Atlantic Canadian startups raised $230 million in venture capital in 2022, showing greater resilience than other parts of Canada amid the global slowdown, according to data from the Canadian Venture Capital and Private Equity Association.

In releasing its annual report on the VC market, the national association for private capital investors showed the Atlantic Canadian VC totals declined 10 percent from $256 million in 2021. However, the fall on the East Coast wasn't as severe as what was seen across the country. The overall Canadian data showed Canadian startups raised $10 billion, down 33 percent from the previous year. 

Nova Scotia accounted for the bulk of the VC funding in the region last year with $149 million. The association did not name individual companies but the provincial numbers were likely driven by Halifax's ABK Biomedical raising US$30 million (C$41 million) in November, a $39.5 million deal by Mara Renewables in May, and Milk Moovement raising US$20 million in July

“VC investments in Atlantic Canada remain high with Nova Scotia reaching record highs of annual investment value and the second highest deal count in the province’s history, with $149M invested across 23 deals in 2022," said the CVCA report. "The rise of investment in this region indicates a growing amount of investable companies out of Atlantic Canada."

It added that there were 14 VC deals in New Brunswick worth $66 million last year, the second-best performance ever in terms of both number and value of deals. Newfoundland and Labrador reported $11million invested in eight deals, its third-highest annual total ever, said the CVCA. Prince Edward Island raised $4 million.

The latest figures are a mixed bag compared to 2021, when New Brunswick companies raised $126 million, roughly double their 2022 total, and Newfoundland businesses raised $77 million.

Assessing how the four Atlantic Provinces fared in the fourth quarter is difficult. The CVCA reports year-to-date totals, but not quarterly figures, and the organization actually revised its annual figure for Newfoundland and Labrador downwards by $25 million in the fourth quarter. 

We suspect the Milk Moovement raise was initially booked as a Newfoundland and Labrador deal as that is the province where the company was founded. But the company, which makes supply chain management software for the dairy industry, is now headquartered in Halifax so the CVCA revised its data to show it as a Nova Scotia deal. 

“2022 was a unique year in the history of Canadian venture capital,” wrote Sean O’Connor, managing director for Saskatchewan-based Conexus Venture Capital, in the report. “At first blush, we see the second-largest year of venture capital being deployed, which signals a growing strength in the Canadian tech space.

“However, looking under the hood, we can see that investments started dropping significantly after the first quarter due to economic pressures. While it’s challenging to tease out in the data, it’s likely safe to presume that a significant portion of Q2 - Q4’s activity went into bridge rounds supporting portfolio companies.”

Nationally, venture capitalists invested about $10 billion in 706 deals for the year, down from $15.1 billion in the record-breaking year in 2021. Some $2.8 billion of last year’s national activity came in the fourth quarter.

"Considering the macroeconomic conditions, the finish in 2022 was surprising, and it's a testament to the resilience of Canadian businesses and our VC market," said CVCA Chief Executive Kim Furlong in a press release. "You can't grow what you don't seed, and given the increase across pre-seed and seed stages, we know Canada has a healthy pipeline of companies that are benefiting from VC investment.”