Canadian VC funding rose for the third consecutive year

Canadian VC-backed companies raised $4.1B (all figures in USD) over 469 deals in 2019. This record funding amount also marked the third year of increased VC funding. While funding was up 16% compared to the previous year, deal activity was down 11%, according to the MoneyTree™ Canada report from PwC Canada and CB Insights.

“Canadian venture-backed companies saw another robust year of record funding, driven by a strong second-half to close off the year. While total deal count did decline, median-deal size has risen by 13%, indicating a healthy and scaling ecosystem. Canada has stood out amongst its global peers as investors continue to recognize the value of Canadian innovation,” said Sabrina Fitzgerald, National Tech Sector Leader, PwC Canada.

“Canadian venture capital investment increased for the third year in a row as Toronto and Vancouver hit record funding highs in 2019,” stated Anand Sanwal, co-founder and CEO of CB Insights. “Seed- and early-stage rounds made up the majority of deals and investments in Canadian AI, fintech, and cybersecurity companies continue to grow. 2020 is poised to be another big year for Canada’s tech ecosystem and as the early stage bets mature, we expect many investors in the US will start looking north and paying more attention to the Canadian tech ecosystem.”

As the top Canadian market, Toronto funding surpassed $1.3B for the second year in a row. The deal count of 175 was only 5 below the number of deals in 2018.

Vancouver hit a six-year high for funding as Vancouver-based startups raised $924M in 2019, more than double investment levels seen in 2018. While deal activity fell to 72 deals compared to 109 in 2018, deal activity remains above pre-2018 levels as larger deal sizes drive gains in funding.

Montreal funding and deals remain at healthy levels — after a strong H2’19, 2019 total funding to Montréal-based companies was $931M, only $11M below 2018 levels. 2019 investment was still above annual funding levels seen before 2018, an exceptionally strong year.

Waterloo and Calgary rounded out the top markets as Waterloo-based companies raised $139M across 25 deals and Calgary-based companies raised $132M across 22 deals

Key 2019 highlights:

• In 2019, seed- and early-stage rounds continued to make up the majority of investments.
  
  
• VC-backed Canadian AI companies hit record funding and deal highs. Funding increased 49% in 2019, to $658M. Deal activity also rose steadily, with a high of 57 deals in 2019.
  
  
• VC-backed Canadian fintech companies also hit record funding and deal highs. Funding to Canadian fintech companies more than doubled in 2019, to $776M, up 104% from 2018. Deal activity reached a new high at 59 deals, an 11% increase YoY.
  
  
• Funding to Canadian cybersecurity companies also reached a new high, with $398M invested across 19 deals. Accompanying the funding jump, deal activity also picked up in 2019, climbing to 19 deals.
  
  
• Though funding to VC-backed Canadian clean energy tech companies fell 33%, the number of deals rose 50% YoY, reflecting increased investor interest in the clean energy space.
  
  
• Canadian digital health companies saw a slight downtick in funding and deal activity, with dollars invested falling 26% YoY and deal count down 14% as $135M was raised across 31 deals.
  
  
• The most active investors in Canadian companies were BDC (includes all venture capital and growth/transition capital arms), Real Ventures, SOSV and Panache Ventures tied for third most active, Investissement Quebec follows, and MaRS Investment Accelerator Fund, Inovia Capital and Fonds de Solidarite FTQ tied for sixth

SOURCE PwC (PricewaterhouseCoopers)