Industry association reports highest amount invested in six years amid record-breaking spate of mega-deals
Canada’s venture-capital space has witnessed a record-breaking third quarter amid a reportedly unprecedented spike in mega-sized rounds for later-stage start-ups.
According to the Canadian Venture Capital Association’s (CVCA) recently released market overview for Q3 2019, the third quarter saw $2.4 billion in investments during Q3, representing the highest amount since 2013 and an almost-80% increase over the $1.3-billion high watermark established in the second quarter.
“A record-breaking increase in mega-deals ($50M+) drove the investment performance so far in 2019,” the report said. With 12 mega-deals in Q3, the year-to-date total for 2019 so far has reached 23, accounting for over half of all dollars invested.
Of those 23 mega-deals, nine surpassed $100 million, and three were worth more than $200 million. There were 30 deals that were worth $20 million-$50 million, which together amounted to $939 million or a fifth of the total $4.7-billion year-to-date investment in VC for 2019. Seventy-two deals fell within the $5 million-$20 million category, totalling $710 million or 15% of the year-to-date total for VC funding.
“In the past nine months, Canadian venture capital investment has surpassed all previous milestones,” said CVCA CEO Kim Furlong.
The average deal size surged to $19 million, a near-tripling of the amount recorded in Q3 last year and a 215% increase over the average $6.1-million deal size during the five years from 2014-2018.
Breaking the data down by jurisdiction, Ontario-based companies captured the lion’s share of year-to-date investment (39%) with $1.8-billion. Those in Quebec received just under a quarter (23%) with $1.1 billion, and BC-based companies took in a 20% share with $943 million.
A more granular look reveals Toronto’s role as a hotbed of VC investment, soaking up 30% ($1.4 billion over 119 deals) of total dollars disbursed. Montreal-based companies received a more modest 17% ($793 million over 88 deals), virtually matching the total amount that went to Vancouver-based companies ($777 million over 49 deals).
Sector-wise, Information and Communication Technology companies were the clear winner, acquiring two thirds of total dollars invested (66%) as they absorbed $3.1 billion over 223 deals. Life sciences were a distant second with a 19% share (886 million over 77 deals), and cleantech ventures took in a 6% share ($262 million over 23 deals).
The latest figures also showed early-stage companies taking in 41% ($1.9 billion over 172 deals), a 30% share for growth equity deals ($1.4 billion over 18 deals), and 23% for later-stage deals ($1.1 billion over 29 deals).
“The focus on growing Canadian companies has never been more evident than what we are currently seeing in the market,” Furlong said.