How is the Canadian VC market doing in 2022?

New figures show that investment in Canadian firms has weakened as the year progresses

How is the Canadian VC market doing in 2022?
Steve Randall

Canadian firms hoping for investment from venture capital (VC) are likely to find conditions more challenging as the year heads to a close.

New data for the third quarter of 2022 shows a tighter pot of funds and VC firms that are financing less, continuing the trend seen in the first half of 2022.

CPE Analytics reports that Canadian VC disbursements totalled $950 million in Q3, down 21% from Q2 and a 71% decrease from Q1. Comparing the first nine months of the year, 2022’s $5.86 billion total is 46% below that of 2021 ($10.9 billion).

Investors from south of the border accounted for 53% of total disbursements, adding $3.1 billion in Q3. Non-US international investors contributed $976 million or 17% of the total.

Canadians accounted for 30% of the total disbursements in Q3, similar to the previous quarter, with $1.8 billion invested.

US investors have cut back their share of Canadian VC funding this year, raising concern that Q4 figures could show an even-more-challenging environment for Canadian firms that have come to rely on US cash.

Early-stage companies remain the favoured target for VC funding with ICT companies raising $3.35 billion or 57% of the total amount to maintain the sector’s top-choice position.  Cleantech companies raised $874 million or 15% of the total amount.

Regional stats

As BC is predominately funded by US and international investors in recent year, it is not surprising that BC continues to trail Quebec in 2022.

Ontario, Quebec, and BC VC-backed companies raised $2.44 billion, $1.58 billion, and $1.05 billion respectively.

Companies from Alberta and Saskatchewan, the only other $100 plus provinces, raised $503 million and $126 million respectively.