Key Trends from the CVCA’s Venture Capital and Private Equity Canadian Market Overview for H1 2019

30 septembre 2019 | Myron Mallia-Dare, Elsir Tawfik

( Disponible en anglais seulement )

The Canadian Venture Capital and Private Equity Association (“CVCA”) released its H1 2019 VC & PE Canadian Market Overview (the “Report”). The Report illustrates the main trends in Venture Capital (“VC”) and Private Equity (“PE”) activity in Canada during the first half of 2019 (the “Period”).

Some of the key findings from the Report are outlined below. Generally, the Report shows that there continues to be a significant uptick in VC investment in Canada, with the Period seeing record VC investment.  Conversely, the Period saw a slowdown in PE dollars invested in the Canadian markets, which reflects the trend in other markets, including the United States.

Key Venture Capital Findings

  1. An increase in deal size. The average deal size this year was $9M, a 22% increase from Q2 last year and a 26% increase compared to the average deal size during the 5 years between 2014 and 2018 ($5.9M). There were 11 mega-deals ($50M+) in the first half of 2019, which accounted for a 42% share of total VC dollars invested. Three of these transactions exceeded $100M.
  2. Venture capital investment reached a record high. There was a record $1.28B invested over 143 transactions in Q2 2019. In the first half of 2019, the total VC dollars invested equaled $2.15B. This investment surpassed the previous record quarter and first half being $1.25B (Q4 2018) and $1.67B (first half of 2018), respectively.
  3. Ontario based companies continue to attract the most investment. Ontario continues to be the jurisdiction with the highest amount of VC and PE dollars invested. Ontario-based companies received 52% of Canada-wide VC investment ($1.1B). Quebec came in second with Quebec-based companies receiving 25% ($532M) followed by BC-based companies in third who received 15% ($322M).
  4. Growing diversification yet, information and communications technology (“ICT”) sector continues to lead the way. The Report found that the ICT sector continues to attract the majority (54%) of VC capital in Canada, with investment in the ICT sector totaling $1.2B over 144 transactions. This is a drop from the first half of 2018 in which 64% of total Canadian VC investment was in the ICT sector. As for other sectors, life sciences businesses received a 27% share ($586M over 55 deals) and agribusiness companies received an 11% share ($243M over 20 deals) of VC capital during the Period.
  5. More investment in emerging growth companies. The Report found that there was a bigger appetite for VC investment into early-stage companies with these companies receiving 45% ($973M over 111 deals) of total VC investment. This was up from the first half of 2018 when VC investment into early-stage companies accounted for only 37% of the total VC investment.
  6. Uptick in exits. VC-backed exits are on pace to exceed last year’s total of 36 ($989M) with 20 already completed during the Period. So far, this year’s exits total $2.1B.

Top Private Equity Findings

  1. A decrease in total PE investment. Although the volume of deals remained constant, the total investment dollars decreased. In Q2 2019, a total of $3B was invested over 158 deals, which represented a 63% drop in investment when compared to Q2 2018. Moreover, the average YTD deal size ($18.8M) was less than half the average deal size of the same period in the previous three years.
  2. Smaller deal size. Except for a single $1.4B deal, all deals with disclosed values were below $500M with 66% (192 out of 289) of these transactions being under $25M.
  3. Quebec leads in PE volume, Ontario leads in PE dollars. 60% of PE deals during the Period were in the province of Quebec. The dollar value for these deals equaled $1.8B which was only 37% of total PE investment in Canada. Comparatively, Ontario captured only 20% of deal flow but accounted for 49% of the total PE investment dollars ($2.4B).
  4. Increased investment in ICT sector. A record share of deal flow (20%) was into the ICT sector, higher than its share in 2017 and 2018. The industrial and manufacturing sector maintained a 21% share.
  5. The volume of PE exits continues to slow down. The Report found that, in the Period, the volume of M&A exits decreased to 15 exits (totaling $851M), falling from the 35 M&A exits in the same period in 2018. Similarly, only one secondary buyout occurred, compared to four in the same period in 2018.


As illustrated by the Report, Canada’s – in particular, Ontario’s – rapidly growing tech sector continues to experience significant investment from both venture capital and private equity. We expect this investment to continue with substantial deal activity predicted for the remainder of the year.