In the first quarter of 2023, deals in Canada’s tech ecosystem plummeted. The latest data from Briefed.in shows Canada experienced a 82 percent decline in amount invested compared to the same time last year, and a 67 percent drop in number of deals.
Compared to the last quarter (Q4 2022), this quarter also saw total investment fall by 61 percent and a 23 percent decrease in the number of deals compared.
In recent months, tech companies have faced shaky markets thanks to factors ranging from war and geopolitical tensions in Europe, soaring inflation at 30-year highs, tightening central bank policy, and surging oil prices.
The collapse of the Silicon Valley Bank further weakened confidence in the markets, with some speculating that limited partners would further shy away from investments, making it harder for VCs to raise their next fund and in turn for companies to secure capital.
Despite that, a number of venture firms have recently announced funds, including Diagram Ventures, Brightspark, The51, and Round13 Capital.
According to Briefed.in, total funding in the quarter topped out at $876.2 million CAD over 55 deals. So far in 2023, Canada is 13 percent of the way to match the total deals done in 2022 and nine percent of the way to match in total investment, according to Briefed.in. Notably, both of those years saw a record amount of venture capital injected into the Canadian ecosystem. In terms of deal count and amount invested, 2022 marked the second-highest year on record despite market conditions. The year prior was at all-time high with venture investments increasing 215 percent from 2020.
FinTech investment led the deals in the first quarter of this year with 12 percent, followed by 10.5 percent in what Briefed.in called marketplace, and 10 percent in SaaS.
Series A comprised the lion’s share of the deals with 20 percent funding distribution, and 23.6 percent of the deals. Series B also did well, capturing 18.6 percent of the funding distribution. But investors shied away from pre-seed and seed deals, respectively only funding 1.2 percent and 7.9 percent.
The lack of early stage deals in Briefed.in’s report bucks the trend reported elsewhere. Osler Hoskin & Harcourt LLP’s second annual report on venture capital and growth equity, for instance, found that the highest concentration of financings in Canada over the last three year period took place at the early stages, such as seed and Series A.
Following recent trends, Québec and Alberta continued to dominate the venture investment scene. Québec captured 36.2 percent of the funding distribution while Alberta enjoyed 25.7 percent. By comparison, Toronto picked up 13.7 percent, British Columbia had 10.8 percent, while the Waterloo Region, Ottawa, and the East Coast respectively earned 3.7 percent, 2.9 percent, and 1.8 percent.
When it came to the number of deals, Québec again led the way with 21.8 percent while Alberta at 12.7 percent gave up ground to Toronto, which gained 29.1 percent of deals.
The top deals in the Series A stage and beyond included Jobber’s $100 million USD in Series D funding in February. The Edmonton-based startup provides operations management software for home service businesses.
Equisoft, a provider of end-to-end, digital solutions for the insurance and investment industry, closed a $125 million equity investment round, while Calgary cleantech startup Summit Nanotech, which develops solutions for lithium extraction, secured $67.4 million CAD ($50 million USD) in what it classified as a Series A2 round.
Edmonton-based biotech startup Future Fields led the top pre-seed/seed deals with a $15.1 million CAD ($11.2 million USD) seed extension funding round.
Other top seed rounds included Peggy, an online social marketplace for contemporary art, securing $10.8 million CAD ($8 million USD) in equity seed funding to launch its platform, which aims to make buying and selling art more flexible; and AgTech startup Terramera’s $8.1 million CAD ($6 million USD) seed round.
Communitech acquired Briefed.in in 2022 in order to build out a data engine to power its founder support programs.