Summary: Canada’s Venture Capital Landscape by BDC

July 2, 2024

BDC recently released a report on Canada’s venture capital (VC) landscape, in 2023 and the last five years, including regional breakdowns providing insight into how British Columbia (B.C.) is performing in comparison to other jurisdictions.

Here is a summary of the findings.

British Columbia’s Venture Capital Landscape

  • B.C. accounted for 18% of VC investment relative to economic size within Canada, with Ontario leading at 48% followed by Quebec at 20%.
  • In the last five years, information, communication and technology (ICT) accounted for 59% of investment dollars and deal counts in B.C., followed by energy and clean technology (ECT) accounting for 23% of investment and 17% of deals.
  • In the last five years, B.C. accounted for 30% of exit values, with Ontario accounting for 29% (despite accounting for nearly half of VC investments) and Quebec 28%.
  • In the last five years, B.C. generated 11 unicorns, behind Ontario’s 17 unicorns.

Canadia’s Venture Capital Landscape

  • The ICT sector remained the dominant sector for VC investment in Canada, partially fueled by the market’s interest in artificial intelligence (AI).
  • There was slightly more investor interest in the life sciences and ECT sectors.
  • While capital invested in later-stage companies decreased 47%, the number of deals only decreased by 19% implying smaller cheque sizes.
  • There was a decrease in bridge financing, suggesting companies are returning to priced rounds.
  • First-time and developing managers represented 82% of active general partners (GPs).
  • Demand for venture debt decreased with the rise of interest rates and companies managing their cash more tightly.
  • There was an increase in internal rounds with investor cautiousness leading them to focus on optimizing their portfolios.
  • With lower levels of initial public offers (IPOs), there were record merger and acquisition (M&A) exits by value, largely driven by acquisitions in the life sciences and ECT sectors.

Canada’s VC Landscape in the Global Context

  • It is estimated that Canadian GPs hold $10.4 billion in dry powder (cash reserve or liquid assets) compared to American GP’s $421 billion.
  • Canadian VC investments increased 64% from pre-pandemic levels, while the global market increased 15%.
  • Canada ranked third in the G7 for funding per capital raised for AI companies.
  • Nearly 60% of VC deals in Canada had foreign participation, with 34% from the United States and 13% from Europe.

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