Canada the hotspot for venture capital

Country draws in record levels of funding – and there is more to come

There is a new hotspot for venture capital: and it’s all around us.

Canada is now the talk of the venture capital world, with The Financial Post reporting that a host of new funds have launched in the country over the last 12 months. Indeed data from Pitchbrook, which is a venture capital database, reveals that private companies in Canada have reeled in a record level of investment during the first quarter of 2016 – some $881 million across 103 funding rounds.

Speaking to The Financial Post, chief executive of the Canadian Venture Capital and Private Equity Association Mike Woollatt commented that on a recent trip to Silicon Valley many people were asking him specifically about Canada – and that there is a real buzz about the scene.

Of course, the start-up arena in Canada is comparatively humble when compared to the USA. It boasts only two private start-ups with a value in excess of $1 billion in the form of Kik Interactive Inc. and Hootsuite, according to data from CB Insights. However, there are a host of venture capital funds raising money to find the next big thing – for example, Kensington Capital Partners raised more than $300 million for its venture capital fund earlier in the year; while there are a host of smaller online funds too, focusing on retail start-ups.

According to Woollatt, the new venture capital funds appearing online are arriving in vast quantities and membership numbers are also on the rise.

In addition, there are several new players in the market such as iNovia Capital and Globalive Capital; while several US firms have also entered the Canadian market to get their own slice of the cake – in a recent deal, Lightspeed Venture Partners and Sequoia Capital invested $34 million in a new Canadian marketplace app that focuses on local swap meets and sales, called VarageSale.

Canada is said to lack a wealth of deep-pocketed investors – and as such, the arrival of American venture capital firms is helping to fill a niche.

Remarkably however, the rise of Canada comes at the same time as a fall in the USA – with Pitchbook reporting that the initial three months of 2016 saw the fewest venture deals in the country for four years.