Venture capital investment in Canada for the first quarter of 2020 is down 7.5 percent compared to the first quarter last year, according to the Canadian Venture Capital and Private Equity Association (CVCA).
The CVCA predicts activity levels will likely be lower in Q2 2020 “as firms reacted to Canada’s lock down.”
On Monday, the group released preliminary data for Q1 2020 venture capital (VC) and private equity (PE) investment in the Canadian market. It found that VC investment hit $834 million over 125 deals in Q1. This marks a decline compared to the past three record-breaking quarters, which all surpassed $1 billion in investment.
However, the $834 million is just 7.5 percent less than the $897 million investment invested in Q1 2019 spanning 116 deals.
Comparatively, the fourth quarter of 2019 saw $1.6 billion invested over 144 deals and significantly contributed to the year’s record-breaking total.
The Q1 results track deals closed and disclosed between January 1 and March 31, 2020. According to the CVCA’s data, the quarter saw three $50 million-plus mega deals in the lead up to the economic impacts caused by COVID-19. Comparatively, Q1 2019 saw six mega deals. Miovision’s $120 million CAD Series C (announced in January) was the sole disclosed mega-deal this quarter.
CVCA noted there were three VC-backed exits in Q1, totalling $16 million, though its preliminary data did not disclose which deals it was referring to. Final data on the quarter is expected to be published in early June.
This quarter’s data follows a record-breaking year for Canadian VC investments. In 2019, VC investment reached new heights with a record $6.2 billion CAD invested over 539 deals.
As part of its preliminary report, the CVCA predicted that activity levels will likely be lower in Q2 2020 “as firms reacted to Canada’s lock down in mid-March following World Health Organization’s March 11th official declaration that COVID-19 was a pandemic.”
A recent report from Startup Genome found that 58 percent of startups in Canada said their industry has been “affected significantly” by the COVID-19 crisis; seven percentage points higher than the global average.
Four percent of Canadian startups reported to Startup Genome that they are effectively closed due to the pandemic. On a more positive note, eight percent of Canadian startups reported that their industry experienced growth.
According to the CVCA, PE investments increased from the same time last year, with $4.5 billion invested over 119 deals in Q1 2020. This marks twice the amount invested in the same quarter last year, which totalled around $2 billion.
There were five PE-backed exits in the first quarter, totalling $8.8 billion including the GFL Environmental IPO on TMX and NYSE.