Canadian venture capital (VC) investment slowed in the second quarter, according to data released from Canada’s Venture Capital and Private Equity Association (CVCA) in Toronto and Thomson Reuters in New York on Wednesday. However, overall net growth for the sector was up for the first half of the year.
VC declined by 3% in the second quarter of 2013 with $485 million invested, reported CVCA. Over the course of the first half of 2013 however, VC investments reached $866 million, an increase of 17% compared with the same time period in 2012.
Information technology (IT) led the VC market in Q2 with $171 million invested, said CVCA, thereby accounting for 35% of the total amount of investment. While IT led the sectors, it saw a 45% year-over-year drop in activity. Another important sector in Q2 was clean-tech. The clean-tech sector was up by almost threefold compared with 2012. Life sciences received $69 million in investments, a 23% drop from Q2 2012.
While these sectors saw investments, for the most part, in the second quarter, overall fund raising was down. According to CVCA, new capital in Q2 reached $297 million, a decrease of 62%.
Overall, in the first half of 2013, VC funds raised $678 million, down from $1.5 billion invested during the same time last year. Furthermore, 53% of the money raised this year is in retail venture capital funds with another 17% coming from individual versus institutional investors.
“The sharp decline in new capital commitments going to domestic funds in the first six months of the year is extremely concerning,” said Peter van der Velden, president of the CVCA and managing general partner of Lumira Capital Corp. “To ensure the future prospects of thousands of promising Canadian entrepreneurs and technology companies, we must redouble our efforts to strengthen fund-raising conditions for Canadian venture capital firms.”