Canadian venture capital activity increased by 36% in 2016 led by a nearly 50% rise in Ontario

Canadian venture capital (VC) activity increased by 36% in 2016, despite a global decline in VC funding. At $3.7 billion, Canadian companies raised more than in any year since 2001. The rise in VC activity was led by Ontario, which experienced a 48.2% increase, lifting the province to a fourth place ranking among states and provinces in North America.

2016 North American VC Rankings, by Province/State

  1. California
  2. New York
  3. Massachusetts
  4. Ontario
  5. Texas

Large-cap deals boost Canadian VC activity to record high

In reaching the $3.7 billion mark, Canadian companies closed 571 rounds of financing, compared with 590 deals at $2.7 billion in 2015. The two largest Canadian VC deals took place in Ontario. BlueRock Therapeutics, a biotech company focused on breakthrough regenerative medicine treatments, accounted for $225 million, while Thalmic Labs, a pioneer in human-computer interaction, received more than $158 million.

MaRS Discovery District listed among top government funds

Last year, we saw more momentum in terms of the VC deals being made in Ontario, and I think it will only stand to increase in 2017 as the Canadian venture capital scene matures. Our portfolio is gaining interest from both Canadian and global follow-on investors, and many have raised substantial growth rounds. At the IAF, we've had several successful exits and continue to reinvest our proceeds back into the community, providing a further boost for deal flow in Canada.

– Michelle McBane, Investment Director, MaRS Investment Accelerator Fund (IAF)

Toronto-based MaRS Discovery District's 27 VC deals landed it in second place among government funds, behind BDC Capital, with 114 deals, and ahead of Export Development Canada, which recorded 22 deals in 2016. Also, Real Ventures led Canadian partnerships with 63 deals, Accomplice LLC topped non-Canadian partnerships with 6 deals and Fonds de Solidarité FTQ led pension, retail, corporate and institutional funds with 55 deals. Although the average Canadian VC round size remained small at $6.5 million, it did demonstrate an upward trajectory while most regions fell flat in 2016.

Toronto records highest increase in VC activity among top 10 North American cities

With a 52.7% increase in VC activity, Toronto was one of only two top 10 North American cities to record VC activity growth in 2016. Top American cities, according to VC dollars invested, declined by 13.3%, on average.

2016 Top 10 North American VC Rankings by Growth

Toronto52.7%
Orange County13.6%
San Diego-3.4%
Boston-6.6%
San Francisco-6.9%
New York City-8.7%
Washington Metroplex-22.1%
Los Angeles-22.4%
Seattle-26.7%
San Jose-36.7%

Information technology and life sciences driving Canadian VC growth

According to the report, Canadian software companies alone raised $1.2 billion, 4% more VC than that raised by all sectors just six years ago. Meanwhile, Canada's life sciences kicked in just over $1 billion, a figure that doubled since 2015.

Read the full report: Canadian Venture Capital Review 2016

Learn more about Ontario's life sciences sector

Find out why global IT firms are thriving in Ontario

Sector/subsector: 

February 10, 2017

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