The report, released Wednesday by BDC’s (Business Development Bank of Canada) investment arm, BDC Capital, Canada’s VC development is mirroring similar trends that have emerged across global VC markets due to unfavourable macroeconomic conditions. This includes declines in dollars invested, number of deals and average deal size. Valuations, returns and exit values all shrank as well, and VC backed IPO activity in Canada is at zero, it said.
Jérôme Nycz
“In the next cycle of venture investing in Canada, resiliency and prudent management of capital will play a key role'” said Jérôme Nycz, Executive Vice President at BDC Capital. “Our industry has progressed significantly over the past decade, including through diversification, a growing number of established GPs and increased interest from foreign investors in the asset class. This maturation has led to a stronger and more sophisticated VC ecosystem in Canada. While the current environment is challenging, we are confident in the ability of the industry to build on its foundation and continue to grow Canada’s innovation economy.”
Despite challenges, the report said venture capital in Canada remains robust, as does the innovation ecosystem it is supporting.
It found:
- 2022 was one of the best years ever for Canadian VC by dollars invested. Last year, for the first time since 2005, more than 50 per cent of VC transactions originated from outside the country, marking an important milestone in Canadian VC as an international asset class;
- VC investments have grown annually at 22 per cent since 2014, and top-quartile funds are still delivering returns north of 15 per cent, even in the current environment;
- Canadian VC investors are equipped with an estimated $13.2 billion in dry powder to weather the downturn, a sign that funding remains accessible for promising startups;
- The number of established General Partners (GPs) in Canada continues to rise, an indication of the industry’s evolution over time and of the confidence that there is significant opportunity in Canada. The number of corporate venture deals also increased last year;
- Cleantech investment in Canada more than doubled in 2022.
Mario Toneguzzi
(Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He worked for 35 years at the Calgary Herald, covering sports, crime, politics, health, faith, city and breaking news, and business. He works as well as a freelance writer for several national publications and as a consultant in communications and media relations/training. Mario was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list)
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