CANADIAN VENTURE CAPITAL REVIEW

Transcription

1 CANADIAN VENTURE CAPITAL REVIEW First Half 2016 Chris Helgren REUTERS

2 Table of Contents Canada s VC Market in Q $ Invested and # Companies Financed 5 Top VC Deals 7 Top VC Investors 8 North American Rankings 10 Investor Type & Nationality 11 Canada by Province, Stage, Sector 13 International VC Context 17 VC Funds Raised 19 Public and M&A Exits 20 Explanatory Notes & Contacts 21

3 Canada s Venture Capital Market in Q Canadian VC Market Trends Venture capital investment activity in Canadian companies continued at an exceptional pace in the second quarter of 2016 with $892 million invested in 165 deals. In dollar terms, this represented a 37% increase over Q and the best first half for Canadian venture capital since The number of Canadian financing rounds in Q increased by 12% from the same period last year, and 9% over the previous quarter. This growth was driven by large cap VC deals, with 11 companies raising a round $30 million or greater in the first half, nearly double the 6 deals in that size range in the same period last year. Montreal-based Dalcor Pharmacueticals raised the largest deal of the first half at $126.7 million, while Real Matters, Zymeworks, and Triotech Amusement each raised rounds exceeding $80 million. With more large Canadian VC deals, the average round size in Canada climbed to $5.6 million, pulling Canada out of its traditional last-place ranking among the top 10 VC-attracting nations. However Canada still ranked poorly compared to most other nations in terms of average round size, lagging far behind the USA at $18.9 million, the United Kingdom at $18.3 million, and Israel at $14.1 million. Investment by Canadian funds in non-canadian companies also had an exceptional showing in the first half, with just over $1.2 billion invested in 48 deals. This was heavily dominated by Canadian pension fund investment in China and India. Deal volume was however down by 20% from the same period last year. Trends in the US VC market Venture capital firms invested US$15.3 billion in 961 deals in the United States in Q2 2016, the tenth consecutive quarter of more than US$10 billion of capital invested. Deal counts and dollars invested however were both down by 21% and 11% respectively from Q

4 Canada s Venture Capital Market in Q Canadian VC Trends by Region Growth in venture capital dealmaking in the first half of 2016 was led by British Columbia and Québec. Among US states and Canadian provinces, both provinces each rose six positions in the North American rankings, up to 15 th place and 8 th place respectively. Ontario improved its ranking by two positions, pushing the province up to 6 th place, surpassing the state of Illinois. Canadian VC Trends by Sector As with last year, investment in the information technology sector took the largest share of VC dollars with 60% of investment totals from January to June, or $1.1 billion. Investment in the sector has now reached $2.0 billion over the past twelve months, up 27% over the previous twelve-month period. Cleantech companies received $144 million in the first half, an 8% share of all investment. Life Sciences companies took a 21% share, or $362 million. Consumer-related companies took $122 million, or 7% of funds disbursed from January to June, up substantially from the sector s 4% share in Canada VC Fundraising Trends Venture capital fundraising by Canadian funds fell fall short of usual levels in the second quarter, with only $45 million raised. However, VC fundraising reached a lofty $929 million in the first quarter, or 77% of the total $1.2 billion raised in the entire 2015 year. A total of ten private independent funds, one government fund, and one corporate fund had an initial or final close in the first half. Top fund closings from Janurary to June included inovia Capital with $175 million, the BDC Capital IT Venture Fund II at $150 million, and VanEdge II with $104 million. 4

5 Deal Values (CAD Millions) Canadian Companies Secure $892 Million in Q2 Best First Half for Canadian VC Since 2001 $3,000 $2,749 $2,500 $2,369 $2,000 $1,500 $1,528 $1,594 $1,937 $1,763 $1,000 $500 $ Q1 Q2 Q3 Q4 5

6 Number of Deals VC Deal Volume Up 4% From 2015 Most Financing Rounds in a First Half Since Q1 Q2 Q3 Q4 6

7 Top Canadian Venture Capital Deals First Half 2016 Rank Company Name Location 1 Dalcor Pharmaceuticals Deal Value ($ Mil) Industry Montreal, QC $126.7 Drug Development 2 Real Matters Markham, ON $100.0 Property Information Services 3 Zymeworks Vancouver, BC $87.8 Biotherapeutics Investor Participants (Disclosed) CDP Capital, CTI Life Sciences, Fonds de Solidarite FTQ, Sanderling Ventures Undisclosed investors BDC Capital, Lumira Capital, Eli Lilly and Company, Celgene, CTI Life Sciences Fund, Fonds de Solidarité FTQ, Perceptive Advisors, Teralys Capital, Northleaf Venture Catalyst Fund, Brace Pharma Capital, Merlin Nexus 4 Triotech Amusement Montreal, QC $80.0 Entertainment Devices Fonds de Solidarité FTQ, Caisse de dépôt et placement du Québec 5 Blockstream Montreal, QC $75.8 Cryptocurrencies 6 Flipp Corp Toronto, ON $ Farmers Edge Precision Consulting Mobile Consumer Marketplace Winnipeg, MB $58.0 Agritech 8 Vidyard Kitchener, ON $50.0 Video Platforms Horizons Ventures, AXA Strategic Ventures, Digital Garage, AME Cloud Ventures, Blockchain Capital, Future\Perfect Ventures, Khosla Ventures, Mosaic Ventures, Seven Seas Venture Partners Insight Venture Partners, General Atlantic Mitsui & Co., Kleiner Perkins Caufield & Byers, Osmington Battery Ventures, Bessemer Venture Partners, Salesforce Ventures, OMERS Ventures, inovia Capital, SoftTech VC 7

8 Most Active Investors in Canadian Companies Private Independent Funds Firm Name # of Deals (First Half 2016) Canadian Private Independent Funds Estimated Amount Invested (CAD $MIL) Real Ventures 33 $12.1 Cycle Capital 13 $5.3 inovia Capital 11 $10.3 Teralys Captial 7 $23.3 Yaletown Ventures 6 $5.4 Relay Ventures 5 $11.4 Avrio Ventures 5 $8.7 Rho Capital Partners 5 $8.6 Plaza Ventures 4 $10.4 Build Ventures 4 $9.0 Georgian Partners 4 $7.6 EnerTech Captial Partners 4 $6.6 Firm Name # of Deals (First Half 2016) Non-Canadian Private Independent Funds Estimated Amount Invested (CAD $MIL) Kleiner Perkins Caufield & Byers 3 $21.8 Open Text Corp 3 $6.1 Domain Associates 3 $4.7 Volition Capital 2 $20.3 Battery Ventures 2 $13.5 Accomplice 2 $6.8 Acton Capital Partners 2 $5.0 Azure Capital Partners 2 $3.5 Accel Partners 2 $2.9 Gibraltar Ventures 2 $2.1 Hyde Park Angels 2 $ Fund 2 $0.5 8

9 Most Active Investors in Canadian Companies Government & Other Fund Types Government Funds Firm Name Rank Estimated Amount Invested (CAD $MIL) # of Deals (Last 6 Months) BDC Venture Capital 1 $ MaRS Discovery District 2 $ Export Development Canada 3 $ FedDev Ontario 4 $2.7 5 Innovacorp 5 $2.2 5 Pension, Retail, Corporate & Other Public Funds Fonds de Solidatité FTQ 1 $ Desjardins 2 $ New Brunswick Innovation Foundation 3 $ OMERS Ventures 4 $ La Caisse de Depot et Placement du Quebec 5 $

10 Québec & B.C. Soar in First Half Rankings Ontario Inches up to 6 th Place State / Province H Rank 2015 Rank H VC Invested (CAD $ Millions) H North American Market Share Change in Rank From 2015 California , % - New York 2 2 4, % - Massachusetts 3 3 3, % - Florida , % +12 Texas 5 5 1, % - Ontario % +2 Illinois % -1 Québec % +6 Washington % -5 Pennsylvania % +5 Utah % +2 Virginia % +6 North Carolina % -1 New Jersey % -7 British Columbia % +6 10

11 Deal Values (CAD Millions) 5% of H1 VC Investment from Firms Overseas United States Investors Account for 30% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% $1,528 $1,594 $1,937 $2,369 $2,749 $1, First Half 2016 Canadian Investors U.S. Investors Other Foreign Investors 11

12 Deal Values (CAD Millions) Institutional & Retail Funds Step Up Activity with 11% and 7% of H1 Investment Overall 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% $1,528 $1,594 $1,937 $2,369 $2,749 $1, First Half 2016 Private Independent Government Retail Corporate Angels & Individuals Institutional Other 12

13 Deal Values (CAD Millions) $372 Million Invested in Québec Companies in Q2 Best Quarter for Québec Since Q % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% $1,528 $1,594 $1,937 $2,369 $2,749 $1, First Half 2016 Ontario Quebec British Columbia Rest of Canada 13

14 Deal Values (CAD Millions) On Pace for Fewest Seed Stage Deals Since 1993 VCs Focusing on Later Stages 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% $1,528 $1,594 $1,937 $2,369 $2,749 $1, First Half 2016 Seed Early Stage Later Stage Expansion Other Advanced Stage 14

15 Deal Values (CAD Millions) IT Accounts for 60% of First Half Investment Life Sciences Takes 21% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% $1,528 $1,594 $1,937 $2,369 $2,749 $1, First Half 2016 Information Technology Cleantech Energy & Industrial 15 Life Sciences Consumer-Related Other Sectors

16 Deal Values (CAD Millions) IT Sector Takes $2.0 Billion in Last 4 Quarters Up 27% Over Previous 12-Month Period $700 $600 $536 $546 $578 $500 $472 $400 $300 $327 $361 $315 $349 $383 $200 $212 $100 $0 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Computer Software Semiconductors & Electrical Communications & Media Internet Specific Computer Hardware 16

17 Average Amount Invested per Round (First Half 2016, CAD $ Millions) Canada s Round Sizes No Longer Raking Last Among Top Ten VC-Attracting Nations $80 $70 $60 $50 $40 $30 $20 $10 $0 17

18 Amount Invested (CAD $ Millions) # of Rounds Canadian Investors, Non-Canadian Companies Buoyed by Canadian Pension Fund Investments in China and India, VC Activity Abroad Skyrockets $1, $1,000 $1, $ $ $ $200 $54 $63 $60 $178 $84 $151 $79 $135 $153 5 $0 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 0 Total Deal Values # of Deals 18

19 Venture Capital Fundraising (CAD Millions) Following A Very Strong Q1, Canadian VC Funds Close On Only $45 Million in Q2 $1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 $0 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Private Independent Retail Other 19

20 VC-Backed IPO Drought Now a Year Long Top Exits in Q Company Name Type Location Rank Value ($Mil) Investors (Disclosed) Aimetis Corp M&A Waterloo $14.02 Venturelink Funds, Covington Capital Corp Nakina Systems M&A Ottawa - Covington Capital Corp, Export Development Canada, MMV Financial, VenGrowth Asset Management, Vimac Ventures Pinshape Inc M&A Vancouver Startups, BDC Venture Capital Privacy Analytics M&A Ottawa - Quickplay Media M&A Toronto - BDC Venture Capital, Purple Angel, Vanedge Capital, Mars Discovery District Difference Capital Financial, Madison Dearborn Partners, ORIX Growth Capital Solutions Fleetmind M&A Montreal - Caisse de dépôt et placement du Québec, Novacap, Vantagepoint Number of Exits (Disclosed) Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q15 2Q15 Other Public M&A 20

21 Explanatory Notes 1. Data collected and analyzed by Thomson Reuters for this statistical report were drawn from a variety of sources. These include Thomson Reuters M&A databases, regulatory filings, and public and proprietary sources among the members of Réseau du capital d investissement du Québec and other Canadian and non-resident fund managers responding to Thomson Reuters quarterly surveys. 2. 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 January 1 st, 2016 to June 30 th, All current and previous years data is as of Tuesday, July 26th, Data is continuously updated and is therefore subject to change. 4. All figures are in Canadian dollars unless otherwise noted. 5. For further information on Thomson Reuters venture capital and private equity offerings, please visit us at: 6. For further reports on private equity, venture capital, and other asset classes, please visit us at: 7. 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 gavin.penny@thomsonreuters.com Tel: