Gervais
LLP
|
7
|
8
|
4
|
Harper Grey
LLP
|
8
|
8
|
2
|
Dentons Canada
LLP
|
9
|
7
|
14
|
Koffman Kalef
LLP
|
10
|
6
|
1
|
Summary report
Summary report can be downloaded from financings.ca
website: https://www.financings.ca/reports/
Methodology
Included
- Equity and quasi-equity investments in companies directly.
Excluded
- Secondary transactions (investor/shareholder exit events) in
which companies received no money.
- Acquisition for expansions (M&As)
- PE transactions
- Financing by foreign headquartered/domiciled companies with
Canadian subsidiaries.
Rémillard Consulting Group (RCG)
Rémillard Consulting Group (RCG) is a unique, Ottawa-based, bilingual consulting firm
specializing in providing private sector, government & trade
association clients with creative, research-grounded solutions to
business issues and public policies involving the Canadian
financial services industry. For more information:
rremillard@bellnet.ca
CPE Analytics
With almost 98,000 financing transactions, and continuing
growing, its Canadian Financings database, CPE Analytics is
Canada's undisputed leader in
financing intelligence. We provide comprehensive, verified,
unbiased and unmatched insights and intelligence on private and
public financings, initial public offerings (IPOs), M&As,
professional investment firm fundraising activities.
We cover all aspects of VC information, not limited to but
including Canada's only
information on VC firm fundraising, VC funding sources (where all
the VC came from and from which types of investors).
CPE Analytics is the data analytics division of CPE Media &
Data Company. More Info: https://cpeanalytics.ca,
https://financings.ca
CPE Media & Data Company
Founded by Canada's the most
experienced private capital and financing research experts, CPE
Media & Data Company is Canada's leading all financing news and
intelligence provider. More information: https://cpecompany.ca/
__________________
|
*
|
* CPE
Analytics' dataset is distinguished by a rigorous application of
proper methodological practice which, for instance, does not
include M&A transactions completed by VC-backed portfolio
companies or other secondaries transactions.
|
SOURCE CPE Media & Data Company