With $2.7B invested, Q1 is top quarter ever for Canadian VC investment

Record quarter propelled by late-stage deals, says CVCA head Kim Furlong.

Q1 2021 was the strongest quarter on record for VC investment with $2.7 billion invested over 175 deals in the first three months. According to a report by the Canadian Venture Capital & Private Equity Association (CVCA):

  • There were 16 mega deals ($50 million+) in Q1, accounting for 67% of total dollars invested in the quarter.

  • The average deal size was $15 million.

  • Over 57% of the 175 deals in Q1 were less than $5 million, with most of these deals ranging between $1-5 million.

Later stage investments received half of all the VC funding in this quarter with a 71% increase in deal count and a 277% increase in dollars invested year-over-year (YoY), a signal that more Canadian companies may be preparing for an initial public offering (IPO).

“The record quarter was propelled by late-stage deals with an increase in investments in Canada’s best-performing companies,” said Kim Furlong, Chief Executive Officer, CVCA. ​“VCs are willing to stay the course across all stages of the startup life cycle. This rise of growth is contributing to the current IPO rage which is expected to continue throughout 2021. It’s an exciting time for Canada’s innovation sector and a testament to the role VCs play in our economy.” 

There was a total of eleven exits valued at $4.8 billion in the first quarter of 2021 which is 30% of the number of exits and almost 50% of total exit value in all of 2020. The largest exit this quarter was St. John’s‑based fintech company Verafin, listing on the NASDAQ for $3.5 billion, one of the largest exits on record, with participation from Information Venture Partners, Northleaf Capital, BDC Capital, and Teralys Capital. Another notable exit was Dialogue Health Technologies’ IPO, listing on the TSX for $779 million, the Montreal-based electronic health company followed 2020’s trend of Canadian life sciences companies going public during the COVID-19 pandemic. 

Ontario, British Columbia and Quebec had the highest investment activities, accounting for nearly 90% of the investment in this quarter, with Ontario leading with $1.2 billion or 44% of total dollars invested in 2020. Toronto accounted for $920 million and 41 of those deals. BC saw 23% of all dollars, and Quebec received 20% of total dollars invested.

The information, communications, and technology (ICT) sector received more than 54% of the total investment in the first quarter of 2021, with $1.4 billion invested across 103 deals. The life sciences sector received 12% of the investment with $324 million across 24 deals, and cleantech received around 10%, with $261 million across 9 deals.

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