Venture capital investments hit record high in first half of 2019

Investing

Canadian venture capital investments in the first half of 2019 hit a record high of $2.15 billion, according to the Canadian Venture Capital and Private Equity Association’s (CVCA) latest report.

The investments in the first half of 2019 surpassed the previous highest half, H1 2018, which saw $1.7 billion in venture capital investments. The second quarter of 2019 also marked the highest amount of VC dollars invested since 2013, with $1.28 billion overall. The quarter, which made up more than half of the H1 2019, surpassed the previous highest quarter, Q4 2018, which saw $1.25 billion.

“We’ve heard time and time again that Canada is experiencing a ‘moment,’ and the results we are seeing in H1 2019 is a testament to that.”
– Kim Furlong CEO, CVCA
 
 

While the amount of dollars invested increased overall, the number of deals decreased year-over-year; Q2 2018 saw $1 billion invested in 166 deals and Q2 2019 saw the capital invested in 143 deals.

The record quarter and half can be attributed to the 11 “mega-deals” (more than $50 million), that took place in H1, accounting for 42 percent of the total VC dollars invested. Four of those deals occurred in Q2. The largest round went to Hamilton biopharmaceutical company Fusion Pharmaceuticals, which raised a $140 million Series B. Wealthsimple, Carbon Engineering, ApplyBoard, North, and Fiix Software were also among the 11 mega-deals.

Information and communication technology (ICT) companies took in 54 percent of the total dollars invested in H1, with $1.2 billion across 144 of the overall 256 deals. Early-stage companies saw 45 percent of total investment ($973 million), with later-stage deals accounting for 40 percent.

VC activity by deal size. Source CVCA.

CVCA also noted that VC-backed exits are on track to exceed the 36 that took place in 2018, with 20 completed in H1 2019.

“Canadian VC-backed exits are on a positive trajectory in 2019 which, in tandem with invested VC dollars, exhibit a healthy innovation ecosystem,” said Kim Furlong, CEO of the CVCA. “We’ve heard time and time again that Canada is experiencing a ‘moment,’ and the results we are seeing in H1 2019 is a testament to that”

Lightspeed, which completed its IPO in March, reaching a market capitalization of $1.1 billion CAD and Milestone Pharmaceuticals’ IPO on the NASDAQ ($468 million CAD), marked the two largest exit to date in 2019. Other top disclosed exits in H1 2019 include MaRS IAF-backed Aeryon Labs, Fanxchange, and Edesa Biotech.

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Ontario-based companies brought in more than half (52 percent) of the investments, at $1.1 billion. This is up from $907 million in VC dollars invested in H1 2018, and $609 million received in H2 2017. The amount invested in Quebec also increased from $319 million in H1 2018 to $532 million in the first half of 2019. British Columbia also saw a jump, with $322 million compared to $276 million in H1 2018.

H1 2019 VC deals by province. Source CVCA

At the city level, VC funding appeared to be more evenly distributed compared to the same time last year. Whereas Toronto took in almost 50 percent of the total dollars invested in H1 2018, it only received 34 percent in H1 2019. Montreal saw an increase from 15 percent to 22 percent, while Vancouver dropped from an overall 16 percent of VC dollars in H1 2018 to just seven percent in H1 2019.

CVCA also recorded the most active VC firms and funds in H1 2019. BDC Capital invested in the highest number of rounds ($252 million in 22), with Fonds de solidarité FTQ contributing the highest dollar amount at $307 million spanning 15 rounds. Real Ventures invested $133 in 18 rounds, followed by Desjardin Capital’s $98 million in 16 rounds. Rounding out the list were Panache Ventures, Investissement Québec, Cycle Capital Management/Ecofuel, MaRS IAF, and Inovia Capital.

Meagan Simpson

Meagan Simpson

Meagan is the Associate Editor for BetaKit. A tech writer that is super proud to showcase the Canadian tech scene. Background in almost every type of journalism from sports to politics. Podcast and Harry Potter nerd, photographer and crazy cat lady.