In many ways, The Rounds exemplified what happened in fundraising by Atlantic Canadian startups last year. It was a record year largely because companies like The Rounds tapped angels and government-owned agencies. 

The Rounds, a Halifax startup that operates a social network for medical professionals, announced a capital raise of $1 million in April 2014 from Innovacorp and a host of angels. Then in November, CEO Blair Ryan unveiled a $565,000 “seed –extension” from angel investors.

“The reason we raised a 'seed-extension' was because we'd hit most of those milestones after four months,” said Ryan recently. “We had a great story that supported the raise, and … adding to the team in that moment really let us capture and take advantage of the early success.”

Ryan could be the poster boy for 2014 financing. Yes, the headlines were captured by the $60 million private equity funding of St. John’s-based Verafin. But the equity funding of startups last year was notable for a 64 percent increase in angel investment and strong activity by government-owned investment groups.

“A large increase in angel investment in the region is incredible in a couple of ways,” said Patrick Hankinson, who made several investments after selling his company Compilr last year. “It shows that as a region we’re building businesses that are competitive on a global scale.”

The latest Entrevestor Intelligence report, which is published today, shows that Atlantic Canadian startups raised at least $124.5 million in equity financing (including convertible debt) last year. We say at least because there are always startup financing deals that are kept quiet. That top-line figure – which was bolstered by the $60 million private equity financing of Verafin of St. John’s -- is roughly twice the investment in startups from 2013 and 2012.

But the question has to be asked: should we include a massive one-time financing like the private equity investment in Verafin? (Private equity deals are generally investments in mature companies with strong cash flow whereas VC deals tend to be smaller investments in high-growth companies.) The St. John’s company whose technology exposes fraud and money laundering raised $60 million from California private equity fund Spectrum Equity – the largest single institutional financing we’ve reported on at Entrevestor. It accounted for almost half the money that East Coast startups raised last year.

That deal should definitely be included in the funding stats, and the reason highlights the first trend in funding we want to highlight in this report: these megadeals are no longer isolated incidents.

They’re rare for sure. But in three of the last four years, the East Coast startup community has witnessed PE deals of $17 million or more. As well as Verafin, there were the $17 million funding of Halifax-based STI Technologies in 2013, and the $30 million investment in Dartmouth-based Unique Solutions in 2011. This demonstrates that these big deals are going to pop up and distort the annual stats in many if not most years. They’re now part of the architecture.

The other trends that we’re noticing lie at the other end of the financing spectrum. A year ago, Entrevestor reported the big development in 2013 startup financing was national and international institutions replacing the agencies owned by provincial governments as the prime movers. Including the Spectrum-Verafin deal, those external institutions were formidable investors in 2014, accounting for $69.2 million in deals.

But the provincial-government-backed agencies were more active than ever – even though provincially owned Nova Scotia Business Inc. exited the VC game midway through the year. And though the government of Newfoundland and Labrador has approved the launch of the public-private Venture Newfoundland and Labrador fund, it made no investments in 2014.

Innovacorp in Nova Scotia and the New Brunswick Innovation Foundation became more active last year. There were 34 investments from agencies owned by provincial governments, up from 27 in 2013. They invested $10.1 million – a jump of 46 percent from the previous year.  [Disclaimer: Innovacorp and NBIF both advertise in Entrevestror.]

Angel investing also leapt. The total investment by angels into Atlantic Canadian startups increased 64 percent to $17.9 million in 2014. That’s a lot, considering that angels are generally known to invest $10,000 to $25,000 at a time.

“Outside of the dollar amounts raised, the other big win is the quality of angel investors we’re seeing backing these startups,” said Hankinson. “Most of these angel investors have been in the trenches and have war stories.  They’re helping founders in the region avoid mistakes and maximize the true value of their companies.”

Not all of these investments were nickel-and-dime antes. There were six companies in Atlantic Canada that raised more than $1 million from angels last year. There was only one such angel funding in the previous year, and three in 2012.

Which brings us back to Blair Ryan and The Rounds.

The company has spent three years developing a closed social network for medical professionals, so they can interact with complete privacy and consult one another for medical opinions. Doctors can join free, and The Rounds sells corporations, such as drug companies, limited access to the site so they can reach their target market.

Ryan spent much of the past few months in San Francisco, where he has continued to raise money with a target of $3 million. Given that he had already raised not one but two seed rounds, he initially told people he was raising a $3 million Series A round. It was met with quizzical expressions. 

“I was barely able to get meetings when I called it a Series A -- the next logical step after seed raises,” he joked. “But as soon as I called it a $3 million seed round, everyone was interested.”