Canadian VC funding and deals reach record highs in 2018

• Canadian VC-backed companies raised a record $3.5B (all figures in USD) over 471 deals this year, up 35% and 30% respectively over 2017. • Canadian funding in Q4'18 jumped by 79% compared to previous quarter. • Canadian investors accounted for the majority of seed and later-stage investments. • Corporate participation in deal activity increased for the fourth consecutive quarter, to a high of 41%. • Toronto and Vancouver continued to drive the highest number of deals.

Funding and deals to Canadian venture-backed companies hit a record high as $3.5B (all figures in USD) was raised across 471 deals in 2018, according to the MoneyTree™ Canada report from PwC Canada and CB Insights. Canada closed out the year strongly with a 79% jump in funding to $983M in Q4'18, up from $548M in the previous quarter. Activity also increased to 116 deals, up from 96 in Q3. Canadian VC funding rose for the second consecutive year.

"2018 was another year of record highs for Canadian venture-backed companies. While deal count has risen across all stages of funding, the increase in total investment was mostly driven by larger cheque sizes in expansion and later-stage deals. Notable is the 26% increase in average deal size of expansion-stage deals year over year, which is an indicator of scale in the sector," said Michael Dingle, National Technology Sector Leader, PwC Canada.

"The Canadian startup ecosystem is doing well as funding and deals hit record highs this past year," stated Anand Sanwal, co-founder and CEO of CB Insights. "Sectors of strength include artificial intelligence, fintech, and digital health that all hit record funding highs in 2018. Investment and deals also increasingly flowed to top markets -- Toronto, Vancouver, Montreal, Québec City, and Calgary. Corporate investors will likely participate in more deals this coming year as investors recognize the growing market opportunity within Canada."

In 2018, Toronto and Vancouver were the top markets in deal activity and also saw 47% and 14% funding increases respectively, compared to 2017 funding totals. Toronto funding increased for the fifth consecutive year and deal activity also increased, from 136 in 2017 to 160 in 2018.

Montreal also saw funding and deal increases for the third consecutive year as Montreal-based companies raised $861M in 2018, up from $669M in 2017. Québec City funding and deals jumped with $427M across 30 transactions in 2018, up from $184M across 11 transactions in 2017. Calgary funding reached a six-year annual high as $126M was invested across 20 deals in 2018.

Key highlights for 2018:

  • Canadian AI funding increased for the second consecutive year, as AI companies raised $418M in 2018, a 51% jump compared to 2017. Annual deal count rose for the fifth consecutive year, to 43 transactions.
  • Comparing sectors by annual deal totals, internet companies raised the highest number of deals at 169 in 2018, up from 146 deals in 2017. Canadian internet companies also saw a 77% funding increase compared to the previous year with $1.3B invested.
  • Annual Canadian fintech funding and deal totals rose slightly in 2018, to $456M across 47 deals compared $441M across 42 deals in 2017.
  • Annual funding and deals for Canadian VC-backed digital health companies saw record highs, as $177M was invested across 30 deals in 2018. Digital health companies have increased funding year over year.
  • In 2018, Toronto leads in funding and deals at $1.3B across 160 deals. Toronto saw a 47% funding increase compared to 2017 and funding has increased for the fifth consecutive year.
  • Vancouver comes second in annual deal count with 101 deals. Annual deal and dollar totals increased in 2018 with $388M raised across 101 deals, up from $340M across 60 deals in 2017.
  • The largest deals in 2018 include Montreal-based Enerkem ($224M), Québec City-based Ocean Group ($112M), Québec City-based Coveo ($100M), Montreal-based Hopper ($100M) and Ottawa-based Assent Compliance ($100M).
  • The most active investors in Canadian companies were BDC, Real Ventures, Anges Québec, iNovia Capital and Panache Ventures.
  • In 2018, Canadian investors participated in 67% of all deals to Canadian venture-backed companies.

The MoneyTree report can be found here.

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