Atlantic Canadian startups raised just $18 million in the fourth quarter, mirroring a loss of momentum nationally in the closing months of 2023, though that figure rises to about $45 million with the inclusion of an eight-figure round finalized by St. John’s- and Toronto-based Spellbook over the holidays.

For the full year, East Coast startups raised $208 million, down from $230 million in 2022, according to new data from the Canadian Venture Capital and Private Equity Association. As a proportion of capital raised nationally, that represents a relative overperformance, since VC investment across Canada fell from about $10 billion to about $6.9 billion during the same period.

“As I reflect on VC's performance in 2023, it's clear it was a year defined by resilience and measured optimism,” wrote chief executive Kim Furlong. “The challenges encountered served as an example of the market's strength and adaptability.

“In the face of global uncertainties, the Canadian VC sector in 2023 distinguished itself through strategic investments in promising sectors such as artificial intelligence and cleantech.”

The CVCA publishes year-to-date numbers, not quarterly numbers, but Entrevestor has estimated those figures by subtracting the CVCA's totals for prior quarters.

A CVCA analyst said in an email Monday the Atlantic totals for 2023 omit capital raised by Spellbook, which sells AI for lawyers, because the company’s main office is in Toronto. At Entrevestor, we consider the business to be based in Newfoundland and Labrador because the registered address of Dialog Enterprises, Spellbook’s corporate name, is in the province, its history is deeply intertwined with the St. John's startup ecosystem and CEO Scott Stevenson is based there. In a call on Tuesday, Stevenson confirmed Spellbook is a Newfoundland company.

In May, Spellbook raised US$10.9 million, or about C$14.8 million at the time. And just before the new year, it closed an even larger, US$20 million or C$27 million Series A round, with some of the fund-transfers continuing into 2024. Counting those deals, the Atlantic Canadian total for 2023 rises to $249.8 million, representing a sizeable improvement over the previous year not just by comparison to the rest of Canada, but in absolute terms.

“In Atlantic Canada, Nova Scotia had another record year as it saw $161M invested across 20 deals,” says the CVCA. “This figure exceeds the record-high set in 2022 of $145 million by 11 percent. Nova Scotia's record investments was led by the largest disclosed deal to date in the province, as CarbonCure Technologies secured $106 million from a consortium of international investors.

“The remaining provinces in Atlantic Canada have largely maintained the pace set in 2022. New Brunswick saw the second highest investments at $31 million across 17 deals, while Newfoundland and Labrador received $12 million from five deals in 2023.”

CarbonCure’s raise, led by Swiss impact investor Blue Earth Capital, was worth a mammoth C$106 million Canadian, making it the largest East Coast deal of the year.

CarbonCure and Spellbook both reflect a trend of more concentrated capital flows, with much of the funding on offer going to a small number of later-stage startups. Between them, the two companies accounted for more than half of the total capital raised by Atlantic Canadian startups at nearly $148 million. In Nova Scotia, CarbonCure alone raised more than two thirds of all funding.

In total, there were 43 capital raises in Atlantic Canada last year, or 45 if we include Spellbook. New Brunswick saw 17 deals worth $31 million, 20 Nova Scotia companies raised $161 million, and five or six Newfoundland and Labrador companies raised either $12 million or $53.8 million. On Prince Edward Island, a single company raised $4 million.