For G. Scott Paterson, little surprise in Canada’s venture capital growth

Thanks in part to a volatile world market, the Canadian economy is in the midst of uncertain times. Stemming from an ever-weakening loonie and low gas prices, coupled with uncertainty in China, financial analysts are worried the Statistics Canada GDP report slated for release on September 1st will announce a nationwide recession (http://www.huffingtonpost.ca/2015/07/28/recession-canada-cd-howe_n_7889118.html)

Despite the first half downturn experienced in a variety of sectors of the Canadian economy, venture capital in Canada saw its greatest growth in a decade. “Data indicates there was $636 million in venture capital invested in 143 deals in the second quarter, a sum that was 15 percent higher than that invested by VC firms in the first quarter,” Reuters reported in July of this year. “This propelled VC investments in the first half of this year to C$1.19 billion, a 33 percent increase from the first half of last year and the strongest first half for VC funding in Canada since 2002.”

2015’s venture capital growth is a continuation of strong venture capital gains in 2014. The Canadian Venture Capital and Private Equity Association (CVCA) surveyed (http://www.techvibes.com/blog/venture-capital-optimistic-canada-2015-02-04) its members and found 77 percent believe current economic conditions favour the private capital industry. 61 percent or almost two-thirds of private equity members believe that lower oil prices improve their overall business projections for this year.

In 2013, the Canadian government introduced the Venture Capital Action Plan (http://www.actionplan.gc.ca/en/initiative/venture-capital-action-plan) aimed at boosting private sector investment in innovative businesses. The mandate outlined on their website states: “The Venture Capital Action Plan has made available: Up to $350 million to establish up to four large-scale private sector-led funds in partnership with institutional and corporate investors as well as interested provinces. An aggregate investment of up to $50 million in established high-performing venture capital funds in Canada. Additional resources to continue developing a robust venture capital system and a strong entrepreneurial culture in Canada.”

G. Scott Paterson, a technology and media venture capitalist (https://www.engagementlabs.com/board/g-scott-paterson/) with more than 25 years of experience, in leading and funding young companies says Canada’s venture capital sector growth is great news, but not as good as it could be. “The size of venture capital deals in Canada is drastically smaller than that of our counterparts. Canada’s average VC funding round size is approximately $4 million, that’s behind the American VC funding of $17 million, and the UK’s $13.7 million,” Paterson points out.

However, Paterson does appreciate the steady growth the sector has seen over the past decade, and especially the past 12 months. “Last year, the first half of 2014 saw five $20 million and greater [VC] deals. While in comparison the first half of 2015 saw eleven $20 million plus deals,” G. Scott Paterson (https://www.symbilitysolutions.com/en/who-we-are/management/board-directors/g-scott-paterson/) mentions. “Although, Canadian startups are still not enjoying the kind of access to funding enjoyed by companies in the United States, especially in later funding rounds, that’s still a sizeable growth.”

For Canada, investing in innovation and technology may mean a less dependance on the oil and energy sector and a more balanced economy. With continued government support and investment, Canadian venture capital is poised to make record gains in the next five years. That will continue to solidify Canada among the world leaders in venture capital and fundraising.