New figures show that venture capital investments rose 48 per cent in the third quarter.Hemera Technologies
Venture capital investment in Canada was up sharply in the third quarter while the number of buyout and private equity deals have slipped so far this year, according to the latest data.
Venture-capital funds invested $541-million between July and September, up 48 per cent from the $366-million invested in the year-earlier period, Canada's Venture Capital and Private Equity Association and research partner Thomson Reuters said on Monday.
As of Sept. 30, the total invested was $1.4-billion, up 27 per cent from the $1.1-billion invested in the first nine months of 2012.
The trend is towards relatively larger deals, the research found.
Financings of innovative companies averaged $5.3-million in the third quarter, up from $4.2-million in the same period last year, and an average of $3.1-million in the third quarter of 2011.
The average size of Canadian financing rounds in the third quarter of this year was greatly influenced by several major transactions, including the $165-million (U.S.) deal for Vancouver-based HootSuite Media, which the association says is the largest VC investment ever in the Canadian market.
"This upswing in VC financing activity is very encouraging for entrepreneurial companies and for the Canadian economy as a whole and really exactly what we would have expected to have seen following the relatively successful new fund formation activity in 2012," said association president Peter van der Velden.
On the buyout and private-equity front, a total of 212 deals were done in the nine months ended Sept. 30, down a bit from the same period in 2012. Disclosed dollar flows totalled $7.4-billion (Canadian) at the end of September, down 17 per cent from $8.9-billion.
"While it is difficult to draw too many conclusions from year to date it would appear that most of the decline is attributable to fewer 'big deals' as the midmarket buyout and growth-equity deals are still getting done at levels consistent with what we have seen for the past 2-3 years," said Mr. van der Velden.
Two year-to-date deals in the $1-billion-and-up category accounted for over half of all disclosed disbursements, while deals in the $100-to-$500-million segment accounted for 27 per cent and transactions valued at less than $100-million accounted for the balance.
The biggest transaction in the third quarter was Hudson's Bay Co.'s $2.9-billion (U.S.) acquisition of Saks Inc.