PwC Canada | CB Insights
MoneyTree™
Canada
report
Q1 2017
Executive summary
CANADIAN INVESTMENT OFF TO SLOW START IN 2017
Activity declines but dollars up from a year before: Canadian venture-capital backed companies saw
$460M in total financing across 64 deals in Q1’17. Year over year, deals were down 19% from Q1’16, while
dollars were up 10%. The quarterly deal figure was the lowest seen since the 54 deals in Q3’15. On a quarterly
basis, deals were down 25% and dollars down 41% from Q4’16.
Seed share reaches new low: Seed activity accounted for just 31% of all deals in Q1’17, reaching an eightquarter low. On the other hand, early-stage share increased to 28%, representing an eight-quarter high.
Corporate participation strong: Amid the overall slackening of activity, corporates and corporate VCs were
a bright spot of activity, with 23% of all deals to Canadian companies featuring at least one corporation or
corporate venture capital arm participating. The participation rate matched Q2’15 for an eight-quarter high.
Internet deal activity stagnates: With just 23 deals completed in Q1’17, the top sector saw quarterly deal
count drop 21% from the prior quarter. Deal activity to Internet companies have fallen since peaking at 41 in
Q1’16.
Healthcare deals reach eight-quarter high: Deal count rose for the second consecutive quarter, reaching
a two-year quarterly high of 14. But both Healthcare and the third place sector of Mobile & Telecom saw
quarterly funding drop in the absence of last quarter’s larger financings.
Montreal defies trend as activity rises; Toronto shows strength: Toronto, Montreal and Vancouver
ranked as the top metros of Q1’17 by deals. All saw dollars invested decline compared to Q4’16, although
Montreal saw deal activity rise. Year over year, Toronto activity was up and dollars were up over 200%.
Strong presence of international capital beyond seed stage: In Q1’17, Canadian investors represented
nearly two thirds of all active investors at the seed stage, but they accounted for only half of early- and
expansion-stage investors with UK and European investors also becoming active.
Note: Report includes all rounds to VC-backed companies. For a detailed brief on
methodology, please see page 39 of this report.
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
All figures in USD. 2
Table of contents
4
Overall trends
12
Sectors
21
Places
30
Movers and shakers
35
Global trends
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
3
01
Overall trends
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
4
In Q1 2017
CANADIAN
companies raised
$460M
All figures n USD.
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
5
Eight-quarter overall financing trend
Dollars up year over year in first quarter of 2017
• Year over year, deals were down 19% from Q1’16, while dollars were up 10%. Deals and dollars into
Canadian companies hit eight-quarter highs in Q4’16, with investment figures fuelled by a $225M
biotechnology mega-round. In Q1’17, total dollars invested fell 41% from that high to $460M.
• Deal activity dropped 25% from Q4’16, as deals in Q1’17 hit the lowest quarterly figure since Q3’15.
79
85
82
90
80
71
66
62
64
70
60
# Deals
54
50
40
30
20
$394
$616
$601
$419
$596
$371
$777
$460
10
0
Q2'15
Q3'15
Q4'15
Q1'16
Investments ($M)
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
Q2'16
Q3'16
Q4'16
Q1'17
Deals
All figures in USD.
6
Eight-quarter
Quote
overall financing trend
“
Encouraging year-over-year increases in total funding
dollars and average deal size in Q1 indicate growing
confidence and capacity within the venture capital
community as well as the continuing solid fundamentals
of the Canadian technology industry.
—Chris Dulny, National Technology Industry Leader
PwC Canada
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
”
7
Deal share by stage
Seed deal share hits eight-quarter low
• Seed deal share remained anemic, accounting for just under a third of all deals and reaching an eightquarter low.
• On the other hand, early-stage share ticked up to 28%, representing an eight-quarter high.
11%
15%
18%
15%
17%
17%
13%
7%
4%
9%
6%
3%
6%
15%
11%
19%
22%
48%
Q2'15
8%
13%
12%
15%
19%
8%
6%
18%
18%
25%
19%
16%
26%
24%
28%
32%
31%
Q4'16
Q1'17
57%
39%
41%
Q3'15
Q4'15
Seed Stage
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
45%
Q1'16
Early Stage
Q2'16
Expansion Stage
42%
Q3'16
Later Stage
Other
8
Deal share by stage
“
The growth of post-seed investments in recent quarters
supports anticipation of greater exit activity in 2017 as
Canadian tech companies mature and become attractive
to public markets and strategic buyers.
—Dave Planques, National Deals Leader
PwC Canada
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
”
9
Corporate deal participation
Corporate investment strong despite overall drop-off
• Amid the slackening funding environment in Q1’17, corporations and corporate venture arms were a
bright spot of activity.
• 23% of all deals to Canadian companies featured at least one corporate or corporate venture capital
investor, matching Q2’15 for an eight-quarter high.
23%
19%
13%
20%
16%
14%
11%
23%
77%
81%
87%
80%
84%
86%
89%
77%
Q2'15
Q3'15
Q4'15
Q1'16
Q2'16
Q3'16
Q4'16
Q1'17
Other Investors
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
Corp / CVC Deal Participation
10
Corporate deal participation
“
The recent signs of increased corporate venture capital
participation reflect global trends of increased strategic
interest in earlier stage technology investments.
—Michael Dingle, National Deals Technology Leader
PwC Canada
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
”
11
02
Sectors
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
Canada deal and funding by sector
$195M
Avg. deal
size: $13M
$65M
Avg. deal
size: $5M
$41M
Avg. deal
size: $5.9M
23 deals
Internet
14 deals
Healthcare
Healthcare
Mobile & Telecom
$38M
Avg. deal
size: $12.5M
$24M
Avg. deal
size: $8.1M
$2M
Avg. deal
size: $1.1M
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
10 deals
3 deals
Computer Hardware & Services
3 deals
Energy & Utilities
3 deals
Industrial
All figures in USD.
13
Deal share by sector
Healthcare, internet deal share remains strong
• Internet deal share recovered slightly following several downward quarters, ticking upwards to 36% in
Q1’17. This figure is still significantly lower than the peak of 52% seen in the same quarter last year.
• Healthcare companies captured 22% of all deals in Q1’17, a significantly higher share than in recent
quarters. Much of this was due to declining activity in other sectors while Healthcare remained strong.
13%
5%
5%
15%
16%
19%
2%
9%
24%
13%
6%
17%
11%
10%
1%
5%
23%
22%
1%
7%
15%
9%
11%
8%
23%
6%
8%
9%
11%
45%
52%
44%
44%
Q2'16
Q3'16
33%
Q2'15
Q3'15
3%
3%
6%
5%
16%
9%
22%
14%
13%
47%
20%
32%
Q4'15
Q1'16
34%
36%
Q4'16
Q1'17
Internet
Healthcare
Mobile & Telecommunications
Software (non-internet/mobile)
Consumer Products & Services
Other
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
14
Internet eight-quarter financing trend
Internet quarterly funding rises, but deals slip
• Funding rose 23% on a quarterly basis to $195M in Q1’17, although deal count slowed 21% to 23, the
lowest figure since Q3’15.
• Quarterly deal activity has fallen steadily since peaking in Q1’16, contributing to the declining deal
share for the sector seen earlier.
45
41
40
36
35
32
29
29
30
23
18
# Deals
29
25
20
15
10
$143
$249
$189
$144
$330
$114
$159
$195
5
0
Q2'15
Q3'15
Q4'15
Q1'16
Investments ($M)
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
Q2'16
Q3'16
Q4'16
Q1'17
Deals
All figures in USD.
15
Internet eight-quarter financing trend
“
Internet deals in Q1 saw an increased focus on enterprise
solutions for data analytics, business intelligence and
productivity. Deals were largely at seed stage, signalling
strong demand for data-driven tools to boost growth and
profitability.
—Shivalika Handa, Corporate Finance Director
PwC Canada
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
”
16
Healthcare eight-quarter financing trend
Healthcare deals up to new quarterly high in Q1’17
• Quarterly funding spiked last quarter, driven by a $225M mega-round to biotech startup BlueRock
Therapeutics.
• Although Q1’17 funding totalled only $65M in the absence of larger financing rounds, deal activity grew
for the second consecutive quarter, reaching a two-year quarterly high.
16
14
14
12
12
10
9
7
7
8
6
# Deals
7
10
6
4
2
$140
$57
$81
$69
$108
$25
$328
$65
0
Q2'15
Q3'15
Q4'15
Q1'16
Investments ($M)
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
Q2'16
Q3'16
Q4'16
Q1'17
Deals
All figures in USD.
17
Healthcare eight-quarter financing trend
“
Excluding one-off mega deals, healthcare and digital
health continue to show stability and interest from
investors. Venture funding is showing perennial support
for the development of new therapies and diagnostic tools
against the backdrop of the world-class Canadian
healthcare system.
—Scott Collinson, Health Industries Leader
PwC Canada
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
”
18
Mobile & Telecom eight-quarter financing trend
Mobile & Telecom deals recovering from Q3’16 low
• Deal activity fell sharply from a peak of 18 in Q1’16 to a low of just 6 in Q3’16, but has crept back up
in the two quarters since.
• Q4’16 saw a number of $20M+ rounds that propelled total funding upwards.
20
18
18
16
14
12
10
9
8
12
# Deals
13
10
8
8
6
6
4
$12
$156
Q2'15
Q3'15
$22
$46
$35
$19
$135
$41
2
0
Q4'15
Q1'16
Investments ($M)
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
Q2'16
Q3'16
Q4'16
Q1'17
Deals
All figures in USD.
19
Mobile & Telecom eight-quarter financing trend
“
With the majority of deals in the Series A stage, the
mobile application development sector continues to track
well—driven by the demand for mobile-first solutions and
the advancement of the ‘connected-everything' ecosystem.
—Dan Rydeen, National Communications Industry Leader
PwC Canada
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
”
20
03
Places
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
Canada: Q1’17 funding by region
British
Columbia
11 deals,
$80M
Prairies
1 deal,
$1M
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
Ontario
34 deals,
$286M
Quebec
15 deals,
$90M
Atlantic
Canada
2 deals,
$3M
All figures in USD.
22
Top five markets of Q1’17 by deals
$227M
Avg. deal
size: $10.8M
$77M
Avg. deal
size: $5.9M
$80M
Avg. deal
size: $11.5M
Vancouver
4
Avg. deal
size: $6.7M
Avg. deal
size: $7.2M
14
Montreal
$20M
$14M
26
Toronto
2
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
9
Ottawa
Waterloo
All figures in USD.
23
Eight-quarter financing trend
Toronto
Deals and dollars both trend downwards in Toronto
• Investment rose on a year-over-year basis, with deals up 4% and dollars up 239% from Q1’16.
• Deal count and total dollars invested have both tumbled after rising to highs in Q4’16, although last
quarter’s funding was bolstered by the $225M round to BlueRock Therapeutics mentioned above.
33
26
23
26
25
21
# Deals
18
20
$130
$204
$98
$67
$256
$126
$360
$227
Q2'15
Q3'15
Q4'15
Q1'16
Q2'16
Q3'16
Q4'16
Q1'17
Investments ($M)
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
Deals
All figures in USD.
24
Eight-quarter financing trend
Montreal
Montreal defies trend as deal activity rises
• Montreal was one major hub that saw deal activity rising into Q1’17, up 56% from the prior quarter.
• But dollar investment was down 29% to $77M, headlined by agricultural microbiology startup
Inocucor’s $29M Series B.
17
15
15
14
14
# Deals
11
9
8
$59
$139
$294
$116
$194
$50
$108
$77
Q2'15
Q3'15
Q4'15
Q1'16
Q2'16
Q3'16
Q4'16
Q1'17
Investments ($M)
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
Deals
All figures in USD.
25
Eight-quarter financing trend
Vancouver
Vancouver investment starts 2017 at modest pace
• With $80M invested in Vancouver-based companies across nine deals, Q1’17 opened the year at
moderate levels relative to its eight-quarter range.
• HR tech startup Visier secured the region’s largest round for the quarter with its $45M Series D.
15
14
14
9
9
8
7
$153
$31
$77
$112
$52
$29
$129
$80
Q2'15
Q3'15
Q4'15
Q1'16
Q2'16
Q3'16
Q4'16
Q1'17
Investments ($M)
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
# Deals
11
Deals
All figures in USD.
26
Eight-quarter financing trend
Ottawa
Ottawa funding figures also modest in Q1’17
• Dollar funding hit an eight-quarter high in Q4’16, pushed up by a $41M Series B to immunotherapy
biotech company Turnstone Biologics.
• Total Q1’17 financing missed last quarter’s mark, although deal activity has ticked upwards.
4
3
3
3
3
$41
$20
$49
$20
Q2'16
Q3'16
Q4'16
Q1'17
# Deals
7
1
$21
$36
$9
Q2'15
Q3'15
Q4'15
Q1'16
Investments ($M)
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
Deals
All figures in USD.
27
Eight-quarter financing trend
Waterloo
Investment to Waterloo-area companies slows
• After finishing 2016 on a strong note, deal activity fell to an eight-quarter low, with just $14M
invested across two deals.
• Total funding was quiet in the wake of Thalmic Labs’ $120M Series B last year.
7
4
4
# Deals
6
4
3
3
2
$2
$51
$46
$61
Q2'15
Q3'15
Q4'15
Q1'16
Investments ($M)
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
$7
Q2'16
$122
$67
$14
Q3'16
Q4'16
Q1'17
Deals
All figures in USD.
28
Largest deals in top markets
Trailing four-quarter (Q2’16 to Q1’17)
Toronto
Qtr.
$M
Montreal
Qtr.
$M
Vancouver
Qtr.
$M
BlueRock
Therapeutics
Q4'16
$225
DalCor
Pharmaceuticals
Q2'16
$100
Visier
Q1'17
$45
PointClickCare
Q1'17
$85
Hopper
Q4'16
$61
MSI Methylation
Sciences
Q4'16
$30
Real Matters
Q2'16
$77
Breather
Q4'16
$40
D-Wave Systems
Q4'16
$21
Flipp
Q2'16
$61
Spectra Premium
Industries
Q2'16
$36
MineSense
Technologies
Q1'17
$19
Hubba
Q4'16
$45
Inocucor
Q1'17
$29
Bench Accounting
Q2'16
$16
Ottawa
Qtr.
$M
Waterloo
Qtr.
$M
Turnstone Biologics
Q4'16
$41
Thalmic Labs
Q3'16
$120
Assent Compliance
Q2'16
$20
Clearpath Robotics
Q4'16
$29
Embotics
Q2'16
$12
Axonify
Q4'16
$27
You.i TV
Q3'16
$12
Dejero Labs
Q1'17
$14
Klipfolio
Q1'17
$9
Intellijoint Surgical
Q4'16
$8
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
All figures in USD.
29
04
Movers
and shakers
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
Largest deals of Q1’17
Company
Sector
Industry
Internet
Internet
Software &
Services
Vancouver, BC
Internet
Internet
Software &
Services
CSDC Systems
Mississauga, ON
Software
Government
(non-internet/
Software
mobile)
Inocucor
Montreal, QC
Agriculture
PointClickCare
Visier
Fusion
Pharmaceuticals
Location
Mississauga, ON
Hamilton, ON
All figures in USD.
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
Healthcare
Agricultural
Products &
Rel. Activities
Biotech
Seed
stage
Stage of
funding
Value
of deal
Disclosed investors
$85M
Dragoneer Investment Group, JMI
Equity
$45M
Summit Partners, Adams Street
Partners, Foundation Capital,
Sorenson Capital
$30M
BuildGroup Management
$29M
Closed Loop Capital, Cycle Capital,
Desjardins, TPG Alternative &
Renewable Technologies
$25M
Johnson & Johnson Innovation, TPG
Biotech, Genesys Capital, HealthCap
Venture Capital, Fight Against
Cancer Innovation Trust
Early
stage
Expansion
stage
Later
stage
31
Most active investors of Q1’17
Investor
Location
No. of
Canadian
companies
Select Q1’17 investments
1. BDC*
Montreal, QC
9
Plum, PotLoc, Sofdesk
2. MaRS**
Toronto, ON
5
FarmLead, Fibrocor Therapeutics
3. Real Ventures
Montreal, QC
4
Dream Payments, Vention, Wiivv
T3. Desjardins
Montreal, QC
3
Airex Energy, Inocucor, Prevtec
Microbia
T3. Cycle Capital
Montreal, QC
3
Airex Energy, Inocucor, MineSense
Technologies
T3. Georgian Partners
Toronto, ON
3
Integrate.ai, Top Hat, Vision Critical
*Includes all BDC venture capital and growth/transition capital arms
**Includes MaRS Innovation and Investment Accelerator Fund
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
All figures in USD.
32
Q1’17 investor locations
Strong presence of international capital beyond seed stage
• Canadian investors represented nearly two thirds of all active investors at the seed stage but accounted for
roughly half of early- and expansion-stage investors in Q1’17, with European investors becoming active.
• There were only a handful of later stage rounds this quarter, but US investors accounted for nearly three
quarters of the active firms at this investment stage.
Stage of
funding
Location of investors
Seed
Total number of seed stage deals: 20
Canada
United States
UK/Europe
Asia
65%
Early
29%
Total number of early stage deals: 18
51%
Expansion
35%
10%
4%
31%
14%
3%
Total number of expansion stage deals: 10
53%
Later
3%3%
Total number of later stage deals: 4
27%
73%
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
33
Q1’17 investor locations
“
Despite a few larger late-stage deals funded by
international players, Canadian investors are staying
active in deal activity beyond seed stage—an interesting
trend to monitor as Canada’s technology industry
continues to scale.
—Christine Pouliot, Deals Partner
PwC Canada
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
”
34
05
Global trends
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
Q1’17 global regional comparison
Deals
605 deals
Deals
$3.3B invested
1,163 deals
405 deals
$9.3B invested
$14.3B invested
Global total
2,228 deals
$27.1B invested
All figures in USD.
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
*Note: Global and North American data in this section of the report includes equity financings to VCbacked companies only. See methodology slide for methodology in Canadian sections.
For more global data, see the full PwC & CB Insights MoneyTree Report.
36
Eight-quarter global financing trend
Global deals up 2%; dollars rise 21% from Q4’16 lows
• Both quarterly deal count and dollars invested bottomed out in Q4’16.
• Deals crept up 2% to 2,228, while an uptick in mega-rounds in North America and Asia helped boost
funding 21% to $27.1B.
2,497
2,443
2,310
2,213
2,221
2,257
2,174
2,228
$35.6
$40.0
$28.7
$27.4
$29.7
$24.7
$22.4
$27.1
Q2'15
Q3'15
Q4'15
Q1'16
Q2'16
Q3'16
Q4'16
Q1'17
Investments ($B)
All figures in USD.
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
Deals
*Note: Global and North American data in this section of the report includes equity financings to VCbacked companies only. See methodology slide for methodology in Canadian sections.
For more global data, see the full PwC & CB Insights MoneyTree Report.
37
Appendix
Notes on methodology
PwC Canada (pwc.com/ca/moneytree) and CB Insights (cbinsights.com) encourage you to review the methodology and
definitions used to better understand the numbers presented in this report. If you have any questions about the definitions
or methodological principles used, we encourage you to reach out to CB Insights directly. Additionally, if you feel your firm
has been underrepresented, please send an email to [email protected], and we can work together to make sure your
firm’s investment data is up to date.
Rankings, e.g. top markets and top sectors, are done by quarterly deal activity (that is, deal count for the given quarter). CB
Insights' global platform converts deal amounts to USD at the market rate current on the date of the specific deal. All figur es
in this report are in USD and not in CAD.
What is included:
What is excluded:
– Canadian companies headquartered in Canada.
– Canadian companies not headquartered in Canada.
– Equity financings into emerging companies. Fundings must be to
VC-backed, which are defined as companies that have received
equity funding at any point from at least one of the following:
venture capital firms, corporate venture groups, super angel
investors, government entities or public-private partnerships.
– No contingent funding. If a company receives a commitment for $20M
subject to hitting certain milestones but first gets $8M, only the $8M is
included in our data.
– Fundings of only private companies. Funding rounds raised by
public companies of any kind on any exchange (including Pink
Sheets) are excluded from our numbers, even if they received
investment by a venture firm(s).
– Only includes the investment made in the quarter for tranched
investments. If a company does a second closing of its Series B
round for $5M and previously had closed $2M in a prior quarter,
only the $5M is reflected in our results.
– Round numbers reflect what has closed—not what is intended. If
a company indicates the closing of $5M out of a desired raise of
$15M, our numbers reflect only the amount which has closed.
– Only verifiable fundings are included. Fundings are verified via
(1) various federal and provincial regulatory filings, (2) direct
confirmation with firm or investor, (3) press release or (4)
credible media sources.
– Equity fundings to joint ventures and spinoffs/spinouts are
included, given that they meet the VC-backed criteria.
– No business development / R&D arrangements whether transferable
into equity now, later or never. If a company signs a $300M R&D
partnership with a larger corporation, this is not equity financing nor is
it from venture capital firms. As a result, it is not included.
– No buyouts, consolidations or recapitalizations. All three of these
transaction types are commonly employed by private equity firms and
are tracked by CB Insights. But they are excluded for the purposes of
this report.
– No private placements. These investments, also known as PIPEs
(private investment in public equities), are not included even if made by
a venture capital firm(s).
– No debt/loans of any kind (except convertible notes). Venture debt or
any kind of debt/loan issued to emerging startup companies, even if
included as an additional part of an equity financing, isn’t included. If a
company receives $3M with $2M from venture investors and $1M in
debt, only the $2M is included in these statistics.
– Grants or loans financings by the federal government, provincial
agencies or public-private partnerships to emerging startup companies
aren’t included (only equity financings).
– No fundings to subsidiaries of a larger parent corporation.
PwC | CB Insights MoneyTree™ Canada Report Q1 2017
39
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