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Key Takeaways from CVCA Canadian Market Overviews for 2021

Fasken
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Overview

CVCA Canadian Market Overview

The Canadian Venture Capital & Private Equity Association (CVCA) released its Canadian market overviews for 2021, which are based on data voluntarily submitted by a selection of venture capital and private equity firms. You can access the overviews for venture capital and for private equity. Key takeaways were as follows:

Venture Capital (VC) Canadian Market Overview

  • Record-breaking level of annual investment in 2021 for a total of $14.2B over 751 deals. The investment doubles those of 2019, the previous record year. The breakdown of those VC investments is as follows:

    • $2.8B invested in growth equity across 25 deals, indicating increased support in growth-stage companies. The investment is a 65% increase in value compared to those of 2019 (previous record year).
    • Nearly all provinces set VC investment records, with a high increase in investment in Western Canada. Saskatchewan, British Colombia and Manitoba saw increased VC investment of 1255%, 222% and 57%, respectively. The three provinces with highest VC investment were Ontario, British Colombia and Québec.
    • Significant transactions of over $50M accounted for approximately 75% of all investment in 2021. 2021 was also a record year for number of IPO’s, with a total of 8 companies going public, at a total value of $2.9B. Average deal size was calculated at $18.9M in comparison to the 5-year average of $8.2M.
    • Increase in foreign VC’s investment in Canadian companies with investments received from the United States, Germany, Singapore, Switzerland, Singapore and Australia.
    • Information, communication & technology sector received 64% of total dollars invested in 2021. Life science also saw a 50% increase from 2020.
    • The pace of VC-backed exit momentum reached a record of 73 exits and $8.4B in total value, demonstrating a 92% increase in exits. 2021 trends additionally indicated an increase for VC-backed companies in IPO activity at lower valuations.

Private Equity (PE) Canadian Market Overview

  • Annual investment of $18B across 799 deals in 2021. The numbers are consistent with pre-pandemic levels with the 5 year average of $19.2B in investment for 607 deals. The breakdown of those PE investments is as follows:

    • 6 mega deals of more than $500M accounted for over 33% of all PE dollar investment in 2021.
    • Record-breaking deal count of 799 deals, representing a 21% increase from 2019 (previous record deal) which may reflect an acceleration of baby boomer’s transition towards retirement due to the Covid-19 Pandemic.
    • Secondary buyout deals totaled $2B across 18 buyouts, representing a 100% increase in the amount of buyouts, with a reduction of approximately 25% in total dollars raised in comparison to 2020.
    • Québec accounted for 60% of deal flow with a total of 481 deals accounting for $9.3B in PE investments in 2021. Ontario was second with a total of 185 deals accounting for $5.8B in PE investments.
    • PE minority investments accounted for 35% of all PE dollars invested in 2021 and over 25% of total activity with $6.4B across 228 deals representing an 14% increase and 11% increase respectively, from 2020.
    • 2021 accounted for the highest number of exits and IPOs on record, with 88 total exits. However, exit value remained low at $6.4B, the second-lowest year in total exit value. Exit by M&A transactions returned to pre-pandemic levels with a 156% increase from 2020 and 49% increase from 2019. The trend also followed for secondary buyout deals for a total of $2B across 18 buyouts, a 200% increase in the amount of secondary buyouts with almost 24% less value in dollars raised from 2020.

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