CVCA Intelligence

CVCA’s H1 2017 Canadian VC & PE Market Overview

CVCA Data Vis VCPE Canada H12017 Final

Strong VC Investment Pace Continues with Revival in Exits After Long Hiatus; Huge Quarter for PE and a Breakout Year for Exits

VC investment sees $1.6B invested over 260 deals with 21 exits totaling $900M in the first half of 2017. PE investment sees $13.9B invested over 277 deals with 80 exits in H12017; already exceeding the number of exits in each of the last four years

Venture Capital:

Venture capital investment in Canada saw a huge year in 2016; particularly in the first half, when $1.7B was invested across 275 deals. VC activity in H12017 indicates the ecosystem is on pace to see another remarkable year for VC investment. Starting off strong in Q12017 with $713M invested, Q2 has seen 28% spike in activity this quarter with $913M invested over 131 deals. With $1.6B invested over 260 deals in the first half of 2017, VC investment and activity in Canada is indicating numbers will meet or exceed last year’s extraordinary performance.

VC activity in 2017 continued at a momentous pace in the second quarter, with $913M invested across 131 deals — a 28% jump from the $713M invested in Q12017 and the $712M invested in Q2 of last year. $1.6B was invested over 260 deals in the first half of 2017 mirroring the pace from H12016 with $1.7B invested over 275 deals.

Of note, the VC market in Canada has seen a healthy reappearance of exits in the first two quarters of 2017 with 21 exits totaling $900M compared to 32 exits totaling $584M last year. So far, the largest exit in 2017 was the $393M acquisition of Montreal-based Luxury Retreats International by Airbnb. There were two VC-backed IPOs signalling a rebound of the IPO market through the first half of the year: Real Matters Inc. (TSE: REAL) and Zymeworks Inc. (TSE/NYSE: ZYME).

Accounting for a huge 68% of all VC deals in H1, the information and communications technology (ICT) sector saw the biggest share of total VC dollars with $1.1B invested across 158 deals. Life science companies received the second highest VC investment in the first half of 2017 with $344 over 52 deals (21% of total invested), while cleantech placed third with $84M over 18 deals (5% total invested).

Ontario-based companies received $620M in VC dollars invested in H1, 38% of total VC investment. Quebec received roughly a third at $544M, while British Columbia investment accounted for a quarter of all dollars invested at $410M.

Private Equity:

Canadian private equity has seen a major bounce-back in the first half of 2017, with $13.9B invested across 277 deals — already surpassing the $13.8B invested in all of 2016. A staggering $8.9B was invested over 170 deals in the second quarter of 2017 — 79% higher than the $5B invested in Q1, and an astounding 164% greater than Q22016. In fact, Q22017 investment is the highest quarter since Q32015 when $11.4B was invested.

In H12017, PE saw 80 exits, exceeding the number of exits in each of the last four years. There were 61 exits in 2016, 66 in 2015, 66 in 2014 and 75 in 2013. The 80 exits in H12017 includes the $2.2B exit from Montreal-based Garda World Securities, sold to Rhone Capital by Apax Partners, and two IPOs: the $445M dual listing of the iconic Canada Goose (TSE/NYSE: GOOS) as well as the $100M debut of STEP Energy Services Ltd. (TSE: STEP).

The oil, gas and power sector – once a thriving sector for PE investment – has seen a consistent quarter-over-quarter slowdown, capturing only a stark 9 per cent of all PE deals in the first half of 2017 — a 19% drop from 2013.

Conversely, Canada is seeing a steadily increasing pick-up in PE investment in both the industrial and manufacturing sector and the information and communications technology sector (ICT). In fact, more than 23 per cent of all PE deals in H12017 were in the industrial and manufacturing sector, compared to only a 14 per cent share in 2013. Additionally, ICT companies captured 17 per cent of PE deals in H1, compared to a 10 per cent share in 2013.

Access CVCA’s H12017 VC & PE Canadian Market Overview HERE

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