H1 2021 - VC & PE Canadian Market Overview
H1 2021

VC & PE Canadian Market Overview

Venture Capital Key Findings

CAD $5.6B Invested in Q2; Strongest First Half on Record with CAD $8.3B Invested
VC investment in 2021 has already eclipsed all previous years

CAD $5.6B was invested across 216 deals in Q22021 bringing the total VC investment to CAD $8.3B across 394 deals for the first half of 2021; eclipsing all previous full-year totals on CVCA records. 

There were 39 mega-deals (CAD +$50M) in H12021 totalling CAD $6.2B and accounting for 75% of total dollars invested in the half; a sharp increase from the four mega-deals in H12020. H12021 saw the largest funding round on record, with Toronto-based Fintech company Wealthsimple closing CAD $750M in growth funding in May.

The average deal size in H12021 was CAD $21M, an all-time high. Over 59% of the 394 deals were less than CAD $5M, with most of these deals ranging between CAD $1M-5M.

There have been 30 exits since the beginning of the year with a total value of CAD $5.9B. Included in the top exits were NASDAQ’s CAD $3.5B acquisition of Verafin Inc. in February, Dialogue Health Technologies Inc.’s (TSE: CARE) CAD $779M IPO on the TSX in March, and Thinkific Labs Inc.’s (TSE: THNC) CAD $232M IPO on the TSX in April. 

We are continuing to see the results of the government’s Venture Capital Catalyst Initiative (VCCI) and the impact of Canada’s maturing technology ecosystem. The increase in larger exits has prompted an increased interest for more capital into Canadian funds and higher funding rounds into Canadian companies,” said Kim Furlong, Chief Executive Officer, CVCA. More than half of the VC dollars in the first half of the year have gone towards later stage or growth opportunities, including in the record Wealthsimple investment. Specific growth opportunities like these have helped to make this quarter spectacular.” 

The information, communications, and technology (ICT) sector received 64% of the total VC investment in the first half of 2021, with CAD $5.3B invested across 232 deals. The life sciences sector received 13% of the investment with CAD $1B across 50 deals, and cleantech received about 4%, with CAD $295M across 22 deals.

CVCA H1 2021 VC Qo Q

Private Equity Key Findings

Mid-Market Deals Represent 85% Of All PE Activity in H1 Supporting Canadian SMEs and Continuing Canada’s Economic Recovery
PE Exits in the First Half Surpass Levels Realized In 2020

CAD $6.2B PE dollars were invested in Canada in Q2 across 200 deals bringing the total for the first half of the year to CAD $8.8B across 377 deals. 

PE deals under CAD $25M accounted for 85% of all deals with disclosed deal values in the first half of 2021, a continued trend since 2016, and underscoring the important investments Canadian PE makes into small and medium-sized enterprises (SMEs), the engine of job creation in the economy.

There were 40 exits valued at CAD $4.4B in the first half, including five IPOs on the TSX, already surpassing exit levels observed in all of 2020. Among the top disclosed exits included the CAD $928M acquisition of Terrapure by GFLEnvironmental, the CAD $525M IPO listing of ABC Technologies on the TSX (TSE: ABCT), and the CAD $340M acquisition of Paybright by Affirm.

We know that PE investment helps support Canadian business ownership transitions — preserving the value created over the company’s lifetime,” said Kim Furlong, Chief Executive Officer, CVCA. In 2017, 49.3% of Canadian SME owners signaled their intention to exit their business within five years which has increased the demand for partnerships with PE funds and speaks to the significant activity we are seeing in the mid-market. We anticipate this trend will continue as Canada’s economic recovery advances.”

The information, communication, and technology (ICT) sector continued to receive the majority of PE investment in H1, accounting for 23% of all PE investment activity and 13% of all dollars invested. Although the financial sector only accounted for 6% of total activity, the sector saw the highest share of dollars invested, 24% or CAD $2.1B. The dollars invested in the sector can largely be attributed to the $1.6B privatization of Sagen MI Canada by Brookfield Business Partners in Q2. The industrial and manufacturing sector stayed steady with 20% of all PE activity (75 deals).

CVCA H1 2021 PE Qo Q

CVCA Member-Only H1 2021 Preview

Our CEO, Kim Furlong along with Christiane Wherry, Vice President, Research and Product, and David Kornacki, Manager, Research and Product walked through the latest industry intel in the report ahead of its public release.

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