Venture capital funding in Canada contracted in the third quarter of this year in what the Canadian Venture Capital and Private Equity Association (CVCA) calls a “return to normalcy.”
Of the $1.2 billion of venture capital financings that did take place in Q3, ICT (information and communications technology) attracted the most capital, followed by life sciences and cleantech and agribusiness.
In total, Canadian firms attracted $5.4 billion in venture capital in 494 deals the first three quarters of 2023.
“Although this marks it as the slowest quarter in 2023 so far, when compared to Q3 2022, there’s a 14 per cent increase in total deal value,” the CVCA says in a quarterly public market report.
Ontario companies attracted 50 per cent of all VC investment so far in 2023 -- $2.5 billion. Quebec companies attracted $1.2 billion, B.C. $888 million and Alberta $534 million.
In B.C., the largest reported deal was $120 million in Series B financing for Vancouver blockchain company LayerZero.
“We are witnessing a return to normalcy, mirroring the pre-pandemic era of 2019,” said CVCA CEO Kim Furlong. “Investor focus has transitioned from funding growth in 2021 to now funding profitability, spotlighting solid companies with sustainable plans or proven profitability.
“The appearance of IPOs, an exit strategy unseen in the last 18 months, coupled with a healthy influx of new companies, signals a robust return to normalcy post the outlier pandemic years.”
The sector breakdown shows information and communications technology (ICT) drew the most venture capital at $3.1billion invested across 237 deals in the first three quarters of 2023 – 58 per cent of the total invested.
Life sciences companies attracted the second highest amount of dollars -- $986 million in 118 deals.
Cleantech attracted $800 in 55 deals, and agribusiness attracted $232 million.
As for exits, they were mainly through mergers and acquisitions, followed by secondary buyouts.