Canadian companies hauled in more than $8 billion worth of venture capital in 2022, a Toronto-based research firm says – down significantly from 2021’s record total of nearly $14.2 billion but still the second-best year ever for VC fundraising in this country.
CPE Analytics said Tuesday its latest figures show $2.18 billion was invested in Canadian firms between October and the end of December, bringing the total amount of VC funding raised last year to $8.19 billion.
That a 42 per cent decrease from the previous year’s tally of $14.16 billion, part of a steady decline in VC funding over the past 12 months as soaring inflation, rising interest rates and other economic challenges battered the tech sector.
But CPE noted the total is still well above the $7.5 billion Canadian companies secured in 2019 before the pandemic triggered widespread economic uncertainty.
“Amidst the gloom and doom, and despite the quarterly up-down-up trend over the year, 2022 is becoming the second-best Canadian VC year behind the record year 2021,” the company said in a news release.
The firm did not provide a city-by-city breakdown of venture capital disbursements in the report, which it called a preliminary look at the Canadian equity financing scene in 2022.
CPE said U.S. and other international investors accounted for two-thirds of all investments in the fourth quarter, with VCs from south of the border contributing 49 per cent of all disbursements and other foreign investors chipping in 18 per centl.
“The preliminary VC investing data point to the continued availability of risk capital for higher-growth firms in Canada given the substantial contribution of foreign investment from both the U.S. and international sources,” said Richard Rémillard, president of Ottawa-based Rémillard Consulting Group.
“The diversity of VC supply is testament to the resilience of the risk capital market in Canada and underpins a 2022 investment level that is second only to the record-breaking level of 2021.”
A leading Ottawa venture capitalist recently told Techopia he believes the future remains bright for Canadian companies looking for funding, particularly from U.S.-based firms.
“A big chunk of that is investors getting tired of the Silicon Valley pricing and so they’re coming to Canada,” said Code Cubitt, managing director of Ottawa-based venture capital and private equity company Mistral Venture Partners.
“I don’t think we have a funding problem,” Cubitt added. “I think anybody who says that we do has a strategy problem. I think good ideas will always get funded, and there’s more places than ever to get it these days.”
CPE Analytics tracks equity and debt financing from a range of sources, including angel investors, VC firms, private equity firms and law firms. It does not factor funding it deems to be “growth equity” – that is, investments from private equity firms that are taking significant ownership stakes in mature companies that have moved beyond the startup stage – into its calculations.