Canada’s venture capital market experiences strongest first quarter in history

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Fewer deals but higher values ​​show Canada’s venture capital ecosystem remains robust, says KPMG’s Venture Pulse quarterly report

TORONTO, April 28, 2022 /CNW/ – Venture capital activity in Canada reached an all-time high in the first quarter, with US$3.5 billion of investments in 213 transactions, against 3 billion US dollars (out of 276 deals) in the previous quarter, according to the latest KPMG Private Enterprise Venture Pulse Q1 2022 report.

KPMG Logo (CNW Group/KPMG LLP)

Canadian start-ups in particular have raised $824.4 million during the first three months of the year — a period marked by global uncertainty due to the war in Ukraine, rising inflation and interest rates, continued supply chain pressures and the lingering COVID-19 pandemic. The majority of this total funding came from Torontosoftware company, which raised US$650 million in a Series C round.

“While significant uncertainty during the quarter impacted the total number of transactions, the amount of money flowing into the market is astronomical,” says Sunil MistryPartner, Private Enterprise and Technology, Media and Telecommunications, KPMG in Canada. “from Canada The VC ecosystem remains remarkably robust in the current environment, which is a strong indicator that from Canada The venture capital market has matured.

“We expect the venture capital market to remain stable over the next few quarters as the mountain of dry powder unfolds. However, we could see some slowdown by the end of the year if the uncertainties geopolitical and pandemic-related persist.”

Similar to the global and US venture capital landscape, Canada continues to attract significant venture capital investment in the tech space, which accounted for 105 out of 213 deals. The majority of deals were in artificial intelligence (AI) and machine learning (30 deals) valued at more than US$1.2 billion*, closely followed by fintech (28), the report notes.

Top Industry Verticals by Investments:

from Canada technology sector continues to attract the attention of investors both inside and outside the country,” says Dan WilsonNational Leader – Technology Sector, KPMG in Canada. “The pandemic has accelerated digital innovation and the use of technology across all industry verticals with continued investments in AI, security tools, fintech, edtech and communication technology. We saw a number of massive funding rounds in the first quarter of 2022 and the rise of cleantech.”

Venture capital and corporate exits take a hit

Corporate venture capital (CVC) investment fell significantly in Q1’22, settling at $966 million, well below that of the previous three quarters, but still up from last year. There were 41 CVC transactions in Q1’22, compared to 56 transactions in Q4’21 and 68 transactions in Q1’21.

After a record year for releases in 2021, Q1 releases saw a noticeable decline. There were only 27 outings worth US$77.5 million in Q1’22, a significant decrease compared to the previous quarter (Q4’21 saw 34 releases worth US$3.4 billion) and last year’s Q1 (34 outings worth US$1.2 billion). Of the total Q1 exits, five were buyouts, two were IPOs, 16 were mergers/acquisitions, and four were reverse mergers (two of which resulted in listings).

“It was a very choppy market last year where many companies went public, but that has dissipated as valuations have fallen. Many companies that went public last year are not meeting expectations “said Mr. Mistry.

“With inflation and interest rates rising, supply chain issues and geopolitical concerns could affect the IPO market.”

Globally, venture capital investments reached US$144.8 billionhigher than all but the four consecutive record quarters seen in 2021.

*Some transaction values ​​have not been disclosed, so this number could be much higher.

About KPMG Canada

KPMG LLP, a limited liability partnership, is a Canadian-owned and operated full-service audit, tax and advisory firm. For more than 150 years, our professionals have provided consulting, accounting, auditing and tax services to Canadians, inspiring trust, fostering change and driving innovation. Guided by our core values ​​of Integrity, Excellence, Courage, Together, For the Better, KPMG employs nearly 8,000 people in more than 40 locations across Canada, serving private and public clients. KPMG is consistently ranked among the from Canada best employers and one of the best places to work in the country.

The Firm is incorporated under the laws of Ontario and is a member of KPMG’s global organization of independent firms affiliated with KPMG International, a private English company limited by guarantee. Each KPMG firm is a legally distinct and separate entity and describes itself as such. For more information, see home.kpmg/ca

SOURCE KPMG srl

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