Canadian VC market gets a boost in 2016

It reached new records in terms of funds raised and money invested that were not seen since the dot-com era.

The Canadian venture capital market reached new highs in 2016 which had not been seen since the early 2000s.

Canadian venture capital funds raised $2.2 billion in 2016, an 81 percent jump over 2015 and a 13-year high. In 2002, Canadian VC funds raised $2.5 billion, according to data from Thomson Reuters.

“Such strong levels of VC fundraising suggest Canadian companies will find more funding options available to them in the years to come,” Thomson Reuters wrote in its report released earlier this month.

Last year, 459 Canadian companies raised $3.7 billion in venture capital money, 36 percent higher than the amount they raised in 2015, marking a fifteen-year high in terms of dollars invested.

“Growth was driven by large cap VC deals, with 14 companies raising rounds $50 million or greater in 2016, smashing the previous record of 12 such companies reaching that threshold in 2000,” it added.

The average VC deal size in Canada in 2016 was $6.5 million in 2016, up from $4.6 million the previous year. Despite the growth, Canada remains far behind other nations in terms of average round size. In 2016, average deal size in the US was $16.7 million, $13.9 million in the UK and $14.4 million in Israel.

Sectors that received some of the most money in Canada were information technology, particularly software companies, followed by life sciences and cleantech. 

One of the top Canadian VC deal of the year was the $295.3 million investment round in regenerative medicine company BlueRock Therapeutics by Versant Ventures and Bayer.

Although fundraising and dealmaking were both on the rise, performance was more subdued. Canadian venture capital and growth equity funds with vintage years of 2000 or greater returned an internal rate of return of 2.9 percent since inception as of 30 September, according to Cambridge Associates. Thomson Reuters noted that this was “lagging far behind their US counterparts, public market equivalents, and only recently returning to positive territory.