Any time an economic metric more than quadruples in one year, you have to figure it was a pretty good year. So, 2018 was definitely a good period for funding by New Brunswick startups.
Though all the funding from last year has yet to be announced, the deals that are already public amount to about $69 million in 2018. This compares with the Canadian Venture Capital and Private Equity Association’s finding that New Brunswick companies raised $16 million in 2017.
Admittedly, 2017 was a weak year for funding in the province, but the amount of equity capital raised in 2018 was off the charts. Maybe this puts it in perspective: the whole Atlantic Canadian startup community raised about $72 million in 2016, and that was a record year for funding across the whole region at the time.
The big reason for last year’s boom in New Brunswick funding was the three big deals that accounted for about four-fifths of the total funding.
Sonrai Security, a recently formed cybersecurity company with a sterling management team, raised US$18.5 million (C$24.6 million), almost all from two American venture capital funds. Relationship intelligence company Introhive said in June that it had raised US$15.2 million in an equity-and-debt round led by Toronto-based venture capital firm Lake Bridge Capital. (The equity portion of that deal is equivalent to C$16.2 million.) And AgTech data company Resson in May said it had raised $14 million with Indian conglomerate Mahindra & Mahindra taking the lead.
Here are the funding deals that were announced in 2018:
Company Amount Lead investors
Sonrai Security $24.6M Polaris Partners, TenEleven Ventures.
IntroHive $16.2M Lake Bridge Capital
Resson $14M Mahindra & Mahindra
Eigen Innovations $3.5M Globalive Technology
Smart Skin $3.1M Schott AG
Chinova Bioworks $2.6M DSM Venturing, Rhapsody Venture
Beauceron Security $1.5M New Brunswick Innovation Foundation
Avrij Analytics $1.2M NBIF
Jaza Energy $750K NBIF, Angels
Stash Energy $500K NBIF, Island Capital Partners
EhEye $500K NBIF
SomaDetect* $250K NBIF
Eyesover Technologies $200K NBIF
*SomaDetect also announced an investment from Dairy Farmers of America without revealing the amount.
The super year for funding in New Brunswick was the pillar of a very good year across Atlantic Canada. Again, the final tallies aren’t in yet, but high-growth companies in the region probably raised about $160 million. Assuming that’s the final number, that would be a gain of more than one-third from $116 million in 2017, which was itself a record year. Any way you cut it, we see green arrows pointing up.
Looking at New Brunswick specifically, the big thing to notice is that about $60 million of the investment came from institutions outside Atlantic Canada. That’s almost 90 percent of the investment in the province’s startups last year. Around 2014, we started noticing that institutions outside the region accounted for more investment than those headquartered on the East Coast. Now they account for the lion’s share.
That’s important for two reasons: first, there’s a finite pool of capital within the region whereas institutions in other places have more capital than our startups could ever use. And every time an Atlantic Canadian company attracts foreign capital, it chisels away at the stigma of Canada’s East Coast being – dare I say it – a backwater.
That’s not to say the local investment groups had a bad year. NBIF, the non-profit organization that oversees the New Brunswick government’s innovation policy, has invested in all the companies listed above. And it had a couple of exits in its portfolio when video analytics company EhEye and fluid analysis company Envenio found buyers.
Disclosure: NBIF is a client of Entrevestor