vc & pe canadian market overview // 2018 · venture capital & private equity canadian...
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VC & PE CANADIAN MARKET OVERVIEW
// 2018
VENTURE CAPITAL & PRIVATE EQUITY CANADIAN MARKET OVERVIEW // 2018 | 2
CONTENTS
PARTICIPATING DATA CONTRIBUTORS .......................................................................3 FOREWORD ......................................................................................................................4 VENTURE CAPITAL CANADIAN MARKET OVERVIEW ...............................................5 VENTURE CAPITAL HIGHLIGHTS ............................................................................................................ 6 VENTURE CAPITAL HEAT MAP ................................................................................................................. 7 QUARTER-OVER-QUARTER VC INVESTMENT ACTIVITY ................................................................. 8 VC ACTIVITY BY DEAL SIZE ...................................................................................................................... 9 TOP DISCLOSED CANADIAN VC DEALS .............................................................................................. 10 TOP 10 CANADIAN CITIES // ADMINISTRATIVE CENTRES .............................................................. 11 VC SECTOR BREAKDOWN ...................................................................................................................... 12 VC STAGE BREAKDOWN .......................................................................................................................... 13 VC EXITS ....................................................................................................................................................... 14 TOP DISCLOSED VC EXITS ..................................................................................................................... 15MOST ACTIVE VC FIRMS // FUNDS ....................................................................................................... 16
PRIVATE EQUITY CANADIAN MARKET OVERVIEW ................................................. 17 PRIVATE EQUITY HIGHLIGHTS ............................................................................................................... 18 PRIVATE EQUITY HEAT MAP // BUYOUT & ADD-ON DEALS ONLY ............................................. 19 PRIVATE EQUITY HEAT MAP // PE GROWTH DEALS ONLY .......................................................... 20 PRIVATE EQUITY HEAT MAP // ALL PE DEALS .................................................................................. 21 QUARTER-OVER-QUARTER PE INVESTMENT ACTIVITY ............................................................... 22 TOP 10 DISCLOSED CANADIAN PE DEALS ....................................................................................... 23 PE ACTIVITY BY DEAL SIZE .................................................................................................................... 24 TOP CANADIAN CITIES // ADMINISTRATIVE CENTRES ................................................................. 25 PE SECTOR BREAKDOWN ...................................................................................................................... 26 PE EXITS ....................................................................................................................................................... 27 TOP 10 DISCLOSED CANADIAN PE EXITS ......................................................................................... 28MOST ACTIVE PE INVESTORS ............................................................................................................... 29
CVCA METHODOLOGY ................................................................................................ 30 VENTURE CAPITAL ................................................................................................................................... 30 PRIVATE EQUITY .................................................................................................................................. 31, 32
AUTHORS, ABOUT CVCA AND CONTACT INFO ..................................................... 33
VENTURE CAPITAL & PRIVATE EQUITY CANADIAN MARKET OVERVIEW // 2018 | 3
If you would like to have your firm included in future reports, please contact [email protected]
CVCA thanks the following firms who participated in its Q4 2018 survey.
PARTICIPATING DATA CONTRIBUTORS
Accelerate FundAmorchem Venture FundAnges QuebecAnges Quebec CapitalArctern VenturesAVAC Ltd.Avrio Ventures Management CorpAzure Capital PartnersBCF VenturesBrightspark VenturesBuild VenturesCIBC Innovation BankingCIC Capital VenturesCTI Life SciencesCycle Capital Management/EcoFuelDifference CapitalEmerald Technology VenturesEnerTech CapitalEpic CapitalEspresso Capital Ltd.Evok InnovationsFerst CapitalFight Against Cancer Innovation Trust
First Ascent VenturesFreycinet VenturesGeorgian PartnersGolden Venture PartnersGood News VenturesGreenSoil InvestmentsHIGHLINEiGan PartnersInformation Venture PartnersInnoStart Venturesinovia CapitalInvesteco Capital CorpIsland Capital PartnersLuge CapitalLumira VenturesMistral VPNew Brunswick Innovation FoundationNorthumberland CFDCOMERS VenturesOntario Capital Growth CorporationPanache VenturesPangaea VenturesPelorus Venture Capital Ltd.Plaza VenturesQuantius
Quark VentureReal VenturesRelay VenturesRenewal FundsRoadmap CapitalRoar VCRound13Ryerson FuturesScaleUP VenturesStandUp VenturesTandem ExpansionTandemLaunchTop RenergyTrellis CapitalTVM Life Science Management Inc.V3-VenturesVancouver Founders FundVanedge Capital PartnersVenbridge Ltd.VentureLink FundsVersant VenturesVersion One VenturesWhite Star CapitalWhitecap Venture PartnersYaletown Partners
Venture Capital Firms
Ardenton Capital Corporation
ATB Capital
BDC Growth Equity
BDC GTC
Birch Hill Equity Partners
CAI Capital Management Co.
Canadian Business Growth Fund
Capital Financière Agricole
Clairvest Group Inc.
Clearspring Capital Partners
Export Development Canada (EDC)
First West Capital
Founders Group of Food Companies Inc.
Fulcrum Capital Partners
GrowthWorks Capital
Hawthorne Capital Inc.
Highland West Capital
InstarAGF Asset Management
Ironbridge Equity Partners
Killick Capital Inc.
Lex Capital Management
m2s Capital
Mink Capital
Mosaic Capital Corporation
Novacap Management Inc.
OMERS Private Equity Inc.
Persistence Capital Partners
PFM Capital Inc
PRIVEQ Capital Funds
Regimen Equity Partners
Roynat Capital Inc.
Seafort Capital
Searchlight Capital Partners
Swander Pace Capital
TIMIA Capital Corp
Western Investment Company of Canada Limited
XPND Capital
Private Equity & LSVCC FirmsAlberta Enterprise Corporation
Alberta Teachers’ Retirement Fund (ATRF)
BDC Capital Inc
Bluesky Equities Ltd.
Caisse de dépôt et placement du Québec (CDPQ)
Dancap Private Equity Inc
Desjardins Capital
Fondaction CSN
Fonds de solidarité FTQ
Fonds de solidarité FTQ (Regional)
Investissement Quebec
Kensington Capital Partners Limited
Northleaf Capital Partners
Ontario Teachers’ Pension Plan (OTPP)
Teralys Capital
Limited Partners
5% of all VC deals and 22% of all PE deals had undisclosed amounts.
VENTURE CAPITAL & PRIVATE EQUITY CANADIAN MARKET OVERVIEW // 2018 | 4
FOREWORD
Canadian VC Investment Propelled by Two $1B Quarters in 2018; Two PE Mega-Deals in Q4 Bring 2018 Total to $22.3B
VENTURE CAPITALCanadian venture capital investment continued its momentum in 2018 following years of steady investment growth across the entire spectrum of stages in the ecosystem. $1.3B was invested over 165 deals in Q4 2018, bringing the year-end total VC investment to $3.7B—only 2% lower than 2017. There was a total of 15 mega-deals ($50M+) which accounted for a 30% share of total dollars invested. The average deal size in 2018 was $6.1M, a 3% decrease from last year but a 16% increase compared to the $5.3M between 2013-2017.
Included in the 15 mega-deals in 2018 was Ottawa-based Assent Compliance’s $161M growth equity infusion from Warburg Pincus with previous investors including First Ascent Ventures, Montreal-based Hopper Inc.’s $129M series D round from a syndicate of investors which included BDC IT Fund, Brightspark Ventures, Caisse de dépôt et placement du Québec (CDPQ) and OMERS Ventures Management Inc, and Montreal-based Milestone Pharmaceuticals Inc.’s $103M series D round from an investor syndicate that included BDC Healthcare Fund and Fonds de solidarité FTQ.
“We are seeing more VC flowing into more Canadian companies at all stages which is an important metric for the health of the sector,” says Kim Furlong, Chief Executive Officer, Canadian Venture Capital and Private Equity Association. “A healthy mix of new growth funds, increased interest from international investors and government support through VCCI is helping to fuel the momentum.”
There were no surprises with sector distribution in 2018, with investment falling in line with historical trending. Information and communications technologies (ICT) companies secured a little over two-thirds of total dollars invested in 2018 ($2.6B over 386 deals), with life sciences receiving a 17% share ($630M over 101 deals). Cleantech companies received a 7% share ($264M over 47 deals).
The number of M&A exits in 2018 kept pace with 2017 (34 compared to 35), but the average exit value dropped by a third to $24.4M. CVCA member, Avrio Ventures Management Corporation, was an integral player in the largest VC exit in 2018, the $347M acquisition of the BC Tweed joint venture by Canopy Growth.
PRIVATE EQUITYPrivate equity investment in Canada bounced back in Q4 with dollars invested tripling from Q3 to $6B. This brings the 2018 year-end total to $22.3B over 543 deals—down 15% from the $26.4B invested in 2017 but 62% higher than the $13.8B invested in 2016.
There were two mega-deals ($1B+) in Q4 which brought the year-end tally to four deals worth $14.4B; 65% of total PE investment— a share that has doubled compared to the last three years. The combined value of mega-deals in 2018 exceeded the sum of all other PE deals. This hasn’t been seen since 2014 with the $11.8B acquisition of Tim Hortons.
The largest disclosed mega-deals in 2018 included the $5.1B recapitalization of GFL Environmental Inc. by a syndicate that included Ontario Teachers’ Pension Plan (OTPP), the $5B secondary sale of Husky Injection Molding Systems Ltd. by OMERS Private Equity Inc., and the $2.7B privatization of Mitel Networks Corp. by an investor group led by US-based Searchlight Capital Partners.
“Canada continues to be an attractive source of investment opportunities for both domestic and international investors,” says Kim Furlong, Chief Executive Officer, Canadian Venture Capital and Private Equity Association. “We will watch to see if the mega-deal trend in Canadian PE experienced last year will continue in 2019 or if we see a return to more conservative sizing.”
Just over one-fifth (22% or 118 deals) of PE deals in 2018 were in the industrial and manufacturing sector with information and communications technologies (ICT) companies receiving the second largest share (16% or 88 deals). The consumer and retail sector took an 11% share of deal flow (59 deals).
PE exits slowed in 2018 with only 82 exits including four IPO exits (worth $11.1B) compared to 2017 with 149 exits (totalling $11.6B). The companies that exited through IPO include Tilray, based in BC, with a market cap of $2.1B, Quebec-based IPL Inc., backed by Caisse de dépôt et placement du Québec (CDPQ) and Fonds de Solidarité FTQ with a market cap of $709M, Ontario-Based MAV Beauty Brands with a market cap of $571M, and ONCAP-backed, BC-based Pinnacle Renewable Energy Inc. with a market cap of $370M.
Canadian VC funded more new and later stage companies in 2018, indicating robust ecosystem; Private equity investors support four IPOs in 2018
MAybe Background is this colour?
VENTURE CAPITAL CANADIAN MARKET OVERVIEW // 2018
VENTURE CAPITAL & PRIVATE EQUITY CANADIAN MARKET OVERVIEW // 2018 | 6
VENTURE CAPITAL HIGHLIGHTS // 2018
Key Findings
$1.3B was invested over 165 deals in the fourth quarter this year, bringing the year-end total VC investment to $3.7B which is only 2% lower than 2017.
The average deal size was $6.1M—a 3% decrease from last year but a 16% increase compared to the average deal size in the five-year period between 2013-2017 ($5.3M).
There were a total of 15 $50M+ mega-deals which accounted for a 30% share of total dollars invested—lower than the 39% share in 2017. These included:
Ottawa-based Assent Compliance raised $161M via a growth equity infusion from Warburg Pincus with previous investors including First Ascent Ventures continuing to hold positions
Montreal-based Hopper Inc.’s $129M series D round from a syndicate of investors which included BDC IT Fund, Brightspark Ventures, Caisse de dépôt et placement du Québec (CDPQ) and OMERS Ventures Management Inc.
Montreal-based Milestone Pharmaceuticals Inc.’s $103M series D round from an investor syndicate that included BDC Healthcare Fund and Fonds de solidarité FTQ
Deals between $5M-$20M totalled $1.3B representing 34% share of total dollars invested—a 7% and the largest year-over-year increase from its share last year.
Ontario-based companies received 51% of investment ($1.9B), up significantly from their 39% share last year. Quebec-based companies received 29% ($1.1B) followed by BC-based companies with an 12% ($441M) share.
Toronto-based companies received 41% ($1.5B over 197 deals) of total dollars disbursed, with Montreal-based companies receiving 24% ($901M over 119 deals) and Vancouver-based companies a 11% share ($400M over 71 deals).
VC sector investments were aligned with historical trends: ICT companies grabbed a little over two-thirds of total dollars invested in 2018 ($2.6B over 386 deals) with life sciences receiving a 17% share ($630M over 101 deals). Cleantech companies received a 7% share ($264M over 47 deals).
The share of investment in later stage companies increased by eight percentage points from last year to 49% ($1.8B) of total dollars. Early stage companies received a 42% ($1.6M) share, down from 52% in 2017. The year-over-year share of seed investments increased slightly from 6% to 8% (303M).
The number of M&A exits kept pace with last year (34 compared to 35, but the average exit value dropped by a third to $24.4M.
The largest exit involved a cannabis operation. A BC Tweed joint venture was acquired by Canopy Growth for $374M. Avrio Ventures Management Corp. was involved in the transaction.
In a repeat of 2016, there were no VC-backed IPOs in 2018.
VENTURE CAPITAL & PRIVATE EQUITY CANADIAN MARKET OVERVIEW // 2018 | 7
2
11
68
17284
28
252
$1.1b
$1.9bOntario
$441MBC
$100MAlberta
Québec
Nova Scotia$67M
New Brunswick
Newfoundland& Labrador
$78M
$8M
$16MSaskatchewan
$29MManitoba
1928Prince Edward
Island
$5M
VENTURE CAPITAL HEAT MAP // 2018
$3.7btotal 610 deals
total #
VENTURE CAPITAL & PRIVATE EQUITY CANADIAN MARKET OVERVIEW // 2018 | 8
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1000
0
20
40
60
80
100
120
140
160
180
200
220
240
260
$1,100
$1,200
$1,300
Q4Q3Q2Q1
$358
$414
$691
$613
Q4Q3Q2Q1
$432
$665
$621
$555
11093
113122
134140 142
129
127
147
Q2Q1
$960
$713
Q3
$690
Q4
$839
Q2Q1
$628
$908
Q3
$1,15
8
Q4
$1,0
99
Q1
$699
Q2 Q3
$1,0
38
$717
Q4
$1,2
73
126
134 134
154 154 158147
167
131
165
127
TOTAL:438 DEALS
$2.1B
TOTAL:545 DEALS
$2.3B
TOTAL:534 DEALS
$3.2B
TOTAL:600 DEALS
$3.8B
TOTAL:610 DEALS
$3.7B
$ Millions Invested # Deals
2014 20162015 2017 2018
QUARTER-OVER-QUARTER VC INVESTMENT ACTIVITY
VENTURE CAPITAL & PRIVATE EQUITY CANADIAN MARKET OVERVIEW // 2018 | 9
VC ACTIVITY BY DEAL SIZE // 2018
Total Deals $ Millions
< $100K
$100K - $500K
$500K - $1M
$1M - $5M
$5M - $20M
$20M - $50M
$50M +
20
109
81
210
120
23
15
$1
$27
$52
$469
$1,281
$673
$1,224
$5mwere under
7 out of every 10 deals
VENTURE CAPITAL & PRIVATE EQUITY CANADIAN MARKET OVERVIEW // 2018 | 10
TOP DISCLOSED CANADIAN VC DEALS // 2018
company name province Disclosed VC Firm(s) sector stage $ mil
ASSENT COMPLIANCE INC. ONTARIO WARBURG PINCUS, FIRST ASCENT VENTURES, VOLITION CAPITAL, GREENSPRING ASSOCIATES ICT LATER STAGE VC $161
HOPPER INC. QUÉBECACCOMPLICE, LLC, BDC IT VENTURE FUND, BRIGHTSPARK VENTURES, CAISSE DE DÉPÔT ET PLACEMENT DU QUÉBEC (CDPQ), CITI VENTURES, INVESTISSEMENT QUÉBEC, OMERS VENTURES MANAGEMENT INC.
ICT LATER STAGE VC $129
MILESTONE PHARMACEUTICALS INC. QUÉBEC
BDC HEALTHCARE VENTURE FUND, BOXER CAPITAL, DOMAIN ASSOCIATES, L.L.C., FONDS DE SOLIDARITÉ FTQ, FORBION CAPITAL PARTNERS, GO CAPITAL, NOVO NORDISK A/S, PAPPAS CAPITAL, VENROCK ASSOCIATES.
LIFE SCIENCES LATER STAGE VC $103
CLEARBANC ONTARIO8VC, EMERGENCE CAPITAL PARTNERS, FJ LABS, FOUNDERS FUND, INOVIA CAPITAL INC., PORTAG3 VENTURES, PRECURSOR VENTURES, REAL VENTURES, THE SOCIAL+CAPITAL PARTNERSHIP
ICT EARLY STAGE VC $93
RITUAL ONTARIO GEORGIAN PARTNERS INC., GREYLOCK PARTNERS, INSIGHT VENTURE PARTNERS, MISTRAL VENTURE PARTNERS INC. ICT LATER STAGE VC $90
ECOBEE, INC. ONTARIO AMAZON.COM NV INVESTMENT HOLDING LLC, BDC CO-INVESTMENTS, ENERGY IMPACT PARTNERS, RELAY VENTURES, THOMVEST VENTURES, INC. CLEANTECH LATER STAGE VC $80
TOUCHBISTRO INC. ONTARIO BDC IT VENTURE FUND, J.P. MORGAN PARTNERS, NAPIER PARK FINANCIAL PARTNERS, OMERS VENTURES MANAGEMENT INC., RELAY VENTURES ICT LATER STAGE VC $72
CLEARBANC ONTARIO UPPER90 ICT EARLY STAGE VC $67
KIRA SYSTEMS ONTARIO INSIGHT VENTURE PARTNERS ICT EARLY STAGE VC $66
WEALTHSIMPLE FINANCIAL INC. ONTARIO POWER FINANCIAL CORPORATION ICT LATER STAGE VC $65
PEDIAPHARMA, INC. QUÉBEC GOODWOOD INC., LUMIRA VENTURES LIFE SCIENCES LATER STAGE VC $62
LEAGUE INC. ONTARIOBDC IT VENTURE FUND, OMERS VENTURES MANAGEMENT INC., QUANTUM VALLEY INVESTMENTS, RBC VENTURE PARTNERS, REAL VENTURES, TELUS VENTURES, WITTINGTON INVESTMENTS, LTD.
OTHERS EARLY STAGE VC $62
VENTURE CAPITAL & PRIVATE EQUITY CANADIAN MARKET OVERVIEW // 2018 | 11
10
TOP 10 CANADIAN CITIES ADMINISTRATIVE CENTRES // 2018
197 DEALS $1,544
$901
$400
$234
$110
$58
$74
$62
$63
$14
Total Deals $ Millions
1. Toronto
2. Montréal
3. Vancouver
4. Ottawa
5. Kitchener, Waterloo, Cambridge
6. Calgary
7. Fredericton
8. Halifax
9. Québec
10. Estrie
197
119
71
25
21
21
18
16
11
11
15
2
6
4
9
3
7 8
#1 toronto $1.5 B
VENTURE CAPITAL & PRIVATE EQUITY CANADIAN MARKET OVERVIEW // 2018 | 12
VC SECTOR BREAKDOWN // 2014–2018
0
40
80120
160
200
240
280
320
400
360
440
520
480
$0
$200
$400$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
$2,200
$2,400
$2,600
2016 2017 2017 2017 201720152014 201620152014 201620152014 20152014
$1,9
54
$20
8
$18
5
2016 2018201820182018
276
328
332
380
113
10478
$48
8 $72
1
$73
3
$69
8
$1,3
42
$1,3
17
105
101
47 44 3547 14 20
27 25 27
$17
7
47
$27
$42
$2,
451
$26
4
$10
5
$40
9
$98
386
$63
0
$13
8
$2,
563
ICT CLEANTECHLIFE SCIENCES AGRIBUSINESS
$ Millions Invested # Deals
VENTURE CAPITAL & PRIVATE EQUITY CANADIAN MARKET OVERVIEW // 2018 | 13
VC STAGE BREAKDOWN // 2014–2018
0
30
60
90120
150
180
210
240
300
270
330
360
$0
$175
$350$525
$700
$875
$1,050
$1,225
$1,400
$1,575
$1,750
$1,925
$2,100
201620152014 201620152014 201620152014
$136
$159
$212
$860
$1,0
68
$1,2
10
$875
$1,5
78
$1,9
86
$1,4
03
201720172017
139
180 178
179
220
261
234
189
117134
93
154
192
$1,5
58
204
$236
2018
$303
2018
$1,5
55
2018
$1,8
31
211
SEED EARLY STAGE LATER STAGE
$ Millions Invested # Deals
VENTURE CAPITAL & PRIVATE EQUITY CANADIAN MARKET OVERVIEW // 2018 | 14
VC EXITS // 2014–2018
IPO/RTO**
$0
$300
$600
$900
$1,200
$1,500
$1,800
$2,100
$2,400
$2,700
$3,000
0
5
10
15
20
25
30
35
40
50
45
201620152014 201620152014
$509
$1,5
24
$584
$1,2
91
20172017$8
282018 2018
33
43
32
76
0 0
35
34
$2,9
45
$1,0
51
$2,15
0
3
Exit Value ($ Millions) # Exits * Includes transactions with undisclosed values ** IPO valuation
M&A*
VENTURE CAPITAL & PRIVATE EQUITY CANADIAN MARKET OVERVIEW // 2018 | 15
TOP DISCLOSED VC EXITS // 2018
There were 2 undisclosed exits* over $220M in 2018*Partial exit
vc investors company sector exit transaction acquired by close date $ mil.
AVRIO VENTURES MANAGEMENT CORP., INVESTECO CAPITAL BC TWEED JOINT VENTURE INC. LIFE SCIENCES M&A CANOPY GROWTH 7/18/2018 $374
TVM LIFE SCIENCE MANAGEMENT INC. AURKA PHARMA LIFE SCIENCES M&A ELI LILLY 5/14/2018 $141
TANDEM EXPANSION FUND, FONDS DE SOLIDARITÉ FTQ, INVESTISSEMENT QUÉBEC, BDC IT VENTURE FUND, PROPULSION VENTURES, FIER SUCCÈS, ACCÈS CAPITAL
COVEO SOLUTIONS INC. ICT M&A EVERGREEN COAST CAPITAL 4/4/2018 $100
BDC IT VENTURE FUND, HYDE PARK VENTURES, ROUND 13 CAPITAL HUBDOC INC. ICT M&A XERO 7/31/2018 $91
VENTURE CAPITAL & PRIVATE EQUITY CANADIAN MARKET OVERVIEW // 2018 | 16
MOST ACTIVE VC FIRMS / FUNDS // 2018
MOST ACTIVE PRIVATE INDEPENDENT FIRMS # ROUNDSSIZE OF TOTAL
ROUNDS*(CDN$ MIL)
REAL VENTURES 59 $446
INOVIA CAPITAL INC. 28 $218
PANACHE VENTURES 26 $41
CYCLE CAPITAL MANAGEMENT/ECOFUEL 22 $122
IGAN PARTNERS INC. 16 $47
YALETOWN PARTNERS INC 13 $129
RELAY VENTURES 12 $223
KILLICK CAPITAL INC. 12 $7
PLAZA VENTURES 10 $92
GOLDEN VENTURE PARTNERS 9 $71
BLUESKY EQUITY LTD. 9 $32
SCALEUP VENTURES 9 $26
GOOD NEWS VENTURES 9 $19
MOST ACTIVE GOVERNMENT FUNDS # ROUNDSSIZE OF TOTAL
ROUNDS*(CDN$ MIL)
BDC CAPITAL 46 $427
NEW BRUNSWICK INNOVATION FOUNDATION (NBIF) 22 $54
MARS IAF 21 $32
ANGES QUÉBEC 15 $92
INVESTISSEMENT QUÉBEC 14 $263
BDC IT VENTURE FUND 13 $330
INNOVACORP 12 $30
BDC INDUSTRIAL, CLEAN AND ENERGY TECHNOLOGY (ICE) VENTURE FUND 11 $66
MOST ACTIVE PENSION, RETAIL, CORPORATE & OTHER PUBLIC FUNDS # ROUNDS
SIZE OF TOTAL ROUNDS*
(CDN$ MIL)
DESJARDINS CAPITAL 46 $133
FONDS DE SOLIDARITÉ FTQ 21 $279
ANGES QUÉBEC CAPITAL 13 $71
TELUS VENTURES 9 $112
WESTCAP MGT. LTD. 7 $20
OMERS VENTURES MANAGEMENT INC. 4 $272
MOST ACTIVE FIRMS IN VC DEBT DEALS # ROUNDSSIZE OF TOTAL
ROUNDS*(CDN$ MIL)
ESPRESSO CAPITAL LTD. 64 $57
DESJARDINS CAPITAL 18 $23
CIBC INNOVATION BANKING 8 $75
TIMIA CAPITAL CORP 8 $7
BDC CAPITAL INC. 4 $23
FONDS DE SOLIDARITÉ FTQ 3 $18
* Total deal values - includes all participating investors ** BDC Healthcare Fund - 6 deals, $136M; BDC IT Venture Fund - 13 deals, $330M; BDC ICE Fund - 11 deals, $66M
# Rounds
Real Ventures
BDC Capital
Desjardins Capital
BDC Sector Funds**
iNovia Capital Inc.
Panache Ventures
Cycle Capital Management/Ecofuel
New Brunswick Innovation Foundation (NBIF)
Fonds de solidarité FTQ
MaRS IAF
59464630282622222121
Size of Total Rounds* (Cdn$ mil)
$446 $427 $133 $533 $218 $41 $122 $54 $279$32
PRIVATE EQUITY CANADIAN MARKET OVERVIEW // 2018
VENTURE CAPITAL & PRIVATE EQUITY CANADIAN MARKET OVERVIEW // 2018 | 18
PRIVATE EQUITY HIGHLIGHTS // 2018
A fourth-quarter recovery from its slump in the previous quarter saw PE investment triple to $6B, bringing the year-end total to $22.3B over 543 deals—down 15% from the $26.4B invested in 2017 but 62% higher than the $13.8B invested in 2016.
Two additional $1B+ mega-deals in Q4 brought the year end tally to four deals amounting to $14.4B or 65% of total PE investment, a share that has doubled compared to the prior three years. It’s worth noting that combined value of mega-deals in 2018 exceeded the sum of all other deals combined, a phenomenon that has not occurred since 2014 driven by the blockbuster $11.8B acquisition of Tim Hortons. The largest disclosed mega-deals included:
$5.1B recap of GFL Environmental Inc. by a syndicate that included Ontario Teachers’ Pension Plan (OTPP)
$5B secondary sale of Husky Injection Molding Systems Ltd. by OMERS Private Equity Inc.
$2.7B privatization of Mitel Networks Corp. (dually listed on TSX and NASDAQ) by an investor group led by US-based Searchlight Capital Partners
Deal activity in the small end of the market segment (deals less than $25M) garnered 68% of all deals, higher than last year’s 60% share. Deals between $25M-$100M captured an 8% share of deals, down from the 11% last year.
26% (98 deals totalling $2.6B) of all PE deals went to Montreal-based companies, with Toronto-based companies receiving a 20% share (78 deals totalling $11B).
A little over a fifth (22% or 118 deals) of PE deals this year have been closed in the industrial and manufacturing sector, with ICT companies receiving the second largest share (16% or 88 deals). The consumer and retail sector garnered a 11% share of deal flow (59 deals).
Corporate appetite for debt continued with four out of every 10 deals being PE debt with the average deal size of $8.5M dropping 15% from last year.
The pace of PE exits slowed with only 82 exits, four of which were IPO exits (totalling $11.1B), compared to last year with 149 exits (totalling $11.6B):
Tilray, based in BC, completed its IPO on NASDAQ with a market cap of $2.1B
Quebec-based IPL Inc., backed by Caisse de dépôt et placement du Québec (CDPQ) and Fonds de Solidarité FTQ, completed its IPO on TSX with a market cap of $709M
Ontario-Based MAV Beauty Brands completed its IPO on TSX with a market cap of $571M
ONCAP-backed BC-based Pinnacle Renewable
Key Findings
VENTURE CAPITAL & PRIVATE EQUITY CANADIAN MARKET OVERVIEW // 2018 | 19
2011
44
Manitoba
$24MSaskatchewan
$186MAlberta
$8.1bOntario
$2.3bQuébec
NewBrunswick
Nova Scotia
$163MBC
1 1
3 3
20
$10.8btotal 103 deals
PRIVATE EQUITY HEAT MAP BUYOUT & ADD-ON DEALS ONLY // 2018
total #
VENTURE CAPITAL & PRIVATE EQUITY CANADIAN MARKET OVERVIEW // 2018 | 20
7316
5
9
37
$383MManitoba
$34MSaskatchewan
$56MAlberta
$162mOntario
$1.8bQuébec
$2mNewfoundlandand Labrador
$146MBC
1
2
$2.8btotal 143 deals
PRIVATE EQUITY HEAT MAP PE GROWTH DEALS ONLY // 2018
total #
VENTURE CAPITAL & PRIVATE EQUITY CANADIAN MARKET OVERVIEW // 2018 | 21
13 6
1 1
3384137
103
$386MManitoba
$345MBC $685M
Alberta $78MSaskatchewan
$13.9bOntario
3
$7bQuébec
NewBrunswick
Nova Scotia
$6MNewfoundlandand Labrador
$22.3btotal
543 dealstotal #
PRIVATE EQUITY HEAT MAP ALL PE DEALS // 2018
VENTURE CAPITAL & PRIVATE EQUITY CANADIAN MARKET OVERVIEW // 2018 | 22
QUARTER-OVER-QUARTER PE INVESTMENT ACTIVITY
$ Millions Invested # Deals
TOTAL:334 DEALS
$42.2B
TOTAL:426 DEALS
$22.9B
TOTAL:542 DEALS
$13.8B
TOTAL:613 DEALS
$26.4B
TOTAL:544 DEALS
$22.4B
2014 20162015 2017 2018
$0
$5,000
$10,000
$15,000
$20,000
$25,000
0
20
40
60
80
100
120
140
160
180
200
Q4Q3Q2Q1 Q4Q3Q2Q1 Q2Q1 Q3 Q4 Q2Q1 Q3 Q4 Q1 Q2 Q3 Q4
$6,2
77
$5,2
50
$7,8
04
$22,
851
$7,0
53
$1,8
69
$11,3
75
$2,6
30
$3,2
21
$3,3
70
64
8188
101
91
104117
114
124
145
134
139
$3,0
68
$4,17
9
$5,3
29
114
179167
153
147
156
116
124
$8,8
12
$7,5
54
$4,6
73
$6,7
47
$7,6
91
$1,9
27
$5,9
17
VENTURE CAPITAL & PRIVATE EQUITY CANADIAN MARKET OVERVIEW // 2018 | 23
TOP 10 DISCLOSED CANADIAN PE DEALS // 2018
company name province firms involved in transaction sector $ mil
GFL ENVIRONMENTAL INC. ONTARIOBC PARTNERS, HAWTHORN EQUITY PARTNERS, HIGHBRIDGE PRINCIPAL STRATEGIES, LLC, MACQUARIE RESOURCE CAPITAL CANADA LTD., ONTARIO TEACHERS' PENSION PLAN (OTPP)
CLEANTECH $5,125
HUSKY INJECTION MOLDING SYSTEMS LTD. ONTARIO BERKSHIRE PARTNERS LLC, OMERS PRIVATE EQUITY INC., PLATINUM EQUITY, LLC INDUSTRIAL &
MANUFACTURING $4,964
MITEL NETWORKS CORP. ONTARIO SEARCHLIGHT CAPITAL PARTNERS, LLC ICT $2,660
STINGRAY DIGITAL GROUP INC. QUÉBEC CAISSE DE DÉPÔT ET PLACEMENT DU QUÉBEC (CDPQ), FONDS DE SOLIDARITÉ FTQ BUSINESS PRODUCTS & SERVICES $509
NAPEC INC. QUÉBEC FONDS DE SOLIDARITÉ FTQ, OAKTREE CAPITAL GROUP, LLC INDUSTRIAL & MANUFACTURING $320
BORALEX INC. QUÉBEC CAISSE DE DÉPÔT ET PLACEMENT DU QUÉBEC (CDPQ), FONDS DE SOLIDARITÉ FTQ OIL & GAS, POWER $300
HÉROUX-DEVTEK INC. QUÉBEC FONDS DE SOLIDARITÉ FTQ INDUSTRIAL & MANUFACTURING $275
PLUSGRADE L.P. QUÉBEC CAISSE DE DÉPÔT ET PLACEMENT DU QUÉBEC (CDPQ) ICT $199
POINTCLICKCARE CORP. ONTARIO DRAGONEER INVESTMENT GROUP LIFE SCIENCES $187
ARTIS EXPLORATION LTD. ALBERTA WARBURG PINCUS LLC OIL & GAS, POWER $180
There were 5 undisclosed deals totalling $2.7B that were not included in this table
VENTURE CAPITAL & PRIVATE EQUITY CANADIAN MARKET OVERVIEW // 2018 | 24
PE ACTIVITY BY DEAL SIZE // 2018
0
40
80
120
160
200
240
280
320
400
360
$0
$16,000
$1,600
$3,200
$4,800
$6,400
$8,000
$9,600
$11,200
$12,800
$14,400
201620152014 201620152014 201620152014 20152014
$84
9
$91
0
$1,2
90
$6,
093
$6,
321
$3,
212
$5,
861
$3,
106 $
4,79
7 $6,
601
2016
$7,
630
$50
9
201620152014 201620152014
$10
,910
$4,
782
$4,
034
$3,
250
$1,6
27 $3,
300
$4,
800
201720172017201720172017
$14
,927
116
183
362
55 57 4927 31
14 10 7 11418 7 3 3 22 1 0 1 3
$2,
804
$2,
818
$2,
197
$3,
328
$1,4
99
2018
368 369
67
4428
2018
$2,
012
2018
$3,
078
2018 2018 2018
$12
,749
$1,6
78
1 1
TOTAL:1,398 DEALS
$6.2B
TOTAL:119 DEALS
$25.3B
TOTAL:16 DEALS
$24.6B
TOTAL:272 DEALS
$13.2B
TOTAL:33 DEALS
$22.6B
TOTAL:7 DEALS$35.8B
< $25M $100M - $500M $1B - $2.5B$25M - $100M $500M - $1B $2.5B+
$ Millions Invested # Deals
VENTURE CAPITAL & PRIVATE EQUITY CANADIAN MARKET OVERVIEW // 2018 | 25
TOP 10 CANADIAN CITIES ADMINISTRATIVE CENTRES // 2018
Total Deals $ Millions
1. Montreal
2. Toronto
3. Montérégie
4. Nord-du-Québec / Abitibi-Témis
5. Calgary
6. Québec
7. Saguenay-Lac-St-Jean/Côte-Nord
8. Bas-Saint-Laurent
9. Chaudière-Appalaches
10. Vancouver
98
78
42
30
27
26
25
21
20
17
$2,632
$11,021
$498
$88
$668
$717
$150
$67
$227
$156
#1 montréal $2.6b 98 DEALS
2
5
10
4
31
96 7
8
VENTURE CAPITAL & PRIVATE EQUITY CANADIAN MARKET OVERVIEW // 2018 | 26
PE SECTOR BREAKDOWN // 2018
118
88
59
57
44
40
34
28
25
23
16
6
5
# Deals $ Millions
Industrial & Manufacturing
ICT
Consumer & Retail
Business Products & Services
Agri-Forestry
Life Sciences
Mining & Resources
Automotive & Transportation
Financial
Oil & Gas, Power
CleanTech
Real Estate
Others
$7,718
$3,731
$363
$1,641
$620
$475
$302
$606
$264
$999
$5,387
$147
$30
industrial & manufacturingmost active sector
118 deals
VENTURE CAPITAL & PRIVATE EQUITY CANADIAN MARKET OVERVIEW // 2018 | 27
PE EXITS // 2014–2018
0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
0
10
20
30
40
50
60
70
80
90
100
110
120
130
140
201620152014 201620152014 201620152014
$1,7
11
201720172017
$3,7
10
2018
$11,4
52
$12,
812
$7,0
17
$3,4
08
5 61 4
5
4750
60
136
9 7 4 8
2018 2018
78
$7,3
67
$2,16
1
$3,4
08
$1,6
72
$4,8
00
$2,5
53
$8,0
55
$924
IPO/RTO** M&A* SECONDARY BUYOUT*
* includes transactions with undisclosed values ** IPO valuationExit Value ($ Millions) # Exits
VENTURE CAPITAL & PRIVATE EQUITY CANADIAN MARKET OVERVIEW // 2018 | 28
TOP 10 DISCLOSED PE EXITS // 2018
Husky Injection Molding Systems Ltd
bought by Platinum Equity, LLC $4,964m#1
seller company name buyer $ mil
BERKSHIRE PARTNERS LLC, OMERS PRIVATE EQUITY INC. HUSKY INJECTION MOLDING SYSTEMS LTD PLATINUM EQUITY, LLC $4,964
PERMIRA, FONDS DE SOLIDARITÉ FTQ, CAISSE DE DÉPÔT ET PLACEMENT DU QUÉBEC (CDPQ) ATRIUM INNOVATIONS INC. NESTLÉ S.A. $2,973
PRIVATEER HOLDINGS TILRAY NA - IPO ON NASDAQ $2,060
CAISSE DE DÉPÔT ET PLACEMENT DU QUÉBEC (CDPQ) CAMSO MICHELIN $1,909
TORQUEST PARTNERS WSB TITAN GMS INC. $811
CAISSE DE DÉPÔT ET PLACEMENT DU QUÉBEC (CDPQ), FONDS DE SOLIDARITÉ FTQ, INVESTISSEMENT QUÉBEC, ONE51 PLC IPL INC. NA - IPO ON TSX $709
TA ASSOCIATES LLP MAV BEAUTY BRANDS NA - IPO ON TSX $571
PRIMUS CAPITAL PARTNERS HYPERWALLET SYSTEMS INC. PAYPAL $528
ONCAP PINNACLE RENEWABLE ENERGY INC. NA - IPO ON TSX $370
WIND POINT PARTNERS DICOM TRANSPORTATION GROUP UK ROYAL MAIL $360
VENTURE CAPITAL & PRIVATE EQUITY CANADIAN MARKET OVERVIEW // 2018 | 29
MOST ACTIVE PE INVESTORS // 2018
159
108
39
31
28
27
11
10
8
7
6
6
# Deals $ Millions*
Fonds de solidarité FTQ
Desjardins Capital
Investissement Québec
Caisse de dépôt et placement du Québec (CDPQ)
Fondaction CSN
BDC Capital Inc.
PFM Capital Inc.
First West Capital
Roynat Capital Inc.
Westcap Mgt. Ltd.
Ontario Teachers' Pension Plan (OTPP)
CAI Capital Partners
$4,765
$2,688
$3,117
$3,622
$293
$204
$174
$55
$226
$97
$5,726
$179* Total deal values – includes all participating investors
most active PE FIRM 159 DEALS
Fonds de solidarité FTQ
VENTURE CAPITAL & PRIVATE EQUITY CANADIAN MARKET OVERVIEW // 2018 | 30
CVCA METHODOLOGY // VENTURE CAPITAL
VENTURE CAPITAL DATA:Verified completed equity or quasi-equity venture capital deals only (non-equity or project-based government funding, pharmaceutical development deals, senior debt, venture capital-backed acquisitions, and angel financing are not included)
SEED STAGE COMPANY HAS A CONCEPT OR PRODUCT UNDER DEVELOPMENT, BUT IS PROBABLY NOT FULLY OPERATIONAL.
EARLY STAGE COMPANY HAS A PRODUCT OR SERVICE IN TESTING OR PILOT PRODUCTION. IN SOME CASES, THE PRODUCT MAY BE COMMERCIALLY AVAILABLE.
LATER STAGE PRODUCT OR SERVICE IN PRODUCTION AND COMMERCIALLY AVAILABLE. COMPANY IS GENERATING ON-GOING REVENUE, BUT NOT NECESSARILY, PROFITABLE.
ICT COMPANY HAS A CONCEPT OR PRODUCT UNDER DEVELOPMENT, BUT IS PROBABLY NOT FULLY OPERATIONAL.
LIFE SCIENCES COMPANY HAS A PRODUCT OR SERVICE IN TESTING OR PILOT PRODUCTION. IN SOME CASES, THE PRODUCT MAY BE COMMERCIALLY AVAILABLE.
CLEANTECH PRODUCT OR SERVICE IN PRODUCTION AND COMMERCIALLY AVAILABLE. COMPANY IS GENERATING ON-GOING REVENUE, BUT NOT NECESSARILY, PROFITABLE.
AGRIBUSINESS TRADITIONAL AND ADVANCED AGRICULTURAL TECHNOLOGIES AND SERVICES
vc development stages
vc sectors
VENTURE CAPITAL & PRIVATE EQUITY CANADIAN MARKET OVERVIEW // 2018 | 31
CVCA METHODOLOGY // PRIVATE EQUITY
PRIVATE EQUITY DATA:Dataset includes only completed private equity deals (announced but yet to be completed deals are not included)
BUYOUT INVESTMENT FOR THE CONTROL OF A PORTFOLIO COMPANY, INCLUDING PLATFORM CREATION, SECONDARY BUYOUT
GROWTH SIGNIFICANT MINORITY INVESTMENT INTO A PORTFOLIO COMPANY, THROUGH NEW CAPITAL INFUSION AND RECAPITALIZATION
ADD-ON CORPORATE ACQUISITIONS BY MAJORITY CONTROLLED PE BACKED PORTFOLIO COMPANIES
DEBT DEBT INVESTMENT INTO PORTFOLIO COMPANIES
INFRASTRUCTURE INVESTMENTS INTO DEVELOPMENT AND MANAGEMENT OF INFRASTRUCTURE ASSETS BUT PE DOES NOT OWN THE UNDERLYING ASSETS
AGRI-FORESTRY AGRICULTURE, FOODS AND FORESTRY
AUTOMOTIVE & TRANSPORTATION TRANSPORTATION, LOGISTICS AND RELATED SERVICES
BUSINESS PRODUCTS & SERVICES BUSINESS PRODUCTS AND SERVICES
CLEANTECH ENERGY AND FUEL TECHNOLOGIES, EFFICIENCY AND CONSERVATION, RENEWAL ENERGY, ENVIRONMENTAL TECHNOLOGIES AND OTHER ENERGY AND ENVIRONMENTAL PRODUCTS AND SERVICES
pe deal type
pe sectors
VENTURE CAPITAL & PRIVATE EQUITY CANADIAN MARKET OVERVIEW // 2018 | 32
CVCA METHODOLOGY // PRIVATE EQUITY
continued
CONSUMER & RETAIL CONSUMER PRODUCTS AND SERVICES, BRICK AND MORTAR RETAIL
FINANCIAL FINANCIAL SERVICES
ICT COMPUTER HARDWARE/SOFTWARE & SERVICES, INTERNET SOFTWARE & SERVICES, ECOMMERCE, ELECTRONIC & SEMICONDUCTOR, MOBILE & TELECOM AND SERVICES
INDUSTRIAL & MANUFACTURING EQUIPMENT AND MATERIAL MANUFACTURING
LIFE SCIENCES BIOTECH, MEDICAL DEVICES, PHARMACEUTICALS, EHEALTH, HEALTHCARE PRODUCTS AND SERVICES, AND OTHER MEDICAL RELATED PRODUCTS AND SERVICES
MINING & RESOURCES NON OIL AND GAS NATURAL RESOURCES
OIL & GAS, POWER OIL & GAS, POWER AND UTILITIES
REAL ESTATE PROPERTY DEVELOPMENT AND MANAGEMENT
pe sectors
ABOUT AND CONTACT
AuthorsDarrell oversees all data related to Canadian private capital investments, exit and fundraising activities for the CVCA. Darrell has held senior positions at several global organizations including the Toronto Stock Exchange, Institutional Limited Partners Association, Thomson Reuters, Glaxosmithkline and the Interac Association. In between these, he also started his own successful management consulting company. He has worked in New York, London and Shanghai, but Toronto remains his favourite working city. He brings to the CVCA a passion for telling compelling stories with data. Darrell is currently on the board of a non-profit social housing in Peel, a member of Volunteer Toronto as well as an active volunteer with Woodgreen Community Services. He holds a BA in Philosophy/History from the University of Western Ontario and an MBA from the Rotman School of Management.
[email protected] | 416-487-0519 ext. 208
David executes research on venture capital and private equity deals within Canada. David is responsible for monitoring industry activity and maintaining the CVCA’s Infobase by entering data, including investments, exits, deals and fundraising activities on a daily basis. David holds a BA in Philosophy and Psychology from the University of Toronto.
[email protected] | 416-487-0519 ext. 202
DARRELL PINTOInterim COO
DAVID KORNACKIAssociate,
Research & Product
About CVCAWe’re how collaboration happens and how innovation and growth thrive.
The CVCA is Canada’s professional association for the venture capital and private equity industry. Our services and support establish a favourable and competitive ecosystem and lay the foundation for greater collaboration, innovation, growth and market intelligence. We strongly advocate for fair and competitive policy to keep our industry energized and future-ready.
From coast to coast, we bring members together; connecting private capital professionals to eachother generating meaningful partnerships, enabling connections to foster and knowledge to prosper.
We’re also the nation’s ultimate resource for data on Canadian private capital investments.
Please visit cvca.ca
@CVCACanada CVCA
CVCA - Canadian Venture Capital and Private Equity Association
372 Bay St., Suite 1201 Toronto, ON M5H 2W9
To obtain estimates for additional custom InfoBase data reports please contact [email protected]