The number of Canadian venture capital deals declined in the first half of 2019, according to research from PwC Canada.
The total amount raised by Canadian companies was down 13 per cent for the first six months of the year compared to the same time period in 2018, with the number of deals down by 15 per cent so far.
“Deal count and total funding were down in the first half of 2019 compared to the same period in 2018,” said Sabrina Fitzgerald, national technology sector leader and capital region managing partner at PwC Canada in the report. “When combining the natural ebbs and flow of the Canadian venture market, with a tempered decline in deal count and funding, Canadian innovation continues to represent a solid investment to the venture community.”
While total deals declined, investment into seed-stage companies is on the rise. In the first half of 2018, seed financing rounds made up 36 per cent of venture capital deals. So far this year, they’ve made up almost half (49 per cent).
On a sector basis, investment in artificial intelligence businesses is on the decline, with the rate of investment falling 60 per cent between the first half of 2018 and that of 2019. That said, in Q2 there was a reversal of this decelerating trend with funding on the uptick in comparison with Q1.
“In recent years, we’ve witnessed a spike in funding to Canadian AI companies, including a recent uptick to those building industry-specific point solutions,” said Cameron Burke, managing director of the technology sector at PwC Canada. “This is a good indicator that AI solutions are being commercialized. Given the transformative potential of AI across industries, we expect investors to be on the lookout for major opportunities to back companies building strong commercial value with this technology.”
Financial technology companies saw more funding so far this year, raising $251 million, close to double the $133 million raised in the first half of 2018.
Investment in digital health, however, fell by 24 per cent in the first half of 2019, relative to the same time last year, with just 13 transactions. As well, funding for the cannabis sector is slowing down, coming off its breakout in 2018, which saw 51 deals, reaching $224 million in funding. This year, so far, the sector has seen just $42 million in investment, from 18 deals.