Investments in venture capital (VC) companies in Canada closed 2016 with a strong finish, as the total number of deals and dollar figures rose in the fourth quarter (Q4) compared with the third quarter (Q3), according to the latest PwC MoneyTree report from PricewaterhouseCoopers LLP (PwC) and CB Insights.
Activity in VC investing ramped up in Q4 as investors deployed US$527 million to Canadian VC-backed startup companies, up notably by 49% from Q3. At the same time, financing was spread across 71 deals, which rebounded by 27% from the previous quarter.
During 2016 as a whole, quarterly financing topped US$500 million twice and each quarter during the year saw at least 50 deals completed, the lowest figure being the 56 in Q3. In addition, the total number of deals rose by 7% in 2016 to 266 from 248 in 2015, while there was a total of US$1.7 billion invested in VC companies in 2016, down slightly by 0.3% from the previous year. However, both trends contrast significantly with the global picture, in which the total number of deals declined by 10% and total funding dropped by 23% from 2015.
“Standout annual and quarterly funding trends underscore the strength of the Canadian technology sector,” says Chris Dulny, national technology sector leader with PwC Canada, in a statement. “Canada continues to attract significant global attention due to its impressive innovation initiatives and ambitious entrepreneurs.”
Activity was strong in both leading Canadian hubs of Toronto and Montreal, which saw total dollars invested rising by 10% and 8%, respectively, in 2016. The Waterloo region saw a 65% increase over 2015 thanks to a deal with wearable computing startup Thalmic Labs valued at US$120 million. Vancouver saw healthy deal activity, with 2016 deals rising by 17%, although total funding declined to US$250 million from US$321 million.
On a sectoral basis, Internet, mobile and telecommunications companies led the way, although health care saw a significant decline from 2015.
“Canada’s solid year is especially notable given the context,” says Anand Sanwal, co-founder and CEO of CB Insights, in a statement. “Whereas many other regions globally have seen a reset after the record financing we saw in 2015, the Canadian funding environment’s momentum continued to be strong. [This year] should be a good year given the growth in Canada’s home-grown investor ecosystem as well as the interest in the market from U.S. and European investors.”
The MoneyTree Report can be accessed here.