Even before the onset of the COVID-19 pandemic, venture capital investments in Ottawa companies took a sharp dive in the first quarter of 2020 compared with a year earlier, according to a new report released this week, mirroring a trend that saw VC funding drop significantly across the country year-over-year.
The Canadian Venture Capital Report compiled by CPE Analytics said local firms raised a total of $19 million (all figures Canadian) in the first three months of 2020. That’s down more than 75 per cent from the cumulative $81.4-million VC funding haul for Ottawa companies in Q1 last year. The total number of deals, however, was actually up slightly to six from five in 2019.
A year ago, the capital’s banner first quarter was propped up by major deals such as Solink’s $16.3-million Series-A round, which by itself almost equalled the city’s entire Q1 funding in the first three months of 2020. Ottawa’s leading deals in Q1 2020 included BluWave-ai’s $3.9-million seed round and $3 million for tech startup GBatteries.
Ottawa ranked ninth in total value of VC deals in Q1 of 2020, well behind leaders Toronto ($303 million), Quebec City ($270 million) and Vancouver ($231 million).
However, several companies in the National Capital Region have announced significant VC rounds since the beginning of April, and total funding has already surpassed the first quarter. Among the deals made public in the past six weeks are $17 million in new funding for Equispheres and software startup Tehama’s US$10-million round.
Nationally, VC firms invested a total of $1.36 billion in Canadian companies in the first three months of the year, down 10 per cent from 2019. The total number of deals fell 26 per cent to 126.
Noting that most deals in the first quarter had either closed or were in the process of closing before the COVID-19 pandemic struck, the report said the coronavirus crisis “had limited impact to Q1 2020 activities.” However, it said early data indicates that transactions for May and June are likely to be “way down” from a year ago, adding the full effect of COVID-19 will likely be felt more acutely in the coming months.
“One seeming strength of the Canadian VC market has been the diversity of funding sources, which have included substantial participation from U.S. and foreign institutions as well as corporates,” Richard Rémillard, president of Ottawa-based Rémillard Consulting Group, said of the report’s findings in a statement.
“In the wake of COVID-19, it is uncertain whether or not these elements of the Canadian VC market will continue to play a comparably important role going forward, which could have direct consequences for the funding of Canada's most promising firms.”
A major Ottawa-based law firm also cracked the list of Canada’s top firms catering to VC deals. According to the report, LaBarge Weinstein LLP was involved in 10 national transactions in the first quarter, the third-highest total of any firm in the country.