Correction: An earlier version of this article mistakenly said the CVCA's second-quarter data overlooked the CarbonCure deal. We have corrected the article to state that the CarbonCure round closed in the third quarter.
While venture capital nationally has had a gangbusters second quarter, startups in Atlantic Canada suffered one of their worst fundraising periods ever, according to data from the Canadian Venture Capital and Private Equity Association, bringing in just $16 million.
But that figure will definitely rise in the third quarter, which will include the largest VC round in Nova Scotia history.
New Brunswick companies raised just $3 million, according to the CVCA, down from $12 million in the first quarter, Nova Scotia startups raised $6 million, a precipitous drop from $41 million in the January-March period, and Prince Edward Island did not post any venture capital activity. Newfoundland and Labrador had a better three months, raising $7 million after seeing no deals in the first quarter.
The figures are poor not just compared to the relatively bullish first quarter of 2023, but also compared to years prior. For the three months that ended June 30, 2022, East Coast startups raised $51 million, or more than thrice what they have brought for the same period this year.
The figures will rise the next time the CVCA releases its quarterly data as it will include Halifax clean concrete startup CarbonCure’s remarkable US$80 million, or C$105.7 million, funding round led by Swiss impact investor Blue Earth Capital. That round, announced July 11, was the largest ever by a Nova Scotian startup.
“Overall, VC investment in Atlantic Canada remains consistent with H1 2022 numbers, however, Nova Scotia saw a decline in investment activity in comparison to 2022,” said the CVCA in its quarterly Canadian Venture Capital Market Overview. “The continuous investments in the region demonstrate a growing number of investable companies out of Atlantic Canada.”
The CVCA does not publish funding data broken down by quarter, instead favouring cumulative, year-to-date figures. Entrevestor has calculated second quarter results by subtracting the first quarter numbers from the combined first half data.
This year’s first half total for the East Coast of $73 million, not counting CarbonCure, is down a little more than a third compared to 2022's first half total of $115 million.
Deal count also fell in the second quarter, with the entirety of the funding raised in New Brunswick going to just one company and Nova Scotia posting three deals, down from seven in the first quarter. Newfoundland and Labrador, meanwhile, saw a trio of deals.
The Atlantic Canadian cooling recorded by the CVCA comes after the region spent several quarters defying a drawdown across the broader industry. The East Coast venture capital ecosystem has lagged slightly behind trends in the broader market of late by continuing to post strong figures amidst an uncertain economic landscape that saw national fundraising slide to $1.2 billion in the first quarter, compared to $4.5 billion for the same period the year prior, according to the CVCA’s data.
For Canada as a whole, the CVCA said $2.8 billion was invested across 170 deals during the second quarter, exceeding only the second quarter of 2021. The data for the most recent period represents a “remarkable increase” of 140 percent over the first quarter of 2023. The average deal size reached $16.6 million.
“This quarter’s performance demonstrates that Canadian entrepreneurs are building solid companies,” said CVCA Chief Executive Kim Furlong in a statement. “The increasing investment in the early stages underscores the commitment to building a strong pipeline of deals and serves as a testament to Canada’s vibrant culture of innovation.”
