The Canadian investment landscape continued to show strength in the first six months of 2016 – especially on the venture capital (VC) side, according to the CVCA.
Building on a huge Q1, CAD683 million was invested in Q2 bringing the total to CAD1.5 billion invested over 255 deals. This is significantly higher than the first half of 2015, where CAD1.1 billion was invested over 272 deals.
The ICT sector led the way with CAD1,027 million invested in H1 (67 per cent of the total dollars invested), followed by CAD310 million in life sciences (20 per cent) and CAD114 million in agribusiness (7 per cent).
The average VC deal size in H1 jumped 53 per cent from CAD4 million to CAD6.1 million driven by a few major deals involving CVCA members. These included cloud-based real estate app, Real Matters, which raised CAD100 million, and the CAD128 million investment in DalCor Pharmaceuticals—a CVCA life sciences record. FarmersEdge, a big data agribusiness, received a VC investment of CAD58 million, a new high for its sector.
“Venture capital investment continues to rise in Canada,” says Mike Woollatt, chief executive officer, CVCA. “On the top-end, we’ve seen a significant increase in the share of the amount invested in later stage deals (50 per cent) compared to last year (38 per cent), which is what Canada really needs to help companies scale and become world leaders.”
On the PE side, CAD3.1 billion was invested (over 87 deals) in Q2, up 4 per cent from CAD3 billion in the previous quarter (over 86 deals). However, the total amount invested in H1 2016 was 32 per cent lower than the same period last year (CAD6.1 billion over 173 deals versus CAD8.9 billion over 194 deals).
One exception was the CleanTech sector with CAD1.5 billion invested in 10 deals. The average CleanTech deal size increased 325 per cent from last year due in large part to CAD800 million invested in Services Matrec and CAD480 million in financing for Capstone Infrastructure Corporation.
Quebec captured nearly a third of all PE financings in the first half—an increase from 2015 (24 per cent) and 2014 (14 per cent), and now rivals Ontario (32 per cent) for PE investment.
“For private equity, there’s positive news in the CleanTech sector. But overall, the 2016 first-half numbers have been lower than what we’ve seen in the past couple of years,” Woollatt adds. “This is primarily due to the slowdown in oil and gas activity continuing into 2016. There is still a tremendous amount of dry powder out there, however, so we expect investment levels to eventually increase.”
Adding to the dry powder, just over CAD4 million in new PE funds were raised in H1, 13 per cent more than was raised the same time last year (CAD3.6 million).
