venture capital canadian market overview …...venture capital canadian market overview // q1 2020 |...

VENTURE CAPITAL CANADIAN MARKET OVERVIEW

// Q1 2020

VENTURE CAPITAL CANADIAN MARKET OVERVIEW // 2019 | 2

source:

CONTENTS

PARTICIPATING DATA CONTRIBUTORS .......................................................................3 FOREWORD ......................................................................................................................4 VENTURE CAPITAL HIGHLIGHTS ..................................................................................5 DATA VISUALIZATIONS ...................................................................................................6 VENTURE CAPITAL HEAT MAP ................................................................................................................. 6 QUARTER-OVER-QUARTER VC INVESTMENT ACTIVITY ................................................................. 7 VC ACTIVITY BY DEAL SIZE ...................................................................................................................... 8 TOP 10 DISCLOSED CANADIAN VC DEALS...........................................................................................9 TOP 10 CANADIAN CITIES // ADMINISTRATIVE CENTRES ............................................................. 10 VC SECTOR BREAKDOWN ....................................................................................................................... 11 VC STAGE BREAKDOWN .......................................................................................................................... 12 VENTURE DEBT HEAT MAP ..................................................................................................................... 13 VC EXITS ....................................................................................................................................................... 14MOST ACTIVE VC FIRMS // FUNDS ....................................................................................................... 15

VENTURE CAPITAL METHODOLOGY ........................................................................ 16 AUTHORS, ABOUT CVCA AND CONTACT INFO ...................................................... 17

VENTURE CAPITAL & PRIVATE EQUITY CANADIAN MARKET OVERVIEW // Q1 2020 | 3

If you would like to have your firm included in future reports, please contact [email protected]

CVCA thanks the following firms who participated in its Q1 2020 survey.

PARTICIPATING DATA CONTRIBUTORS

7 Gate Ventures

AmorChem Fund

Amplify Capital

Amplitude Ventures

Anges Quebec

Anges Quebec Capital

Arctern Ventures

AVAC Ltd.

BCF Ventures

Brightspark Capital

CIBC Innovation Banking

Clanton Capital Inc.

Conexus Venture Capital

CTI Life Sciences

Cycle Capital Management/EcoFuel

Dash40 Ventures

Emerald Technology Ventures

Espresso Capital Ltd.

Evok Innovations

Ferst Capital

Fight Against Cancer Innovation Trust

First Ascent Ventures

Fonds Innovexport

Framework Ventures

Freycinet Ventures

Good News Ventures

GreenSoil Investments

Highline Beta

iGan Partners

Information Venture Partners

Innovacorp

inovia Capital

Island Capital Partners

Klass Capital

Luge Capital

Lumira Ventures

MaRS IAF

McRock Capital

Mistral VP

NAventures (National Bank of Canada)

New Brunswick Innovation Foundation

OMERS Ventures

Ontario Capital Growth Corporation

Panache Ventures

Pangaea Ventures

Portag3 Ventures

Quantius

Quark Venture

Radical Ventures

Real Ventures

Relay Ventures

Renewal Funds

Ripple Ventures

Roadmap Capital

Round 13

Ryerson Futures

Sectoral Asset Management Inc.

Tactico Inc.

Tandem Expansion

TandemLaunch

TELUS Ventures

Top Renergy

TVM Life Sciences

V3-Ventures

Vanedge Capital Partners

Venbridge Ltd.

VentureLink Funds

Versant Ventures

White Star Capital

Whitecap Venture Partners

Venture Capital Firms32 Degrees Capital

ARC Financial

Ardenton Capital Corporation

BDC Growth Equity

BDC GTC

BMO Capital Partners

Bond Capital

CAI Capital Partners

Canadian Business Growth Fund

Capital Financière Agricole

Clairvest Group Inc.

Clearspring Capital Partners

Credit Mutuel Equity

First West Capital

Founders Group of Food Compa-nies Inc.

Fulcrum Capital Partners

Highland West Capital

InstarAGF Asset Management

Ironbridge Equity Partners

Kayne Capital

Killick Capital Inc.

m2s Capital

Mink Capital

Mosaic Capital Corporation

Novacap Management Inc.

PenderFund Capital Management

Persistence Capital Partners

PFM Capital Inc

PRIVEQ Capital Funds

Regimen Equity Partners

Seafort Capital

Swander Pace Capital

Tricor Pacific Capital Ltd.

TriWest Capital Partners

Vistara Capital Partners

Westcap Mgt. Ltd

Western Investment Company of Canada Limited

Private Equity & LSVCC FirmsAlberta Enterprise Corporation

Alberta Teachers’ Retirement Fund (ATRF)

BDC Capital

Bluesky Equities

Caisse de dépôt et placement du Quebec

Dancap Private Equity Inc

Desjardins Capital

Fondaction

Fonds de solidarite FTQ

HarbourVest Partners (Canada) Ltd

Investissement Quebec

Kensington Capital Partners Ltd.

Northleaf Capital Partners

Ontario Teachers’ Pension Plan (OTPP)

Teralys Capital

Limited Partners

source:

More than three-quarters of a billion dollars (CAD $831M over 117 deals) was invested in the first quarter of 2020, 7% lower than the same period in 2019 (CAD $897M). There was also a notable 45% quarter-over-quarter decline in activity which is the most pronounced drop in VC investment activity between the fourth and first quarters over the last five years.

“The venture capital investment performance in the first quarter demonstrates the health of the ecosystem in a pre-COVID-19 environment.” said Kim Furlong, Chief Executive Officer, CVCA. “We expect to continue to see a drop in the second quarter and potentially the third as investors have increased their reserve funding for existing portfolio companies. Also, the challenges in conducting due diligence given social distancing may impact the number of deals that get done in the next few months.”

There were 3 $50M+ mega-deals in the first quarter which accounted for a 30% share of total dollars invested. The largest of these was:

Kitchener-based Miovision Technologies Inc.’s $120M series C round from investors that included TELUS Ventures and McRock Capital

Information and Communication Technologies (ICT) companies received 54% of total dollars invested in Q1 2020 ($449M over 59 deals) with life sciences companies receiving a 21% share ($174M over 19 deals).

The pace of VC-backed exits in the 5-year between 2015-2019 (averaging 10 per quarter) slowed with only 3 undisclosed M&A exits in the first quarter.

VENTURE CAPITAL CANADIAN MARKET OVERVIEW // Q1 2020 | 4

source:

FOREWORD

Quarterly activity experiences a marked QoQ decline; further decline in VC investment in Q2 is anticipated due to COVID-19

VC-backed exit momentum also slowed in Q1 2020


source:

VENTURE CAPITAL HIGHLIGHTS // Q1 2020

Key Findings

$831M was invested over 117 deals in the first quarter this year which is 7% lower than the same quarter in 2019 ($897M) and 45% lower than Q4 2019 ($1.5B)

Although Q1 activity does not reflect the full impact of the COVID-19 lock down which started in mid-March, it is notable that the typical quarter-over-quarter drop in activity between Q4 to Q1 (45%) is the most pronounced it has been in the last 5 year period

The average deal size was $7.1M, a 14% decrease from Q1 last year and 3% lower than the average deal size during the 5-year period between 2015-2019 ($7.3M)

There were a total of 3 $50M+ mega-deals which accounted for a 31% share of total dollars invested. The largest of these was:

Kitchener-based Miovision Technologies Inc.’s $120M Series C Round

from investors that included Telus Ventures and McRock CapitalAlmost two-thirds of deal flow (75 out of 117) was less than $5M with 19

deals between $5M-$20M totaling $198MOntario-based companies received 61% of investment ($504M); BC-based

companies received a 20% ($164M) share followed by Quebec-based companies with 12% ($99M)

ICT companies grabbed 54% of total dollars invested in Q1 2020 ($449M over 59 deals) while life sciences companies received a 21% share ($174M over 19 deals)

Early stage companies received 50% of all funding ($419M over 72 deals)The pace of VC-backed exits slowed tremendously with only 3

undisclosed M&A exits in the first quarter


source:

4

46

21

11

34

35

$99M

$504MOntario

$164MBC

$53MAlberta

Québec

Nova Scotia$2M

New Brunswick$2M$5M

Manitoba

Newfoundlandand Labrador

$2M

2

VENTURE CAPITAL HEAT MAP // Q1 2020

$831Mtotal

117 dealstotal #


source:

QUARTER-OVER-QUARTER VC INVESTMENT ACTIVITY

$0

$250

$500

$750

$1,000

$1,250

$1,500

$1,750

$2,000

$2,250

$2,500

0

20

40

60

80

100

120

140

160

180

200

Q2Q1

$940

$703

Q3

$717

Q4

$839

$831

Q2Q1

$592

$864

Q3

$1,11

4

Q4

$1,0

55

Q1

$629

Q2 Q3

$1,0

70

$710

Q4

$1,2

68

Q1 Q1

$897

Q2

$1,3

50

Q3

$2,4

14

Q4

$1,5

06

125117

145

124

134

104

120 118111

128

143

108

129

116

151

130

163

TOTAL:528 DEALS

$3.2B

TOTAL:453 DEALS

$3.6B

TOTAL:508 DEALS

$3.7B

TOTAL:560 DEALS

$6.2B

TOTAL:117 DEALS

$831M

$ Millions Invested # Deals

2016 2017 2018 2019 2020


source:

VC ACTIVITY BY DEAL SIZE // Q1 2020

Total Deals $ Millions

< $100K

$100K - $500K

$500K - $1M

$1M - $5M

$5M - $20M

$20M - $50M

$50M +

7

18

12

38

19

9

3

$1

$8

$10

$88

$198

$272

$255

$5m

NEARLY TWO THIRDs OF ALL INVESTMENT ACTIVITY WAS

LESS THAN


source:

TOP 10 DISCLOSED CANADIAN VC DEALS // Q1 2020

company name province Disclosed VC Firm(s) sector stage $ mil

MIOVISION TECHNOLOGIES INC. ONTARIO TELUS VENTURES, MCROCK CAPITAL ICT LATER STAGE $120

TOP HAT ONTARIOGEORGIAN PARTNERS, INOVIA CAPITAL, UNION SQUARE VENTURES, EMERGENCE CAPITAL AND LEADERS FUND, BMO TECHNOLOGY AND INNOVATION BANKING GROUP

ICT LATER STAGE $72

ADA SUPPORT ONTARIO ACCEL, BESSEMER VENTURE PARTNERS, FIRSTMARK, VERSION ONE, LEADERS FUND, AND BURST CAPITAL ICT EARLY STAGE $64

ALAYACARE ONTARIO CAISSE DE DÉPÔT ET PLACEMENT DU QUÉBEC, INOVIA CAPITAL LIFE SCIENCES EARLY STAGE $48

DEEP GENOMICS ONTARIO FUTURE VENTURES, AMPLITUDE VENTURES, KHOSLA VENTURES, MAGNETIC VENTURES AND TRUE VENTURES LIFE SCIENCES LATER STAGE $40

BENCHSCI ONTARIO F-PRIME CAPITAL, NORTHLEAF CAPITAL PARTNERS, GRADIENT VENTURES, INOVIA CAPITAL, GOLDEN VENTURES, AND REAL VENTURES ICT EARLY STAGE $30

NORTHONE ONTARIO BATTERY VENTURES, REDPOINT VENTURES, AND TOM WILLIAMS OTHERS EARLY STAGE $28

ASPECT BIOSYSTEMS BRITISH COLUMBIA RADICAL VENTURES, PANGAEA VENTURES, PALLASITE VENTURES, AND RHINO VENTURES LIFE SCIENCES EARLY STAGE $26

VALDERE ALBERTA WING VC, GREYLOCK PARTNERS AND SALLYPORT INVESTMENTS ICT EARLY STAGE $20

CANALYST FINANCIAL MODELING CORPORATION BRITISH COLUMBIA SCALEUP VENTURES, VANEDGE CAPITAL ICT EARLY STAGE $20

There were 3 undisclosed deals totalling $81M omitted from this table.


source:

TOP 10 CANADIAN CITIES ADMINISTRATIVE CENTRES // Q1 2020

29 DEALSTotal Deals $ Millions

1. Toronto

2. Montréal

3. Vancouver

4. Edmonton

5. Calgary

6. Victoria

7. Halifax

8. St. John’s

9. Kitchener, Waterloo

10. Hamilton

29

25

13

6

5

4

4

4

2

2

$348

$85

$118

$9

$44

$19

$2

$2

$122

$26

110

9

5

4

2 7

8

#1 toronto $348M

36


source:

VC SECTOR BREAKDOWN // 2016–Q1 2020

0

40

80120

160

200

240

280

320

400

360

440

480

$0

$300

$600

$900

$1,200

$1,500

$1,800

$2,100

$2,400

$2,700

$3,000

$3,300

$4,000

$2,

259

2017 2018 2018 201820182016 20172016 201720162016

$1,9

14

$20

8

$18

5

2017 2019 201920192019 Q12020

Q12020

Q12020

Q12020

322

269

104

$72

3

$67

2

$17

492 95

119

432859 49

27 2927

22 29

$27

8

$41

4

$94

300

316

$64

6

$2,

428

$4,

028

$1,0

51

$18

5

$12 $

158

$40

0

$9

$44

9

19 5 5

ICT CLEANTECHLIFE SCIENCES AGRIBUSINESS



source:

VC STAGE BREAKDOWN // 2016–Q1 2020

$0

$250

$500$750

$1,000

$1,250

$1,500

$1,750

$2,000

$2,250

$2,500

$2,750

$3,000

20172016 20172016

$212

$1,5

94

$1,9

53

$1,3

53

20182018

262

232

192

85

7279

14

$1,4

22

59$236

2019 Q12020

$310

$251

2019 Q12020

20172016 2018 2019 Q12020

2019 Q12020

$1,5

64

$1,3

68

$343

$32

$1,5

45

98

263

178

154

177

25

194

24

2 0

30

60

90120

150

180

210

240

300

270

330

360

$2,7

42

$1,7

25

$17

$419


SEED LATER STAGEEARLY STAGE GROWTH EQUITY


source:

$8M

$30mOntario

$36MBritish

Columbia$1M

AlbertaNA

Saskatchewan

NANova Scotia

Québec

2

2

2

1

4

4

VENTURE DEBT* HEAT MAP // Q1 2020

$75mtotal 15 deals

total #

* VC Debt deals are not included in the overall Canadian VC activity


source:

VC EXITS // 2016–Q1 2020

IPO/RTO**

$0

$300

$600

$900

$1,200

$1,500

$1,800

$2,100

$2,400

$2,700

$3,000

0

5

10

15

20

25

30

35

40

50

45

20172016 20172016

$584

$1,0

65

20182018

$1,0

33

$1,4

29

2019 Q12020

2019 Q12020

32

0 0 3

33

3936

03 $2,15

0

$1,6

00

$16

Exit Value ($ Millions) # Exits * Includes transactions with undisclosed values ** IPO valuation

M&A*


source:

MOST ACTIVE VC FIRMS // FUNDS // Q1 2020

MOST ACTIVE PRIVATE INDEPENDENT FIRMS # ROUNDSSIZE OF TOTAL

ROUNDS*(CDN$ MIL)

CYCLE CAPITAL MANAGEMENT/ECOFUEL 7 $50

INOVIA CAPITAL INC. 5 $93

REAL VENTURES 4 $29

BRIGHTSPARK CAPITAL 4 $15

GENECHEM 3 $3

KILLICK CAPITAL 3 $2

DASH40 VENTURES 2 $2

CHRYSALIX VENTURE CAPITAL 2 $65

MOST ACTIVE GOVERNMENT FUNDS # ROUNDSSIZE OF TOTAL

ROUNDS*(CDN$ MIL)

BDC CAPITAL 10 $67

MARS IAF 5 $3

INNOVACORP 5 $1

NEW BRUNSWICK INNOVATION FOUNDATION 4 $1

MOST ACTIVE PENSION, RETAIL, CORPORATE & OTHER PUBLIC FUNDS # ROUNDS

SIZE OF TOTAL ROUNDS*

(CDN$ MIL)

DESJARDINS CAPITAL 11 $29

TELUS VENTURES 4 $138

FONDS DE SOLIDARITÉ FTQ 1 $1

MOST ACTIVE FIRMS IN VC DEBT DEALS # ROUNDSSIZE OF TOTAL

ROUNDS*(CDN$ MIL)

CIBC INNOVATION BANKING 7 $51

VENBRIDGE 7 $2

ROADMAP CAPITAL 1 $21

LUGE CAPITAL 1 $2

HIGHLINE BETA 1 $2* Total deal values - includes all participating investors

# Rounds

Desjardins Capital

BDC Capital

Cycle Capital

MaRS IAF

inovia Capital

Innovacorp

TELUS Ventures

Real Ventures

Brightspark Capital

11107555444

Size of Total Rounds* (Cdn$ mil)

$29 $67 $50 $3 $93 $1 $138 $29 $15


source:

CVCA METHODOLOGY // VENTURE CAPITAL

VENTURE CAPITAL DATA:Verified completed equity, quasi-equity venture capital and venture debt deals only (non-equity or project-based government funding, pharmaceutical development deals, venture capital-backed acquisitions, and angel financing are not included)

VENTURE DEBT SHORT-TO-MEDIUM TERM, NON-DILUTIVE DEBT INSTRUMENT WITH NO EQUITY RIDER.

SEED STAGE COMPANY HAS A CONCEPT OR PRODUCT UNDER DEVELOPMENT, BUT IS PROBABLY NOT FULLY OPERATIONAL.

EARLY STAGE COMPANY HAS A PRODUCT OR SERVICE IN TESTING OR PILOT PRODUCTION. IN SOME CASES, THE PRODUCT MAY BE COMMERCIALLY AVAILABLE.

LATER STAGE PRODUCT OR SERVICE IN PRODUCTION AND COMMERCIALLY AVAILABLE. COMPANY IS GENERATING ON-GOING REVENUE, BUT NOT NECESSARILY, PROFITABLE.

GROWTH SIGNIFICANT MINORITY INVESTMENT TO DRIVE GROWTH AND SCALE WHICH CAN BE COMBINED WITH A SECONDARY TRANSACTION TO FACILITATE LIQUIDITY FOR EXISTING VC INVESTORS

ICT COMPUTER HARDWARE AND SOFTWARE AND SERVICES, INTERNET SOFTWARE OR SERVICES, ECOMMERCE, ELECTRONIC & SEMICONDUCTOR, MOBILE AND TELECOM TECHNOLOGIES AND SERVICES.

LIFE SCIENCES BIOTECH, MEDICAL DEVICES, PHARMACEUTICALS, EHEALTH, HEALTHCARE PRODUCTS AND SERVICES, AND OTHER MEDICAL RELATED PRODUCTS AND SERVICES.

CLEANTECH ENERGY AND FUEL TECHNOLOGIES, EFFICIENCY AND CONSERVATION, RENEWAL ENERGY, ENVIRONMENTAL TECHNOLOGIES AND OTHER ENERGY AND ENVIRONMENTAL PRODUCTS AND SERVICES.

AGRIBUSINESS TRADITIONAL AND ADVANCED AGRICULTURAL TECHNOLOGIES AND SERVICES

vc development stages

vc sectors

ABOUT AND CONTACT To obtain estimates for additional custom CVCA Intelligence data reports please contact [email protected]

About CVCAOUR VISIONA thriving Canadian economy driven by private capital

OUR MISSION CVCA’s mission is to help our members fuel the economy of the future by growing the busi-nesses of today. We do this by supporting and connecting a vibrant private capital industry with advocacy, research, and education.

CVCA is also the nation’s ultimate resource for data on Canadian private capital investments.

Please visit cvca.ca

@CVCACanada CVCA

CVCA - Canadian Venture Capital and Private Equity Association

372 Bay St., Suite 1201 Toronto, ON M5H 2W9

Authorsdarrell pinto vp, research & industry [email protected]

david kornacki associate, research & [email protected]

jon jackson head of [email protected]

IZADELLA STA. ROMANA MARKETING & BRAND [email protected]

venture capital canadian market overview …...venture capital canadian market overview // q1 2020 |...

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