CVCA’s 2019 Year-End VC & PE Market Overview | Record Breaking CAD $6.2B VC Invested in 2019; 2019 PE Investment Elevated by Q4 Surge
Canadian Venture Capital
Following years of consistent investment growth across all stages in the ecosystem, Canadian venture capital investment reached impressive new heights in 2019 with a record CAD $6.2B invested over 539 deals. This is 69% more than the CAD $3.7B invested in 2018 and three times more than when the CVCA began market analysis in 2013. Q4 2019 significantly contributed to the year’s total, with CAD $1.6B invested over 144 deals.
The exit environment was healthy in 2019, with 40 VC-backed exits (the same amount in 2018) valued at CAD $3B, triple the value from 2018. There were three notable exits on the public markets:
- Lightspeed POS Inc.’s unicorn-level debut on TMX with a market cap of $1.1B. The company was backed by Caisse de dépôt et placement du Québec (CDPQ), inovia Capital and Teralys Capital
- Milestone Pharmaceuticals Inc. went public on NASDAQ valued at $468M and backed by investors that included BDC Healthcare Fund,Fonds de solidarité FTQ and inovia Capital
- Lumira Ventures-backed Edesa Biotech’s Reverse-Takeover (RTO) now listed on NASDAQ with a market cap of $49M
“The performance of venture capital investment in 2019 is beyond positive and an indication of sustained confidence in the Canadian ecosystem,” said Kim Furlong, Chief Executive Officer, Canadian Venture Capital and Private Equity Association. “Canadian entrepreneurs have continued to aggressively grow their companies and Canadian VCs are helping push Canadian innovation forward.”
Excluding mega-deals (CAD $50M+), the average deal size in 2019 was $5.6M, an 11% increase from $5M the previous year. Signalling the strength of the Canadian VC market: ten of the 28 mega-deals were over $100M and included five which exceeded $200M:
- $515M VC growth financing of St. John’s-based Verafin from a syndicate of investors that included Information Venture Partners, BDC Co-Investments, Northleaf Capital and Teralys Capital
- $332M series D round in Vancouver-based Clio by US investors
- $265M series A round in Toronto-based 1Password by a syndicate of US Investors
- $227M growth financing of Quebec City-based Coveo Solutions Inc. by a syndicate which included Fonds de solidarité FTQ, and OMERS Growth Equity.
- Montreal-based Element AI’s $200M series B round from investors that included Caisse de dépôt et placement du Québec (CDPQ), BDC Capital Co-Investments and Real Ventures
Canadian information and communication technology (ICT) companies continued to take in the majority of investment, receiving 66% (CAD $4.1B over 308 deals) of total VC dollars in 2019. Life sciences received a 17% share (CAD $1.1B over 177 deals) while cleantech companies took a 7% share (CAD $407M over 29 deals).
Canadian Private Equity
The closing of Garda World Security and Westjet Airlines in the last quarter raised PE investment in 2019 to a total disclosed value of CAD $19B over 526 deals, 16% less than the CAD $22.7B in 2018, and 38% higher than the previous low of CAD $13.8B in 2016.
For the second year in a row, the sum of mega-deals exceeded the sum of all other deals combined: CAD $11.6B out of CAD $19B in 2019 and CAD $14.4B out of CAD $22.7B in 2018. There were three $1B+ mega-deals this year which included:
- $5.2B recap of Montreal-based Garda World Security Corp. by a European investor
- $5B buyout of Calgary-based WestJet Airlines Ltd. by ONEX
- $1.4B buyout of London-based Autodata Solutions Inc. by a US PE firm
“Private Equity continues to pick up momentum as an attractive source of value-add financing for growing companies in the Canadian market,” said Kim Furlong, Chief Executive Officer, Canadian Venture Capital and Private Equity Association. “Canadian PE offers attractive returns and the opportunity to truly make a positive impact across the country as investors and investees grow Canadian companies together.”
There were 111 PE growth deals in 2019 which accounted for a fifth of all deal flow totalling $1.5B (8% share of total dollars). These included the following disclosed deals:
- $102M investment by BDC Capital Inc., Fondaction CSN and Fonds de solidarité FTQ in Laval-based JLD-Laguë Group, with 400 employees in Montreal, Estrie, Laval, Laurentides, Saguenay and Ontario
- $95M by a US investor in Vancouver-based PDFTron Systems Inc., a female-founded tech company employing 47 employees
- $91M investment by InstarAGF Asset Management and PFM Capital Inc. in Calgary-based Steel Reef Infrastructure Corp. which employs 110 people
24% of all PE investment in 2019 went into companies in the industrial and manufacturing sector, 2% higher than its share in 2018 and 4% higher than its 2017 share. The ICT sector maintained its deal flow in 2019 with a 17% share of PE Investment.