Canadian VC funding volumes and activity stay strong in H1 2018: report

The second quarter saw record highs in funding and deal activity for AI companies

Canadian VC funding volumes and activity stay strong in H1 2018: report

Canada’s venture capital market managed to maintain strong volumes and activity in the first half of the year, according to the latest MoneyTree Canada report by PwC and CB Insights.

While the number of deals to Canadian venture-backed companies rose to 116 in the second quarter, total VC funding slipped 7% to US$900 million. Nevertheless, PwC said overall venture capital activity in H1 2018 was strong from coast-to-coast.

“A recent rebound in seed-stage deal activity and a lift in later-stage deals show broad levels of investment support across all stages of funding," said Michael Dingle, National Deals Technology Leader for PwC Canada.

Quebec City and Calgary saw dramatic increases in funding and deal activity in Q2 2018. The US$147 million raised across 5 deals in Quebec City was a significant improvement over the single US$8-million deal produced in Q1. Driving the funding increase were a US$100-million round of VC funding for Coveo — the largest deal in Canada this past quarter — and La Maison Simons’ US$34-million round.

Calgary saw US$99 million from eight deals last quarter; in Q1, the city saw only US$900,000 across three deals. The second-quarter VC surge was powered by a US$78-million round for Greengate Power, Canada’s second largest VC deal in the second quarter. A US$12-million round of VC financing for Circle Cardiovascular imaging also proved significant.

Toronto remained the leader in deals for Canadian VC-backed companies. In spite of an 11% decline in funding compared to last quarter, the city remained the top market for funding in Q2 with US$290 million across 33 deals.

Vancouver reached an eight-quarter high in deal activity as 28 deals were orchestrated to yield a Q2 total of US$126 million, a 21% jump over the previous quarter. Meanwhile, Montreal saw a 74% decline in funding (from US$389 million to US$103 million) as deal activity slipped to 16 — one less deal than the previous quarter.

"Canadian AI companies saw record highs in funding and deals this past quarter, as that sector attracts increasing investor interest," noted Anand Sanwal, co-founder and CEO of CB Insights. "With funding to AI companies jumping 104% in Q2'18, the sector is on pace for a record funding year."

The largest funding increase occurred among mobile & telecom companies, with US$186 million representing a 167% surge. The amount was amassed across 13 deals, including large rounds to Ritual Technologies ($70 million) and TouchBistro (US$54 million).

The second quarter was a strong one for Canadian fintech companies, which collected US$79 million. While the total funding amount was down 10% from the previous period, deal activity jumped up from 8 deals in Q1 to 13 in Q2.

“Early-stage, expansion-stage, and later-stage deal shares all declined with early-stage deal shares falling the most to 19%, down from 26% in Q1'18,” PwC said in a statement.


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