According to the Canadian Venture Capital and Private Equity Association’s (CVCA) latest report, $2.48 billion CAD of venture capital was invested in 126 deals in the third quarter of 2019, marking the highest dollar amount invested in Canadian companies of any quarter.
“In the past nine months, Canadian venture capital investment has surpassed all previous milestones.”
The quarter was driven by a record number of “mega deals,” deals over $50 million (all numbers CAD). The results follow another record-breaking quarter, which saw $1.3 billion of venture capital invested in Canadian companies in Q2 of 2019.
According to the CVCA, there were 12 mega deals in Q3, bringing the total number so far in 2019 to 23. These deals account for more than half (57 percent) of all dollars invested in 2019, with nine deals exceeding $100 million, and three surpassing $200 million.
“In the past nine months, Canadian venture capital investment has surpassed all previous milestones,” said Kim Furlong, CEO of the Canadian Venture Capital and Private Equity Association. “The focus on growing Canadian companies has never been more evident than what we are currently seeing in the market.”
Notable record-breaking deals so far this quarter have included St. John’s, Newfoundland-based Verafin’s $515 million growth financing round, BC-based Clio‘s $332 million Series D, Element AI‘s $200 million Series B, TouchBistro, Trulioo, Clearbanc, Terramera, Drop, and Neuvoo. More recently, Montreal-based Coveo also hit record numbers, raising $227 million in a late stage growth round.
As revealed by the CVCA’s report there has been steady growth in the size of Canadian venture deals over the past five years, while the number of deals has gone down. In 2015, VC investment totalled $2.2 billion across 537 deals. This is compared to a total of $4.7 billion this year invested in 387 deals.
The average deal size in Q3 2019 skyrocketed to $19 million, a 215 percent increase compared to the average deal size during the 5-year period between 2014-2018 ($6.1 million), according to the report. For the same time last year, the average deal size was $5.1 million.
According to the CVCA’s reporting 30 deals were between $20 million to $50 million, totalling $939 million overall, with 72 deals between $5 million and $20 million, totalling $710 million.
Even with the large number of later stage mega-deals contributing to the record breaking year, early-stage companies received 41 percent of total investment, with growth equity deals accounting for 30 percent, and later stage 23 percent.
By province, Ontario still rakes in the most amount of VC dollars, with $1.8 billion invested in 2019 across 146 deals. Quebec is the next closest with a comparable $1.1 billion across 114 deals. The provinces with the next highest amount of VC investment are BC ($943 million) and Newfoundland and Labrador ($521 million), which is accounted for by the $500 million-plus Verafin deal. Other notables include Alberta, which according to the CVCA’s report brought in $130 million this year, and Saskatchewan with $98 million.
Information and communications technology (ICT) companies received 66 percent of total dollars invested this year, followed by life sciences receiving (19 percent), and cleantech companies receiving a 6 percent share ($262 million over 23 deals).
CVCA’s report also noted that VC-backed exits are on pace to exceed last year’s total of 35, valued at $978 million, with two Montreal exits leading the way: Lightspeed, which IPO’s to a market cap of $1.1 billion and Milestone Pharmaceuticals, which closed its IPO on the NASDAQ with a market cap of $468 million.