Venture Capital Key Findings
CAD $1.7B Invested in Q2; Larger Cheque Sizes Drive Strongest Q2 Performance on CVCA Records
Later stage companies received half of all funding in the first half of 2020
CAD $1.7B was invested over 145 deals in the second quarter of 2020 which is 23% higher than the same quarter in 2019 ($1.35B) and more than double the amount invested in Q12020 ($818M). This was the highest investment in a second quarter since the CVCA began collecting industry data in 2013.
Large deal sizes (CAD $20M+) drove most of the dollars invested in H12020 which accounted for 69% of the total dollars invested. 11 mega-deals (CAD $50M+) closed in Q22020, totalling $884M invested. As a result, the average deal size in Q22020 was CAD $11.45M; 56% higher than the average deal size during the five-year period between 2015 – 2019 (CAD $7.3M).
Later stage Canadian companies received 50% of all funding (CAD $1.2B) in the first half of 2020, a sharp increase compared to the share of funding later stage companies collected last year with only 22%.
“VC investment activity in Q2 was driven by government stimulus coupled with a slight adjustment in valuation,” said Kim Furlong, CEO, Canadian Venture Capital and Private Equity Association.“We saw fewer deals, larger injections in portfolio holdings and VCs reviewing and re-evaluating deal flow that they may had passed on last year. The key is that VCs are continuing to invest.”
There were 13 mega-deals (CAD $50M+) in the first half of 2020, which accounted for a 43% share of total dollars invested. Included in the mega-deals was Kitchener-based Miovision’s CAD $120M founding round led by TELUS-ventures with participation from previous investor, McRock Capital.
The pace of VC-backed exits picked up in Q2, with an additional 9 exits closed. VC exits remain slow in comparison to previous years, with only 10 M&A exits in the first half. Two important VC-Backed IPOs were completed in Q2, both in the life sciences sector:
- Montreal-Based Repare Therapeutics listing on the NASDAQ with a market cap of $1.5B
- Hamilton-Based Fusion Pharmaceuticals went public on the NASDAQ, with a market cap of $964M
An additional notable exit was inovia Capital-backed North, Inc., which was acquired by Google for a reported $180M.
- 62% of deal flow (163 out of 264 deals) was less than $5M with 51 deals between $5M-$20M totaling $507M
- Ontario-based companies received 42% of investment ($1B); Quebec-based companies received a 24% ($599M) share followed by BC-based companies with 22% ($555M)
- ICT companies grabbed 53% of total dollars invested in H12020 ($1.3B over 145 deals) with life sciences companies receiving a 29% share ($722M over 47 deals)
Private Equity Key Findings
PE investment Up 33% in First Half of 2020 compared to H12019
PE in 2020 is pacing along the 2015 – 2019 average
PE performance is pacing along with the average between 2015 – 2019 in both deals and dollars invested (565 deals and CAD $21B) with $4.5B invested over 145 deals in the first half of 2020 —33% higher than the amount in the same period last year (CAD $3B).
There was a total of six mega deals (CAD $500M+) so far in 2020, totalling CAD $7B, 67% of total dollars invested (CAD $10.4B). 83% of PE deals were below $25M (198 out of 238 deals with disclosed values).
“Canadian PE investors continue to pursue transactions despite COVID-19,” said Kim Furlong, CEO, Canadian Venture Capital and Private Equity Association. “As Canada and international business cautiously open back up, I am encouraged to see resilience and confidence from Canadian Private Equity investors. There may still be some uncertainty ahead, but there is also opportunity.”
- Although a fifth of all deals (61 out of 297) were closed in the Industrial and Manufacturing sector, the sector only represented 11% of total dollars invested with CAD $1.2B. The lion’s share of invested dollars was captured by ICT sector (CAD $3B),driven by the $2.7B secondary buyout of Xplornet Communications Inc. by Northleaf Capital Partners to a US-based private equity firm.
WEBINAR CVCA Member-Only VC & PE Canadian Market Overview // H1 2020
On August 24th, our CEO, Kim Furlong along with our Associate, Research & Product, David Kornacki, walked CVCA members through the latest industry intel and provided market colour prior to the official release of the reports on August 26th.
For questions or to arrange an interview or quote from the CVCA or if you would like connections to our membership, contact us: