Canadian startups are raking in large sums of money from venture capitalists – both local and foreign. Venture capital investments in Canada totaled over $1B in the last four quarters (Q2’13 to Q1’14) and Q4 2013 saw a multi-year high in terms of investment dollars. Below is a look at some trends within Canada’s venture ecosystem.
Early-Stage Makes Up Over 3/4 of Deals
In the past two years, early-stage deals accounted for over 75% of the investments into Canadian startups. Anchoring the later-stages were well-known companies Shopify and Hootsuite, with Ottawa-based Shopify raising a $100M Series C this past December, which valued them at $1B, and Vancouver-based Hootsuite raising a $165M Series B in August 2013.
Industry Breakdown
In the past two years, VCs have invested heavily in Canadian companies in both Internet and Mobile software and services, which made up almost 50% of all deals in the country. Recent investments in these industries include reader and writer social networking startup Wattpad, who closed a $46M Series D investment from Union Square Ventures and Khosla Ventures among others as well as Triggerfox, a mobile address book company that raised $1.8M in seed funding from Dharmesh Shah and Wayne Chang. On an aggregate funding basis, the Internet sector was first. eCommerce came in second with over 15% of all investment dollars being allocated to the industry. Recent Canadian eCommerce deals include BuildDirect.com’s $27M Series B, as well as AskForTask’s $500k Seed round financing.
Canada’s Tech Cities
Two of the top three most populated cities in Canada are Toronto and Vancouver. Not surprisingly, startups in these cities received more funding than others in the country. While Toronto-based startups recorded the highest number of deals in the past eight quarters, with over 70, it was Vancouver, with almost half the # of deals (38) which took the most VC funding on the back of several large deals.
On a deals basis, the top 5 cities in Canada were:
- Toronto
- Vancouver
- Montreal
- Kitchener
- Ottawa
On a total funding basis, they were:
- Vancouver
- Toronto
- Ottawa
- Montreal
- Burlington
Interestingly, as you can see above, the city of Kitchener came in 4th in terms of number of deals with over 15 investments. This could be a sign of a burgeoning tech scene, with the majority of investments in the area coming in under $1M, driven by the Communitech Hyperdrive accelerator.
The largest investment over the past 2 years for each of the top 5 cities is below:
- Vancouver – Hootsuite – 08/2013 – $165M Series B
- Toronto – Wattpad – 04/2014 – $46M Series D
- Ottawa – Shopify – 12/2013 – $100M Series C
- Montreal – Enerkem – 06/2013 – $48.2M Series E
- Burlington – Anaergia – 10/2013 – $46M