Venture Capital Deals Increase But Value Stays the Same in Q1

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Venture capital activity in Canada over the first three months of 2014 stayed the course.

Canada’s Venture Capital & Private Equity Association (CVCA) has released its venture capital data for the first quarter of 2014. The number of deals rose by 16 percent compared to the same time last year, but the value of those deals experienced just two percent year-over-year growth.

The total amount invested was $378 million spread over 122 deals.

The average deal size in Q1 was relatively small. Both Canadian investors ($1.4 million average deal size) and US investors ($3.9 million average deal size) showed a significant decrease in average deal size from 2013. Only life sciences saw an increase in deal size, while information technology, clean tech and traditional sectors all declined.

“Venture capital is certainly on a prolonged uptick in Canada, which is great for Canadian innovation,” said Mike Woollatt, CEO of CVCA. “Canada’s venture capital has a long way to go to solve our relative undercapitalization, but these numbers are heartening.”

In terms of investment rounds, Series A continued to receive the lion’s share of venture capital investment, with 37 percent of the 122 deals in Q1. Q1 2014 also saw more investment from outside Canada and the US, with an increased share of global venture capital investment into Canada.

Information technology and life sciences saw the biggest growth in investments and drove investment, taking a combined 87 percent of capital invested. Within life sciences, human biotech is dominating the activity, representing nearly 90 percent of the life science investment in Q1. This reflects a similar trend seen in the US and elsewhere.

The first three months of the year saw a few big deals, including those backing Edmonton-based Aurinia Pharmaceuticals, Vancouver-based BuildDirect, and Dorval, Québec -based Clementia Pharmaceuticals.

On the fundraising side, the news was positive, particularly in private VC: $393 million was raised in Q1 2014, representing 56 percent of all of 2013 ($699 million).

In terms of private equity numbers, Canada had quite a strong first quarter. The amount of private equity invested in the first quarter of 2014 doubled year over year. Private equity investments totalled $4.6 billion in the first three quarters of 2014, double the $2.3 billion in values reported at the same time in 2013.