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Canadian companies seeing venture capital funding boom, interest in fintechs high

TORONTO – Canadian firms attempting to drum up enterprise capital throughout the COVID-19 pandemic raised billions extra within the first half of this yr than they did in earlier years.

A brand new report from enterprise analytics agency CB Insights mentioned Canadian firms have raised US$6.3 billion thus far this yr, greater than double the US$2.9 billion in funding they obtained all through all of final yr. Firms within the nation raised US$4.3 billion in 2019 and US$3.4 billion in 2018.

About US$2.1 billion was raised throughout 197 offers within the first quarter of 2021 and US$4.1 billion throughout 217 offers within the second quarter, amounting to an 89 per cent enhance in funding between the quarters.

Enterprise capital (VC) and know-how consultants attribute the funding growth to a robust international market and rising curiosity within the nation’s know-how and expertise.

Canada lured an rising variety of overseas giants, together with Microsoft, DoorDash, Amazon, Google, Wayfair, Twitter, Pinterest, Reddit and Netflix, to open places of work and increase their Canadian workforces throughout the pandemic.

There’s additionally a “community impact” occurring amongst Canada’s entrepreneurs, mentioned Janet Bannister, managing associate at Actual Ventures, a VC agency that has backed property planning firm Willful, automotive gross sales enterprise Clutch and jeweller Mejuri.

“Success begets success in startup communities,” she mentioned. “The extra success that comes from an ecosystem, the extra you’ve gotten skilled entrepreneurs, founding groups and executives who know learn how to develop.”

Canada’s trove of expertise has deepened lately because the variety of exits — when VCs get their cash out of investments as firms merge, get acquired or go public — has climbed.

There have been 128 mergers and acquisitions and 7 preliminary public choices within the first quarter of 2021 and 102 mergers and acquisitions and eight IPOs within the second quarter, CB’s report reveals.

In 2017, the primary quarter generated 64 mergers and acquisitions and three IPOs and the second quarter included 57 mergers and acquisitions and 7 firms going public.

Bryn Jones believes Canadian firms have since turn out to be much more engaging and the pandemic has helped too.

“There was no excuse to not meet Canadians as a result of all people moved to (videoconferencing platform) Zoom,” mentioned the co-founder of PartnerStack, a Toronto firm that helps companies discover the correct companions to work with.

PartnerStack raised US$29 million in Sequence B funding in Could. Fairly than assembly with two or three VCs daily in-person to seek out that funding, know-how helped him join with as much as 10 a day.

“That created a variety of competitors for the enterprise capitalists…and that yielded a extremely nice consequence,” he mentioned.

“It additionally allowed us to fulfill those that we beforehand wouldn’t have been in a position to converse to and people individuals have confirmed to drive an absolute ton of worth, whether or not they have invested in us or not.”

CB’s report reveals that simply over half of the funding Canadian firms obtained in 2021 thus far has gone to early-stage companies, whereas 14 per cent and 12 per cent was snagged by mid- and late-stage firms respectively.

A lot of that funding has gone to monetary know-how, typically known as fintech, firms, which have seen hovering ranges of curiosity as Canada research the thought of open banking and extra individuals gravitate towards on-line transactions.

“I’ve by no means seen such a simple surroundings to lift cash in as a fintech entrepreneur,” mentioned Raphael Bouskila, the chief government of Mako Fintech, a Montreal firm behind instruments for automating administrative and compliance duties, so wealth and asset administration companies can spend extra time investing.

International fintech funding, mentioned CB, reached a brand new excessive of US$33.7 billion within the second quarter of 2021, up 191 per cent from final yr.

The report mentioned 22 per cent of worldwide VC funding within the second quarter of 2021 was allotted towards fintechs, amounting to $1 out of each $5 going to an organization in that trade.

“The COVID pandemic has kicked into excessive gear the urge for food of banks and established wealth managers to work with fintechs, and likewise for the enterprise capitalists,” mentioned Bouskila.

“The sharks odor blood in order that they’re in search of offers to finance in that area.”

However it’s not simply fintechs proving to be a success.

The report listed Vancouver identification verification software program firm Trulioo with a $394-million Sequence D, Kitchener, Ont. training platform ApplyBoard’s $300-million Sequence D and Toronto software program enterprise Vena’s $242-million Sequence C as the highest fund raisings within the second quarter of 2021.

Bannister doesn’t count on numbers like that to cease any time quickly.

“I feel that we’re simply getting began and I’m extraordinarily bullish,” she mentioned.

“We actually suppose the long run is extraordinarily vivid and has by no means been brighter.”

This report by The Canadian Press was first revealed Aug. 1, 2021.



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