April 24th, 2017
Jim Orlando’s 2016 Venture Capital predictions scorecard
Betakit | | Jan 4, 2017
Twelve months have flown by and it is time to look back at my Ten Canadian startup and venture capital predictions for 2016. A lot has happened in our ecosystem since this time last year, so it is interesting for me to look back at what was on my mind a year ago and see how my predictions stacked up.
Prediction #1: Deal Volume Would Increase Disproportionately For Early-Stage Startups
A year ago I thought there would be fewer larger investments in later-stage ventures in 2016 versus the previous year, resulting in proportionately more investments in early-stage ventures. A guesstimate using data from the CVCA shows that funding to early-stage companies increased by 30%, while funding to later-stage companies decreased by 5% (the overall funding during the year increased by 15%). For what it’s worth, the four new investments in 2016 here at OMERS Ventures (AmpMe, Nudge, and two unannounced investments) were all early-stage and pre-revenue.
Prediction #2: U.S. Investor Interest in Canadian Startups Would Increase
I felt that in 2016 U.S. investors would be even more interested in Canadian startups than in previous years, with a particular emphasis in late-stage investments. A review of CVCA data shows that foreign investment in Canadian startups increased by 15% in 2016 over 2015.
Prediction #3: 2016 Would Not be the Year for Tech IPOs
I wasn’t bullish on the potential for tech IPOs for 2016 and I was right. Stay tuned for 2017…
Prediction #4: More VC Firms Would Raise Larger Funds
With the Canadian VC industry continuing to mature, I predicted that some of the established VC firms would raise larger funds (> $150M) in 2016 versus 2015. Georgian ($485M) and iNovia ($175M) announced their funds in 2016. New funds from BDC Cleantech, VanEdge, and Yaletown were announced as well, but they were all just below the $150M threshold. The larger two compare against our one OMERS Ventures Fund 2 announcement ($260M) in 2015. Narrowly got this one!
Prediction #5: Equity Crowdfunding Would Take Hold in Canada
A year ago, I felt that the then-new equity crowdfunding rules would impact early-stage startups in 2016, similar to what has happened around the world. A mid-2016 report from the National Crowdfunding Association of Canada forecast a significant increase in crowdfunding capital for 2016. The numbers are still relatively small compared to the overall venture capital industry but the underlying trend is there.
The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support and networking opportunities to over 1500+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at www.ncfacanada.org.