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Ottawa companies’ total VC haul fell 23% in 2023 from previous year: report

March 18, 2024

Ottawa-based companies raised 23 per cent less venture capital in 2023 than they brought in a year earlier, a new study says, mirroring a national trend that saw total VC funding to Canadian firms drop by more than third last year compared with 2022.

In total, local companies landed $194 million in venture capital from 25 deals last year, research firm CPE Analytics said in its 2023 Canadian Venture Capital Report released Monday.

That’s down from $252 million in total VC funding for Ottawa-based enterprises in 2022 and $396 million in 2021.

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Ottawa ranked sixth among Canadian cities in overall VC fundraising last year, the same as in 2022.

Overall, Canadian companies raised $6.07 billion worth of venture capital in 2023, a 37 per cent decline from 2022’s total of $9.43 billion. Total deal volumes remained relatively stable at 693 in 2023, down slightly from 708 the previous year.

Richard Rémillard, president of Ottawa-based Rémillard Consulting Group, said 2023 was “another very difficult year for venture capital in Canada” following a disappointing 2022 that saw total VC fundraising by Canadian firms plummet more than 33 per cent from $14.2 billion in 2021.

“Investment volume was at its lowest level since 2019 while industry fundraising was equally morose,” Rémillard said in a statement. “The industry continues to be dominated by (U.S. firms), particularly, and foreign sources of capital even from the likes of China. At the same time, 2023 registered a complete lack of interest in the venture asset class by corporate Canada as no new corporate funds were raised.”

Toronto once again led all Canadian cities in VC fundraising at $1.78 billion, down from $2.49 billion the previous year.

Montreal was second at $1.3 billion, down from $2.1 billion in 2022, while Vancouver was No. 3 at $844 million, a decline from $1.7 billion in 2022.

Ontario was the centre of VC activity last year, accounting for $2.6 billion worth of investments.

According to the report, early-stage companies brought in the biggest haul, raising $2.92 billion, while growth and late-stage financings accounted for $1.98 billion and seed/pre-seed financings raised $581 million.

Among sectors, ICT companies raised $3.23 billion or 53 per cent of total disbursements, while cleantech companies secured $1 billion and biotech firms brought in $937 million.

Canadian investors contributed $2.62 billion, slightly ahead of the $2.53 billion from U.S. investors.

CPE Analytics tracks equity and debt financing from a range of sources, including angel investors, VC firms, private equity firms and law firms.

The report includes equity and quasi-equity direct investments in companies, but excludes private equity transactions and financing by foreign-headquartered or -domiciled companies with Canadian subsidiaries. As a result, the report doesn’t tell the whole story of how investment capital is helping grow Ottawa’s tech ecosystem.