Canadian VC funding on the rebound after dip in second half of 2018, according to MoneyTree™ Canada Report

• Canadian VC-backed companies raised $1.65B (all figures in USD) over 240 deals in the first six months of this year.
• Seed rounds increased significantly, rising from 36% of all deals in the first half of 2018 to 49% of deals in the first half of 2019.
• Toronto continues its 2018 lead in funding and deals as Vancouver and Montreal follow.

Toronto - July 31, 2019 – Canadian VC-backed companies raised $1.65B (all figures in USD) over 240 deals in the first six months of this year, a 15% decrease in deals from the 281 deals that took place in the first six months of 2018. Despite a strong second quarter, VC investment in Canadian companies is down 13% in the first half of 2019 compared to the same period last year, according to the MoneyTree™ Canada reportOpens in a new window from PwC Canada and CB Insights.

"Deal count and total funding were down in the first half of 2019 compared to the same period in 2018. When combining the natural ebbs and flows of the Canadian venture market, with a tempered decline in deal count and funding, Canadian innovation continues to represent a solid investment to the venture community," said Sabrina Fitzgerald, National Tech Sector Leader, PwC Canada.

"After unprecedented highs in 2018, this year has seen less funding and fewer deals for Canadian companies. Investment in Canadian startups is down 13% and deal activity is down 15% in the first half of this year, compared to the first six months of 2018," stated Anand Sanwal, co-founder and CEO of CB Insights. "This decline contrasts with global activity which saw both funding and deal activity climb. The really bright spot for the Canadian ecosystem is the seed-stage where deals increased significantly, now making up 49% of deal share. In addition, less-active regions, such as Waterloo and Ottawa, saw a strong start to 2019. Investor interest in early-stage startups and in startups outside of the popular Toronto and Vancouver should pay dividends in the future.”

Toronto and Vancouver continue to lead in the first half of 2019 – Toronto-based companies raised $555M across 90 deals and Vancouver-based companies raised $355M across 40 deals. Montreal follows with $206M raised over 38 deals. Waterloo and Ottawa round out the top five markets with $131M raised across 15 deals and $122M raised across 11 deals, respectively.

Key highlights for H1’19:

• 2018 was a breakout year for Canadian cannabis companies with $224M raised over 51 deals. In the first six months of 2019, funding slowed down as Canadian cannabis companies raised $42M across 18 deals. 
• Investment in Canadian AI companies fell 60% in the first half of this year compared to the first six months of 2018.
• Canadian fintech companies raised $251M in H1’19, nearly double the $133M raised in the first half of 2018. Deal activity also ticked up from 23 to 28 deals over the same period.  
• Funding raised by Canadian digital health companies jumped in Q2’19 to $43M. However, smaller deal sizes in Q1’19 contributed to a 24% decline in funding during the first half of 2019 compared to the same period in 2018. Deal activity this first half of the year also fell to 13 transactions.
• Canadian cybersecurity companies saw a sharp funding decline in Q2’19 to $2M across 4 deals after a Q1’19 high -- $132M over 5 deals. An average deal size of $26M in Q1’19 offset smaller deals in Q2, bringing YTD funding up nearly 5x from the first half of 2018.
• The largest deals of H1’19 include Hamilton-based Fusion Pharmaceuticals ($105M), Toronto-based Vena Solutions ($87M), Vancouver-based PDFTron Systems ($71M), Vancouver-based Carbon Engineering ($68M), Toronto-based ecobee ($61M), and  Montréal-based Enerkem ($57M). 
• The most active investors in Canadian companies were BDC, Real Ventures, SOSV, Medteq while Panache Ventures, MaRS, and Anges Quebec tied for fifth most active. 
• While Canadian investors are most active in funding across stages, seed stage deals have the highest percentage of Canadian investor participation. US-based investors are more active in expansion stage investments.

The MoneyTree report can be found hereOpens in a new window.

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