Venture Capital

Venture capital financings hit $7.5-billion in first half of 2021, tying 2019 full-year record

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Canada’s sizzling technology sector has driven more venture capital funding in the first six months of the year than all of 2019, with U.S. funds making a significant contribution to the total investment value.

Venture funds poured $7.5-billion into Canadian companies in the first half of 2021 in 349 financing rounds, according to market data company Refinitiv. The top 10 financings made up more than a third of the overall investment value. Vancouver-based Trulioo, an identity verification company, topped the chart with a $476-million round led by TCV, a venture firm based in Menlo Park, Calif.

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“The quality of opportunity is better than it’s ever been in the last 20 years,” said John Albright, co-founder of Relay Ventures, a Toronto-based venture fund that invested more than $11-million in the first half of the year. “The teams are great, the tech is great, the [mindset] of building a global company instead of a Canadian company is well understood. It’s very exciting.”

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Twenty financings were over $100-million, including a $250-million round for fintech giant Wealthsimple, and a $385-million round for Dapper Labs, a blockchain company that specializes in creating collectible non-fungible tokens, or NFTs.

Canadian tech companies have benefited from a low interest rate environment, with lots of private capital searching for investments outside of stocks and bonds. Not all of that money is domestic: U.S. funds invested $3.3-billion in the first half of the year, more than the $2.6-billion supplied by domestic funds.

The Business Development Bank of Canada was the most active domestic fund, participating in 36 rounds and investing $206.5-million. The Canadian Business Growth Fund contributed $153.8-million in the same period, followed by Montreal-based Innovia Capital. Innovia had the period’s largest fundraising, closing a $560-million growth fund in March.

Companies based in Ontario and British Columbia attracted the most investment, capturing $3.4-billion and $2.4-billion, respectively. Ontario’s total is double what it saw in the first half of 2020, and B.C. tripled its total from the same period last year. Quebec raised 911.6-million over 85 financings.

Mr. Albright expects the technology sector’s red-hot run to continue, especially with pandemic restrictions easing across North America as vaccination rates continue to rise. A return to in-person meetings could help to strengthen relationships and make due diligence easier.

“We couldn’t be busier, and the problem is we can’t travel,” he said. “I think we’ll be hopping on planes, in the fall, even.”

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