Top Three for VC: ICT, Life Sciences and Agribusiness Sectors Lead Canadian Growth

Top Three for VC: ICT, Life Sciences and Agribusiness Sectors Lead Canadian Growth
September 07
11:55 2016

By the Canadian Venture Capital and Private Equity Association

In the first half of 2016, the Canadian VC landscape continued to grow, propelled by investment in three sectors: ICT, life sciences and agribusiness.

According to our exclusive H1 2016 data, ICT led the way with $995M invested in H1 (65 per cent of the total dollars invested), followed by $342M in life sciences (22 per cent) and $114M in agribusiness (7 per cent).

For the past three years, ICT and health sciences have held the number-one and number-two VC investment spots, respectively. ICT leaders include Shopify, Hootsuite and the recent $100M investment in Real Matters, a cloud-based provider of property information services.

In life sciences, you’ll find companies like Zymeworks Inc., which raised $61.5M to build a cancer-focused therapeutics company and DalCor Pharmaceuticals, which received $128M—a CVCA life sciences record.

Russell Samuels, Principal, Whitecap Venture Partners, a Real Matters investor, believes the Canadian VC landscape is “experiencing a renaissance driven by a number of factors, including: strong investment returns, government support through the Venture Capital Action Plan and a multitude of new venture funds led by experienced GPs entering the market.”

That’s corroborated by OMERS Ventures’ Managing Director, Jim Orlando, who says the last several years have seen increasing confidence on the part of Canadian entrepreneurial and technology ecosystem.

“There are more individuals starting and wanting to work for start-ups, more risk capital flowing into the industry and more recognition that world-class companies can be built in Canada by Canadians,” Orlando says.

Agribusiness Surges Ahead of CleanTech

Clean technology was the number-three VC investment sector in 2013, 2014 and 2015. And while it remains healthy, it’s been eclipsed in the first half of 2016 by several agribusiness deals, notably, the $58M infusion in FarmersEdge — which uses big data to help agriculture companies grow — and Manitoba’s Fresh Hemp Foods.

Andrée-Lise Méthot, Founding and Managing Partner of Cycle Capital Management, thinks cleantech is maturing. “There is a need to build a stronger ecosystem to support the industry. We need larger funds to be even more competitive in the sector. From our point of view, having a new $300-million Canadian VC fund would make a significant positive impact.”

Looking ahead, however, we’re seeing a number of key trends come together which are helping to drive a robust VC ecosystem in Canada. The revolution in IT services, such as low-cost cloud computing, open source software and widespread mobile adoption, is working its way across the entire economy.

Shayn Diamond, Principal at Whitecap Venture Parters explains sectors like real estate, law, insurance and banking have been historically slow to embrace new technology, but are ripe for disruption. “This approach will be replicable across many ‘old world’ industries,” he says.

“While there are inevitably going to be ups and downs along the way, we believe that the fundamentals in Canada will continue to be strong for years to come.”

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