Despite uncertainties regarding Ukraine, inflation, and interest rates, Canada's venture capital industry remained strong in the first quarter of 2022. According to KPMG data in Canada, a record high of US$3.5 billion was invested in 213 deals, up from $3 billion in 276 deals a year ago.

In the first three months of this year, Canadian venture capital firms raised $824.4 million. Most of the money went to a Toronto software firm, which received $650 million in a Series C round. Artificial intelligence and machine learning led the way with 30 deals worth $1.2 billion, accounting for 105 of the total deals. Meanwhile, the fintech space came second with 28.

Sunil Mistry, Partner, Private Enterprise and Technology, Media and Telecommunications, KPMG in Canada, said: "While significant uncertainty during the quarter impacted the total number of deals, the amount of money being invested in the market is astronomical. Canada's VC ecosystem remains remarkably robust in the current environment, is a strong indicator that Canada's VC market has matured.”

Dan Wilson, National Leader - Technology Sector, KPMG in Canada, said:

"Canada's technology sector continues to draw significant attention from investors both within and outside the country. The pandemic has accelerated digital innovation and use of technology across industry verticals with continued investment in AI, security tools, fintech, edtech and health tech. We have seen some massive financing rounds in Q1 2022 and momentum building in cleantech."

According to the KPMG in Canada study, corporate venture capital investment has decreased significantly. The first quarter's investment was $966 million, a decrease from the prior three quarters but a year-over-year increase.

Exits fell sharply from record highs in 2022, with only 27 exits totalling $77.5 million: five buyouts, two IPOs, 16 merger/acquisitions, and four reverse mergers (two of which resulted in listings).

Mistry added, "It was a very frothy market last year where many companies went public, but that's dissipated as valuations have dropped. A lot of the companies that went public last year aren't living up to expectations. With inflation and interest rates going up, supply chain issues and geopolitical concerns could affect the IPO market."

Source: Wealth Professionals