Canadian SaaS investment rebounded in 2023, reaching nearly $7 billion

L-SPARK’s report identified 20 SaaS deals valued at $50 million or more.

Canada’s software as a service (SaaS) sector saw a marked year-over-year rebound in investment in 2023, according to a new report from Canadian SaaS accelerator L-SPARK.

Released during SAAS NORTH, which took place in Ottawa last week, L-SPARK’s State of SaaS report showcases the climate of deal activity in the Canadian SaaS sector. The report tracked $6.9 billion CAD invested in Canadian SaaS startups in 2023, roughly double the $3.9 billion CAD invested in 2022.

“Staying vigilant and agile remains the state of SaaS.”

Leo Lax

Last year’s SaaS investment results were characterized as a “disaster” by L-SPARK executive managing director Leo Lax, as investment fell by nearly 60 percent from the $9.16 billion CAD raised in 2021.

“2023 has been a year of constant change. Economically, geographically, politically, and financially. Our industry has suffered accordingly,” Lax said in the report. “Staying vigilant and agile remains the state of SaaS.”

While SaaS investment in 2023 is still short of its 2021 peak by over $2 billion, it represents a marked improvement in what remains a challenging fundraising environment for Canadian software startups. Investment in 2023 has also exceeded pre-pandemic years like 2019, which saw $5.13 billion CAD in financing deals.

The report’s findings are generally in line with investment figures released by the Canadian Venture Capital and Private Equity Association (CVCA) last week. That report found that Canada’s investment results in Q3 2022 signal a return to pre-pandemic normalcy.

While the State of SaaS report did not provide specific numbers on venture deal volume, it identified 62 merger and acquisition (M&A) deals or buyouts in 2023, with some of the largest deals being Thomabravo’s $1.6-billion USD acquisition of Magnet Forensics, Cisco’s acquisition of Accedian, Recursion Pharmaceuticals’ acquisition of Cyclica.

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The report also tracked a total of 20 deals that were each valued at $50 million or more. In total, these deals amount to $4.65 billion in cumulative investment, a 63 percent increase in investment from the $2.85 billion invested in 2022.

Of those deals, the report highlighted several standouts, including Jobber’s $100-million USD Series D financing round, Miovision’s two raises from the year, which included $260 million in April and an additional $36 million in October, and MindBridge’s $60-million raise from PSG Equity. Cohere was also on the list, though the total value of its deal in July was not disclosed publicly.

Unsurprisingly, Ontario has attracted the most capital so far in 2023, with the report tracking just shy of 200 deals valued at $4.5 billion. In second place was British Columbia, which saw $1.28 billion invested across 69 deals. Québec saw $817.4 million invested across 37 deals, and Alberta saw $415 million invested across 43 deals.

Isabelle Kirkwood

Isabelle Kirkwood

Isabelle is a Vancouver-based writer with 5+ years of experience in communications and journalism and a lifelong passion for telling stories. For over two years, she has reported on all sides of the Canadian startup ecosystem, from landmark venture deals to public policy, telling the stories of the founders putting Canadian tech on the map.

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