Recently published data from the Canadian Venture Capital and Private Equity Association shows just how far Atlantic Canada’s startup community has come in just two years.

And how far it has to go.

The annual statistics published by the association, known as CVCA, show that the value of capital raised from venture capital firms more than tripled and the average deal size almost tripled between 2014 and 2016. And they also show that there is proportionally more seed funding on the East Coast than in any other part of Canada.

But it also showed that Atlantic Canada is still a Junior A player in the venture funding world — and has some work to do to reach the big leagues.

The CVCA said recently that Canadian startups raised $3.2 billion in venture capital funding in 2016 through 530 funding deals. The dollar amount was up 68 per cent from 2014, while the number of deals was up 40 per cent. (I’ve chosen comparisons over two years to show the longer-term trend than the one-year comparison.)

It’s really strong growth but the national increases are nothing compared with those of the Atlantic region.

For the four eastern provinces, startups in 2016 raised a total of $103 million, an increase of 240 per cent over the figure of 2014. The number of deals rose 27 per cent to 56. The main reason for the higher number was a number of major deals, like the US$11 million raised by Fredericton-based Resson, the US$9 million funding by Halifax’s Kinduct Technologies, and the US$3 million round raised by Sequence Bio of St. John’s.

Perhaps the most interesting development is that the average size of deals has also grown strongly in just two years — to $1.84 million in 2016 from $680,000 in 2014.

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The average deal size is important because companies that can raise large rounds tend to have the greatest impact. They hire more people, spend more on R&D, export more and fail less often.

“Given the relative scarcity of growth capital in the region, increasing the average deal size should take precedent over number of deals, or even total capital deployed,” said Gregg Phipps, managing director of investment at Innovacorp.

“The ecosystem will be better served by building a few incredibly successful companies that can scale and ultimately make money for investors. The depth and breadth of funding is almost always a strong predictor of longevity and commercial success.”

The CVCA makes clear that there are proportionally more small funding deals done in our part of Canada than anywhere else — 10 per cent of the venture capital rounds announced in Canada last year were done in Atlantic Canada. But the average deal size in Canada was $6 million. That means that only two Atlantic Canadian deals — Kinduct and Resson — were larger than the national average. (A third funding deal, Halifax-based Truleaf Sustainable Agriculture’s $8.5 million round, is also larger than the national average, but it came from angels rather than venture capital funds.) It also means Atlantic Canada has to more than triple its average deal size to reach the national average.

The 10 largest deals in Canada last year were all worth more than $50 million, and none was in Atlantic Canada. It will be a while until Atlantic companies are in that bracket, though there are entrepreneurs working at it.

Said Phipps: “Continuing to align deal size with the national average will do more to serve startup entrepreneurship and the success of the local ecosystem than any other metric.”