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CVCA H1 2023 Report: Venture Capital Market Overview

Venture Capital | Aug 23, 2023

CVCA H1 2023 market overview report - CVCA H1 2023 Report:  Venture Capital Market Overview

The Canadian Venture Capital (VC) and Private Equity (PE) market has showcased significant developments in the first half of 2023.

  • Investment Overview
    • CAD $2.8B was invested across 170 deals in the second quarter, making it the second-largest Q2 on record, only surpassed by Q2-2021.
    • This indicates a 140% increase quarter-over-quarter (QoQ) and a 45% rise year-over-year.
    • The number of deals saw a slight 3% increase QoQ, with the average deal size reaching CAD $16.6M. This showcases strong investor confidence in backing companies with high growth potential.
  • Funding Stages
    • Pre-seed: CAD $47M was invested across 51 deals.
    • Seed: CAD $245M was invested across 70 deals, marking a 50% increase from Q1-2023.
    • Early-stage: CAD $1.2B was raised from 54 deals, a significant 74% QoQ increase and 26% YoY rise.

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  • Sectoral Investments
    • ICT: CAD $1.8B was invested across 84 deals, with a significant focus on AI. A notable investment was in Cohere​.ai, which secured $368M in a series C round.
    • Lifesciences: CAD $738M was invested in H1, surpassing 65% of the total 2022 investments.
    • Cleantech: Investments surged by 116% QoQ, reflecting the growing emphasis on climate issues.
  • Non-dilutive Financing
    • 2023 has seen a record year in deal activity, outperforming 2022 by 2% with 126 deals.
    • However, the deal value declined by 33% to $78 million, indicating a trend towards smaller average deal sizes due to rising interest rates.
  • Exits
    • Q2 2023 saw 15 merger and acquisition exits with a combined value of CAD $279M.
    • The absence of IPOs and focus on M&As indicates a strategic approach to the current economic scenario, balancing optimized returns and long-term growth.

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Closing Thoughts

  • Kim Furlong, Chief Executive Officer of CVCA, emphasized the solid foundation of Canadian companies and the commitment to building a robust pipeline of deals. The increasing investments in the early stages highlight Canada's vibrant culture of innovation.
  • Despite economic challenges, Canadian investors remain optimistic, focusing on sectors with long-term potential, such as ICT and cleantech.

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