Fred Thornhill, Reuters. Canadian Venture Capital Review First Three Quarters 2017

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1 Fred Thornhill, Reuters Canadian Venture Capital Review First Three Quarters 2017

2 Table of Contents Canada s VC Market in First 3Q $ Invested and # Companies Financed 5 Top VC Deals 7 Top VC Investors 8 North American Rankings 10 Investor Type & Nationality 13 Canada by Sector & Stage 14 International VC Context 17 VC Funds Raised 19 Public and M&A Exits 20 Venture Capital Returns 21 Explanatory Notes & Contacts 22

3 Canadian Venture Capital Market Activity in the First Three Quarters of 2017 Canadian VC Market Trends Venture capital investment in Canadian companies continued at a strong pace in the first three quarters of 2017 with $3.2 billion invested in 377 rounds of financing. In dollar terms, this represented a 26% increase over the same period last year, the fourth consecutive quarter with over $1 billion of disbursements, and the strongest individual quarter on record since Q The third quarter alone saw $1.16 billion of investment in 120 individual transactions, an increase of 55% in dollar terms over the third quarter of Deal volumes did not see the same gains, instead falling by 16% from the first nine months of The average Canadian VC round size increased to $8.4 million in the first three quarters. While this represents a 2.4 times increase over the average round size just five years ago, Canada s average round size continues to lag behind all other top VC-attracting nations. Despite the highest level of direct investment by Canadian governments, Canadian companies on average continue to secure less than their counterparts across all VC-intensive regions. While Canadian companies have been securing larger VC rounds, this growth could not be attributed to domestic investors. Canadian investors were responsible for approximately 46% of capital disbursed in the first nine months; United States-based funds accounted for an additional 41%, and the remainder was accounted for by overseas investors. The last year in which Canadian investors accounted for such a low share of VC investment in Canadian companies was 1992, when 38% of VC investment in Canadian companies could be sourced to Canadian firms, with the remainder originating in the United States. Canadian Fund Performance While investment activity was on the rise, the performance of Canadian venture capital and growth equity funds had not reached the same heights. Final data provided by Cambridge Associates shows Canadian venture capital & growth equity funds with vintage years of 2000 or greater returned a since inception IRR of 2.3% as of the end of Q2 2017, lagging far behind both US counterparts and public market equivalents. The improvement of Canadian VC fund returns over the past four years, however, has brought industry performance into positive territory.

4 Canadian Venture Capital Market Activity in the First Three Quarters of 2017 Canadian VC Trends by Region While investment in Ontario held steady in the first three quarters, the most impressive gains in Canadian venture capital dealmaking went to the provinces of Québec and British Columbia. Investment in Québec surged by 31% over the first nine months last year, bring the province up to 7 th place in the North American rankings. However, British Columbian investment activity more than doubled, up 129% from the same period in 2016, and pulling the province up to a 10 th place ranking. With B.C. companies pulling in $794 million in the first nine months, the province has already far surpassed its previous full-year record of $594 million set in Alberta, not typically a province to rank in the top 30, placed 29 th with just over $100 million of investment activity. In a similarly close race, Toronto placed 11 th among North American cities, with $872 million invested in the first three quarters, behind Atlanta, GA; and ahead of Austin, TX. Montreal placed 13 th with $820 million in investment, edging out Denver, CO. Canadian VC Trends by Sector Canadian IT companies raised $801 million in Q3 2017, the most capital invested in the sector since Q2 2001, but the number of deals was down 13% from the same period last year. Through the first three quarters, Canadian IT companies secured just short of $2 billion, while life sciences companies followed second with $897 million invested. Cleantech companies raised just under $200 million in the first nine months, with the remainder rounded out by energy & industrial ($73 million) and consumer-related companies ($38 million). Canada VC Fundraising Trends Sixteen Canadian funds raised a total of $853 million in the first three quarters of While this was a comparatively poor showing as compared to the first nine months of 2016, when nearly $1.7 billion was raised, 2016 had represented the best year for Canadian VC fundraising since the height of the dot com era. Highlights of year-to-date fundraising included OMERS Ventures Fund III at $300 million and Vanedge Capital II Limited Partnership, with its third and final closing at $161 million. Round 13 Capital also closed on $95 million for its latest growth-stage venture capital fund.

5 VC Deal Values ($ Billions) Historical Venture Capital Investment in Canadian Companies: Deal Values Canadian companies raised $1.2 billion in VC in the third quarter of 2017, marking the fourth consecutive quarter over $1 billion and the best individual quarter since Q $4.5 $4.0 $4.2 $3.5 $3.7 $3.0 $3.2 $2.5 $2.0 $1.5 $1.0 $0.5 $2.7 $1.6 $2.1 $1.8 $1.9 $2.4 $1.4 $1.0 $1.2 $1.6 $1.6 $1.9 $2.4 $2.8 $ Q1 Q2 Q3 Q4

6 # of Deals Historical Venture Capital Investment in Canadian Companies: Deal Volumes More VC being deployed to a shrinking pool of Canadian companies. Deal volume down 16% from same period last year, reaching a four-year low. 1, Q1 Q2 Q3 Q4

7 Top Canadian Venture Capital Deals, First Three Quarters 2017 Portfolio Company Investors Rank Company Name Deal Value ($ Millions) Location Sector Investing Firms (Disclosed) 1 Aurinia Pharmaceuticals $231.1 Victoria, BC Pharmaceuticals ILJIN Life Sciences, Lumira Capital 2 Element AI $135.1 Montreal, QC Artificial Intelligence 3 Leddartech $122.5 Quebec, QC Sensor Technology Data Collective, Real Ventures, BDC Venture Capital, Fidelity Investments Canada, Hanwha Investment, Intel Capital, Microsoft Ventures, National Bank of Canada, NVIDIA, Tencent Delphi, Magneti Marelli, Fonds de solidarité FTQ, Integrated Device Technology 4 PointClickCare $110.9 Mississauga, ON Healthcare Software Dragoneer Investment Group, JMI Equity 5 Repare Therapeutics $90.0 Montreal, QC Pharmaceuticals 6 Zymeworks $86.6 Vancouver, BC Pharmaceuticals Versant Ventures, MPM Capital, Fonds de solidarité FTQ, Celgene Corporation, BDC Venture Capital BDC Venture Capital, Celgene Corporation, CTI Life Sciences, Eli Lilly & Co, Fonds de solidarité FTQ, Lumira Capital 7 estruxture Data Centers $80.0 Montreal, QC Cloud Computing Caisse de dépôt et placement du Québec, Canderel 8 Milestone Pharmaceuticals $69.0 Montreal, QC Pharmaceuticals Novo Holdings A/S, Forbion Capital Partners, Tekla Capital Management, Domain Associates, Fonds de solidarité FTQ, BDC Capital, Pappas Capital, GO Capital 9 Visier $59.8 Vancouver, BC Business Analytics Sorenson Capital, Foundation Capital, Summit Partners, Adams Street Partners 10 Absorb Software $58.3 Calgary, AB Learning Technology Silversmith Capital Partners

8 Top VC Investors in Canadian Companies, Partnerships & Governments Canadian Private Independent Partnerships First Nine Months 2017 Rank Firm Name # Deals Estimated Investments ($ Millions) Location 1 Real Ventures 40 $35.7 Montreal, QC 2 Cycle Capital 12 $32.0 Montreal, QC 3 igan Partners 9 $11.6 Toronto, ON 4 inovia Capital 8 $39.5 Montreal, QC 5 Anges Québec 8 $3.3 Montreal, QC 6 Portag3 Ventures 7 $15.9 Toronto, ON 7 CTI Life Sciences 7 $12.1 Montreal, QC 8 Relay Ventures 7 $9.3 Toronto, ON 9 Yaletown Venture Partners 7 $9.0 Vancouver, BC 10 Georgian Partners 6 $46.5 Toronto, ON Canadian Government Funds First Nine Months 2017 Rank Firm Name # Deals Estimated Investments ($ Millions) Location 1 BDC Venture Capital 62 $119.7 Montreal, QC 2 MaRS Discovery District 24 $15.2 Toronto, ON 3 Sustainable Development Technology Canada 9 $25.3 Ottawa, ON 4 Export Development Canada 4 $4.9 Ottawa, ON 5 Investissement Québec 4 $10.5 Montreal, QC

9 Top VC Investors in Canadian Companies, Foreign & Other Non-Canadian Investors First Nine Months 2017 Rank Firm Name # Deals Estimated Investments ($ Millions) Location Startups 6 $1.9 Mountain View, CA 2 Connecticut Innovations 4 $4.0 Rocky Hill, CT 3 Union Square Ventures 3 $5.9 New York, NY 4 Domain Associates 3 $5.0 Princeton, NJ 5 Versant Ventures 2 $33.0 Eden Prairie, MN 6 Kleiner Perkins Caufield & Byers 2 $24.3 Menlo Park, CA 7 Adams Street Partners 2 $23.6 Chicago, IL 8 Softtech VC 2 $16.3 Palo Alto, CA 9 TPG Capital Management 2 $16.1 San Francisco, CA 10 Foundation Capital 2 $16.0 Menlo Park, CA Canadian Retail, Institutional & Other Investors First Nine Months 2017 Rank Firm Name # Deals Estimated Investments ($ Millions) Location 1 Desjardins Venture Capital 29 $16.4 Lévis, QC 3 Fondaction 22 $30.2 Montréal, QC 2 New Brunswick Innovation Foundation 19 $3.7 Fredericton, NB 4 Fonds de Solidarité FTQ 10 $71.5 Montréal, QC 5 Westcap 7 $2.6 Saskatoon, SK

10 North American VC Rankings, by Province & State North American Rankings First 3Q 2017 Rank State / Province # Deals First 3Q 2017 VC Invested ($ Millions) $ Change From First 3Q 2016 North American Rankings First 3Q 2017 Rank State / Province # Deals First 3Q 2017 VC Invested ($ Millions) 1 California 1,171 30, % 16 Florida % 2 New York , % 17 Virginia % 3 Massachusetts 265 6, % 18 New Jersey % 4 Washington 100 1, % 19 D. of Columbia % 5 Texas 108 1, % 20 Minnesota % 6 Ontario 146 1, % 21 Ohio % 7 Quebec 123 1, % 22 Michigan % 8 Illinois 89 1, % 23 Connecticut % 9 Georgia % 24 Missouri % 10 British Columbia % 25 Arizona % 11 Colorado % 26 Oregon % $ Change From First 3Q Utah % 27 Idaho ,624.3% 13 North Carolina % 28 New Mexico % 14 Maryland % 29 Alberta % 15 Pennsylvania % 30 Louisiana %

11 Canadian VC Investment by Province & Region British Columbia companies secure $794 million in the first three quarters alone, smashing the previous full-year provincial total of $594 million reached in % 1% Quebec 8% 9% 29% $3,222 Million Invested 33% Ontario British Columbia 14% 377 Deals 31% Prairies 33% Atlantic Canada 39%

12 North American VC Rankings, by City North American Rankings First 3Q 2017 Rank Metro Area # Deals First 3Q 2017 VC Invested ($ Millions) $ Change from First 3Q San Jose , % 2 New York City , % 3 San Francisco , % 4 Boston 248 6, % 5 Los Angeles 162 2, % 6 Seattle 92 1, % Montreal Median Investment: $900K Median Round Size: $2.5 M 7 Washington Metroplex 109 1, % 8 San Diego 58 1, % 9 Chicago % 10 Atlanta % Toronto Median Investment: $1.4 M Median Round Size: $2.8 M 11 Toronto % 12 Austin % 13 Montreal % 14 Denver % 15 Orange County % Vancouver Median Investment: $1.4 M Median Round Size: $6.2 M

13 Venture Capital Investment by Origin of Capital Corporate investors comprise 12% of VC activity in first three quarters. Canadian investors so far this year account for only 46% of dollars disbursed, a 25-year low. Investor Type 100% Investor Location 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% First 3Q 2017 Private Independent Corporate Government Institutional Retail Angels & Individuals Other 0% First 3Q 2017 Canada United States Other

14 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 $ Billions $ Billions Information Technology Sector Driven by Software Dealmaking Canadian IT companies raised $801 million in Q3 2017, the most dollars invested since Q2 2001, but with the number of deals in the first nine months down 13% from 2016 volumes. All Sectors Information Technology $1.2 $0.9 $1.0 $0.8 $0.7 $0.8 $0.6 $0.6 $0.5 $0.4 $0.4 $0.3 $0.2 $0.2 $0.1 $0.0 $0.0 Information Technology Life Sciences Other Sectors Computer Software Semiconductors & Electrical Internet Specific Other IT Sectors

15 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 $ Billions $ Billions Biotech, Medical & Cleantech Sectors Round Out First 3Q Investment Activity Nearly $900 million invested in Canadian life sciences companies in the first three quarters of 2017, 67% more than the same period in Life Sciences $0.60 Other Sectors $0.25 $0.50 $0.40 $0.30 $0.20 $0.20 $0.15 $0.10 $0.10 $0.05 $0.00 $0.00 Biotechnology Medical & Health Cleantech Consumer-Related Energy & Industrial Other

16 # of Deals VC Investment in Canadian Companies: Deal Stages First three quarters see 377 deals, down 16% from same period last year, with January to September totals reaching a four-year low Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Seed Early Stage Later Stage Expansion Other Advanced Stage

17 Venture Capital Deal Sizes in Canada, International Context Among top VC attracting nations, Canada ranks highest in direct government participation within its VC deals, but last in average round size. Average VC Deal Size, First 3Q 2017 ($ Millions) $120 $100 $80 $60 $40 $20 Direct Government Investment in VC First 3Q % 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% $0 Singapore Switzerland India China United States United Kingdom Israel Germany Australia Canada 0.0%

18 $ Millions Canadian Dealmaking Abroad Canadian VCs invest $701 million in 80 non-canadian companies in the first three quarters. This Q2 sees the most outbound investment in a single quarter since Q Portfolio Company Investors Rank Company Name Deal Value ($ Millions) Location Sector Canadian Investors (Disclosed) 1 Lyft $794.8 San Francisco, CA Transportation PSP Investments 2 Avidxchange $405.5 Charlotte, NC Fintech Caisse de dépôt et placement du Québec 3 Convene Conference Centers $93.0 New York, NY Workspaces Brookfield Property Partners 4 SutroVax $85.9 San Mateo, CA Biopharmaceuticals CTI Life Sciences 5 Rover $82.7 Seattle, WA Petcare OMERS Ventures $400 $300 $341 $367 $200 $100 $0 $178 $196 $150 $136 $143 $120 $138 $85 $56 $64 $60 $73 $87 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17

19 $ Millions VC Fundraising by Canadian Firms Sixteen funds raised $853 million in the first three quarters, a decline from 2016 which was itself the strongest year for Canadian VC fundraising since the height of the dot com era. $1,000 $900 $890 $800 $700 $725 $600 $500 $569 $493 $553 $473 $400 $300 $200 $100 $155 $185 $312 $238 $364 $118 $45 $182 $198 $0 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17

20 # of Exits Canadian VC-Backed Exits First three quarters see 34 completed exits from Canadian VC-backed companies, a 79% improvement over the 19 exits completed in the first three quarters of Portfolio Company Investors Rank Company Name Deal Value ($ Millions) Location Sector Investors (Disclosed) 1 Lumenpulse $531 Montreal, QC Lighting Products Fonds de solidarité FTQ, Desjardins 2 Clementia Pharmaceuticals $173 Montreal, QC Pharmaceuticals 3 Real Matters $157 Markham, ON Real Estate Software BDC Venture Capital, Fonds de solidarité FTQ, New Enterprise Associates, OrbiMed Advisors, RA Capital Management, EcoR1 Capital Kensington Capital Partners, Wellington Financial, Whitecastle Investments 4 Freshii $144 Toronto, ON Food Service Klass Capital 5 TIO Networks $141 Burnaby, BC Fintech Compaq Canada, Core Innovation Capital, IA Capital Group, Napier Park Global Capital Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 M&A Public Secondary Sale

21 Cambridge Associates: Venture Capital Fund Performance Canadian private independent funds holding slightly positive returns following long stretch of negative performance, but still lagging far behind US-based funds, public markets. Canada 10% 8% 6% United States 10% 8% 6% 8.4% 4% 2% 2.3% 4% 2% 0% 0% -2% -2% -4% -4% -6% -6% -8% Q Q Q Q Q Q % Q Q Q Q Q Q Venture Capital & Growth Equity Funds mpme: S&P/TSX 60 Index Venture Capital & Growth Equity Funds mpme S&P 500 Index Source: Cambridge Associates, Standard & Poor's

22 Explanatory Notes 1. Data collected and analyzed by Thomson Reuters for this statistical report were drawn from a variety of sources including Thomson Reuters M&A databases, regulatory filings, press releases, and proprietary investor reports from Canadian and non-resident fund managers. 2. The Thomson Reuters Canadian venture capital report measures cash for equity and quasi-equity investments by the professional venture capital community in emerging companies in Canada. These transactions are referred to as VCReporter Deals on Thomson Reuters databases. 3. The report includes the investment activity of professional venture capital firms, whether Canadian-based or not, including private independent funds, retail funds (LSVCCs and PVCCs), venture arms of corporations, institutions, government funds, angel funds, and similar entities whose primary activity is financial investing. Where there are additional participants such as angels, corporations, governments, or company officers in a qualified and verified financing round, the entire amount of the round is included. 4. The report excludes venture debt, buyouts, recapitalizations, secondary purchases, IPO exits, and other forms of private equity that do not involve cash such as services-in-kind. Investments in capital pool companies (CPCs & JCPs) are not eligible. Companies whose primary activity is the extraction of natural resources (agriculture, forestry, mining, and oil & gas exploration) without a specific focus on technology are not eligible. 5. Rounds are tracked based on investment location. This predominantly includes Canadian-headquartered companies, but companies headquartered outside of Canada with Canadian research & development facilities are also eligible. 6. Rankings of top VC investors include only investment activity made in Canadian portfolio companies. Estimated investment activity is based on the actual syndicate breakdown, where available, and is split equally among disclosed investors where actual breakdowns are not available. Private independent, government, and other funds are independently ranked in their respective categories. Rankings capture the six-month period from October 1 st, 2016 to March 31st, Fund performance data and public market equivalents are produced via the Cambridge Associates Benchmark Calculator, available through Thomson Reuters Eikon. Returns are for Canadian and US venture capital and growth equity funds with vintage years of 2000 or greater, on a first cash flow basis, in Canadian dollars, from inception to the end of the indicated quarter, under published data mode Q Pooled internal rates of return are net of fees, expenses and carried interest. CA Modified Public Market Equivalent (mpme) replicates private investment performance under public market conditions. The public index s shares are purchased and sold according to the private fund cash flow schedule, with distributions calculated in the same proportion as the private fund, and mpme NAV is a function of mpme cash flows and public index returns. 8. All current and previous years data is as of Wednesday, October 25th, Data is continuously updated and is therefore subject to change. All figures are in Canadian dollars unless otherwise noted. For further information on Thomson Reuters venture capital and private equity offerings, please visit us at: For further reports on private equity, venture capital, and other asset classes, please visit us at: Contributors to this analysis are provided with additional packages of data. If you would like to participate in the submission process, receive quarterly press releases, or have questions about our venture capital criteria, please contact us at: Gavin Penny Greg Beaman gavin.penny@thomsonreuters.com greg.beaman@thomsonreuters.com Tel: Tel: