Canadian Venture Capitalists Are Feeling Optimistic

Canada’s venture capital industry is feeling optimistic.

According to a survey of members of Canada’s Venture Capital & Private Equity Association, 80% of VCs believe that investment over the next 6 months will be the same as, or better than, the last 6 months. And the focus will be on new investments, 61% believe, not follow-on transactions.

“These survey results demonstrate that venture capital and private equity funds see great opportunity in these turbulent times,” said Gregory Smith, CVCA President and Managing Director of Brookfield Financial. “It is particularly encouraging to see the optimistic view of investing in Canada that emerges. Canada’s attractiveness as an investment destination for venture capital and private equity is a competitive advantage for our member funds and for the country as a whole, given the central role the industry plays in fostering innovation and company growth.”

Exits look poised to be somewhat popular, with 53% of survey respondents expecting they or their clients will sell at least one investment through a merger or acquisition in the next 6 months. However, just 9% anticipate an initial public offering in that time.

“While the ability to exit investments remains challenging, that doesn’t appear to be dampening our community’s interest in making new investments,” said Ian Palm, partner in McCarthy Tétrault’s Business Law group. “And almost three-fifths believe that access to debt capital will not be an impediment,” he added.

84% of VCs characterize the current climate as “better” or “the same” as 6 months ago for making private equity investments. For new venture capital investments, 81% say the climate is better or the same. On a worldwide scale, a majority feels that Canada’s investment climate is better than Europe (73%), Africa (53%), and Middle East (51%). 87% respondents feel that Canada’s climate is similar or better than the U.S.