According to the Canadian Venture Capital and Private Equity Association (CVCA), venture capital funding in Canada experienced a decline in the third quarter of this year, signaling a “return to normalcy.” Of the $1.2 billion invested in venture capital during Q3, the information and communications technology (ICT) sector attracted the highest amount of capital, followed by life sciences, cleantech, and agribusiness.
Throughout the first three quarters of 2023, Canadian companies secured a total of $5.4 billion in venture capital across 494 deals. Despite being the slowest quarter in 2023 so far, there is a 14 percent increase in total deal value compared to Q3 2022, as reported in the CVCA’s quarterly public market report.
In 2023, Ontario has taken the lead in venture capital investment, securing 50 percent of the total with an impressive $2.5 billion. Following closely, Quebec attracted $1.2 billion, British Columbia received $888 million, and Alberta secured $534 million in venture capital.
In British Columbia, a notable deal involved Vancouver-based blockchain company LayerZero, which raised $120 million in Series B financing. According to Kim Furlong, CEO of the Canadian Venture Capital and Private Equity Association (CVCA), there is an observed shift towards a return to pre-pandemic norms from 2019. Furlong notes that investor attention has moved from funding growth, as seen in 2021, to a focus on profitability. The current trend involves highlighting robust companies with sustainable plans or proven profitability.
The emergence of initial public offerings (IPOs) as an exit strategy, a phenomenon absent for the past 18 months, along with a substantial influx of new companies, indicates a strong return to normalcy following the atypical years of the pandemic.
Breaking down the sectors, the information and communications technology (ICT) sector led in venture capital, with $3.1 billion invested across 237 deals in the first three quarters of 2023, constituting 58 percent of the total investment. Following closely, life sciences companies secured the second-highest funding with $986 million across 118 deals. Cleantech attracted $800 million across 55 deals, while agribusiness attracted $232 million.
Regarding exits, the primary methods were through mergers and acquisitions, followed by secondary buyouts.
Source: PEAK