Here’s something to watch in the startup community as we move toward the autumn season: it’s conceivable Atlantic Canadian startups will record $200 million in equity investment this year.
I wouldn’t put money on it, but after the Canadian Venture Capital and Private Equity Association released funding data for the first half last week, it’s certainly within the realm of possibility.
On Thursday, the association known as the CVCA presented a portrait of Canadian venture capital in the fullest flush of good health. The CVCA Infobase shows that there were a record 166 venture capital deals in Canada in the second quarter, worth a total of $966 million.
“The trend is onward and upward, and it’s been on an increasing trend for several years,” said CVCA Research Director Darrell Pinto in an interview. “We’ve had almost $1 billion in investment in the quarter and that’s a mark we’ve hit three times in the past year.”
To demonstrate the trend, consider this: there were $1.7 billion in Canadian VC deals in the first half, while in 2014 there were $2.1 billion in the whole year.
An added bonus is that this is one national economic jamboree that does not start at Montreal and extend west. Atlantic Canada is not quite front and centre, but it’s been invited to the party. The CVCA Infobase data shows Atlantic Canada is doing well, but I believe the region is doing even better than the CVCA data says.
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Let me explain. The CVCA says there were 16 VC investments in Atlantic Canada in the second quarter, worth a total of $39 million. Added to the first quarter numbers, it shows that the region accounted for $81 million in VC deals in the first half. That’s an impressive showing, given that the CVCA said Atlantic Canada accounted for $99 million in all of 2017, and that was a pretty good year by historical standards.
But the CVCA Infobase tallies only venture capital deals, whereas startups draw investment from other sources as well, such as angel investors or corporations.
The CVCA, which does not break down individual deals when releasing its provincial tallies, said New Brunswick accounted for $19 million in VC investment in the second quarter. But Entrevestor reported on investments totalling $36.2 million in New Brunswick in that period, dominated by two Fredericton deals: Introhive’s US$15.2 million ($20.2 million) funding round and Resson’s $14 million raise. It’s conceivable that the Resson deal didn’t count because the main investor was Mahindra & Mahindra of India, a corporate investor rather than a venture capital fund.
In any case, if we add $17 million to the CVCA tallies, we see there were about $98 million in investments showing up for Atlantic Canada before Canada Day. So, it’s not hard to envisage a $200 million funding bonanza for this year. That would be pretty sweet given that the region’s startups raised a total of $55.5 million just three years ago in 2015.
There have been no big investments announced over the summer so there would have to be some big deals in the next four months. Having spoken to a few founders recently, I’d say it’s not out of the question.