Canadian VC Investments in Tech Companies up 57% from Last Year, Rise to Over Half a Billion Dollars

Venture capital investments in Canada were up 31 per cent during the second quarter, when compared to the year before, according to a new report released by Canada’s Venture Capital and Private Equity Association.

Across the country, venture capitalists invested $505 million during the three-month period that ended on June 30. That’s up from $455 million during the same period last year

The number of deals also increased, with 130 reported during the quarter. That up from 111 a year ago.

The increase was “led by a number of major Canadian technology deals,” according to the report, prepared by Thomson Reuters. “These included financings of St. John’s, Newfoundland-based Verafin, Toronto-based Wattpad and SHOP.CA Network, and Vancouver-based Visier.”

So far this year over $890 million in VC has been invested. That’s a up from $825 million at this time last year.

Of that, $535 million went to tech companies, a 57 per cent increase from last year.

Software companies received half of those investments. Another 27 per cent went to what the report describes as “internet specific” companies. Hardware and semi-conductor companies accounted for the most of the rest.

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Despite the increase, VC investment and fundraising rates in Canada continue to lag those in the United States.

South of the border, US$22.7 billion in VC has been invested so far this year. VC fundraising was also up in the U.S., with US$16.5 billion in new commitments during the first two quarters of 2014.

Here in Canada, though, its a different story. VC fund-raising was down 71 per cent during the second quarter, dropping from $392 million to $112 million.

Those low numbers pushed the amount of new funds committed during the first half of 2014 down 26 per cent from the same period a year ago – despite a stronger first quarter.

So far this year, “$643 million has been committed to a dozen domestic VC funds,” the report says. That’s compared to “$873 million committed to 18 funds in the first half of 2013.”

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“We remain concerned about domestic venture capital fundraising activity, which materially lags the pace and volume of fundraising in other jurisdictions, such as the United States,” said Mike Woollatt, CEO of CVCA in a release. “Without an increase in capital allocation to our domestic VC ecosystem, there is a real risk of foreign investment dominating our industry, and a slowing in new company formation and growth within Canada’s innovation economy.”

On a regional basis, Ontario leads the country so far this year, with 37 per cent of investments going to firms in the province. On a dollar basis, investments in the province were up 40 per cent to $330 million.

British Columbia took second, with a 22 per cent market share as investments in the province rose 34 per cent to $194 million while investments in Quebec, traditionally Canada’s second largest market, fell 58 per cent to $161 million, or 18 per cent of the national total.

Alberta and Atlantic Canada also saw stronger results in the first two quarters.