Canadian VC reaches record high of $2.78 billion in first quarter
Canadian venture capital (VC) reached an historic high of $2.7 billion in the first quarter of 2021, according to analysis from research firm CPE Media.
The number of financings – 192 – was also a record high.
The top destination for VC in Q1 2021 wasn’t Ontario, as is typical, but British Columbia. BC attracted $1.2 billion from 57 financings, including the blockbuster Dapper Labs deal. The Vancouver-based blockchain technology firm reeled in US$304.4 million to snag the largest Canadian venture capital financing of all time.
US investors continued to account for a large portion of funding, increasing from 40% overall in 2020 to 43% in Q1 2021. In the first three quarters of 2020, US investment retreated to 31% as a result of the pandemic, with Canadian institutional investors picking up some of the slack.
US-origin funding reached $1.51 billion in Q1 2021, with $626 million from private VC, $283 million from corporate VC, and $276 million from hedge funds. US private VC financing was 2.5 times the amount of Canadian private VC financing in the first quarter.
Indeed, Canadian VC funding retreated to 28% of overall funding in Q1 2021 – down significantly from the 48% registered in 2020 as a whole. Foreign investment from countries other than the US made up 18% of funding in the quarter, with most of that flowing from Germany, the British Virgin Islands, Hong Kong, and the UK.
BC attracted capital overwhelmingly from US and foreign investors, at 55% and 25%, respectively.
US investors accounted for more than 50% of financing in every region save the Prairies. That region raised just 42% of its VC capital from US and foreign sources.
"The Q1 2021 data reveal the astonishing dominance of US and foreign funds in the Canadian venture capital market place,” said Richard Rémillard, president of Rémillard Consulting Group (RCG). “On the one hand, this feature is testament to the vibrancy of the technology sector in Canada that is evident in both private and public capital markets.
“On the other hand, this data is likely to reinforce the concerns of those who have expressed fears that Canada may be continuing to export its future business champions as the leading market share of US funds at the growth stage seems to now encompass multiple stages of venture investing.”
