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CANADIAN VENTURE CAPITAL
LANDSCAPE
2
A WORD FROM OUR CANADIAN PARTNER
Jean-Francois Marcoux
Co-Founder & Managing Partner
WHITE STAR CAPITAL
Authors/ Contributors
Sanjay Zimmermann
Associate
“Canada has it all. Nothing
can’t be built here”
Joshuah Lebacq
Summer Associate
“Canada has a closely-knit
yet extensive VC ecosystem.
Great things will continue to
come from Canada”
“We are proud to be a partner of choice for Canadian
entrepreneurs. The Canadian ecosystem is building some
amazing companies with global ambitions, led by hustling
founders and talented world-class teams”
In this report, we aim to share our enthusiasm on the Canadian
tech and Venture Capital ecosystem.
We begin by outlining why we are bullish about Canada which ties
into the strong momentum in successful exits, large funding
rounds and increased presence of tech giants entering the market.
Then, we look at two unique Canadian advantages stemming from
clever public sector support and access to deep talent pools.
Finally we end with a deep dive on VC’s and other investors
making up the space.
At White Star Capital, we started investing in Canada in 2007 and
have made over 10 investments since and are looking forward to
many more. We hope you enjoy reading this report!
External Data Sources
TABLE OF CONTENTS
3
1. Overview: Why We Are Bullish About Canada Page 5-7
2. Canadian Ecosystem Continues to Gain Momentum & Support Page 8-16
3. Public Sector Continues to Prioritize Growth in VC and Tech Page 17-20
4. Canadian Talent Amongst the Best in the World Page 21-23
5. Deep Dive on Canadian VCs Page 24-34
OVERVIEW: WHY WE ARE BULLISH
ABOUT CANADA
VC-backed funding in Canada has nearly
doubled since 2014
VC FUNDING HAS DOUBLED SINCE 2014 IN ICT1 AND
HEALTHCARE, LARGER DEALS A REALITY IN CANADA
Industry expertise and successful start-up activity in Canada
has captured the attention of investors. Canada experienced
record VC funding in 2016, and the momentum continues in
2017. In fact, the total amount of funding per year has nearly
doubled since 2014.
The increase in quantity of funds and quality of startups has
made it possible to fund larger rounds – something that was
previously a challenge in Canada. Furthermore. the country
has seen the average deal size increase over the last few
years.
34% 35%
23%
31%
40%
2013 2014 2015 2016 H1 - 2017
0
2
4
6
8
10
Average Deal ($m) Median Deal Value ($m)
Total funding percentage captured by the top 10 Canadian Deals
VC-backed funding
H1-2017 marks a record for the total
funding allocated to the 10 largest deals
5
Source: CBInsights
Source: CVCA
Source: CVCA Newsletter
Note 1: Information and Communications Technology
Note 2: 2017E based on two times 2017 H1 actuals
$1.9B
$2.0B
$2.3B
$3.2B
$3.3B
2013 2014 2015 2016 2017E2
6
THE PERCENTAGE OF DEAL VOLUME AT THE
SEED-STAGE HAS INCREASED BY 66%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Seed Series A Series B Series C Series D+
% of Canadian deal volume per stage,
per year
As a greater percentage of funding value is captured by the
largest Canadian deals, Canada has also experienced 66%
increase over the last 10 years of the percentage of total deal
volume captured by Seed-stage funding.
This is a positive indicator for Series A and later stage funds as
an increase in the number of Seed financing deals implies
more prospective investments at later stages further enabling
VC-backed exits opportunities to grow in-line with total
Canadian exits.
The number of Canadian exits has been
steadily rising year-over-year since 2009
Source: CBInsights
8 12
21 24 25 29 31 29 4431
59
165
233
291
444
471
517
724
2009 2010 2011 2012 2013 2014 2015 2016 2017E
Number of exits in Canada (VC Backed)
Number of exits in Canada (Total)
CANADA SITS WITH TOP REGIONS FOR
VENTURE DEALS AND CONTINUING TO GROW
Top Regions for Venture Deals (excluding US)*
U.K.
France
Germany
Canada
Israel
$1.4B
$622M
$292M
$404M
$526M
208
141
89
97
59
Region Total Deal Amount (Q2 17) Total Deal Volume (Q2 17)
Source: CB Insights 7
CAGR Deal Volume
(2014-2016)
+4.0%
+27.7%
+11.3%
+5.0%
+3.6%
*Western Hemisphere only, VC deals Angel round through Series E+
CANADIAN ECOSYSTEM CONTINUES
TO GAIN MOMENTUM & SUPPORT
Canada is known for Video Games (Ubisoft has a flagship office in
Montreal), Aerospace (Bombardier, Pratt & Whitney), and
Artificial Intelligence (Canadian Researchers invented Neural
Networks – the latest trend in AI securing millions of dollars in
investments.)
9
Advanced Manufacturing and Energy
• Next47 (Siemens)
• GE Ventures
• Chevron Technology Ventures
• Inversiones Financieras Perseo
Telecom
• TELUS Ventures
• Deutsche Telekom Strategic Investments
• Innovacom (France Telecom)
• Verizon Ventures
Automotive
• Robert Bosch Venture Capital
• Motorola Solutions Venture Capital
• BMW i Ventures
Technology
• Intel Capital
• In-Q-Tel (Central Intelligence Agency)
• GE Ventures
Healthcare
• BlueCross BlueShield Venture Partners
• Pfizer Venture Investments
• SR One (GlaxoSmithKline)
• Johnson & Johnson Innovation
Voice Technology
• Amazon Alexa Fund
Digital Media
• Bertelsmann Digital Media Investments
• Burda Digital Ventures (Hubart Burda Media)
Enterprise Software
• Bloomberg Beta
• Salesforce Ventures
• Cisco Investments
Canada also excels in a number of other industries attracting
numerous corporate venture capital firms (CVCs). Classifying
the most active CVCs in Canada over the last ten years by
industry provides insight into which industries attract CVC
investments – and what industries are deemed as innovative in
Canada by CVCs.
Most Active Corporate VCs in Canada Over the Last 10 Years, By Sector
Source: CBInsights
CANADIAN TALENT ATTRACTS CORPORATE VCS IN A
VARIETY OF INDUSTRIES
Tech Giants are acquiring Canadian startups
from coast to coast
Tech Giant acquisition presence per province over the last 10 years
Cloud Computing
• Google built its first Canadian cloud computing facility in
Montreal
• Amazon Web Services has opened a cluster of data
centers near Montreal
Artificial Intelligence
• Thomson Reuters announced it would open a center for
“cognitive computing” in Toronto
• Major technology companies, like Google, Microsoft and
IBM, are adding to their A.I. research teams in Canada
• Google DeepMind opened its first ever international AI
research office in Edmonton
• Google Brain has expanded to Montreal and Toronto
Autonomous Vehicles
• Uber announced the establishment of a new Toronto
research hub dedicated to the development of self-driving
vehicles
• General Motors said it was going to locate one of its
research and engineering hubs for self-driving cars in
Toronto
10
Europe Canada
And are financing Canadian ventures at an
accelerated pace
• Tech firms have not limited their activity in Canada to
expanding their operations, they have also invested in
Canadian ventures.
• Microsoft ventures and Amazon Alexa Fund have invested in
an equal or greater number of deals in Canada as in the
entirety of Europe over the last 5 years (YTD)
Tech Giant Venture Capital Financing over the last 5 years
Google Ventures 5 1
Microsoft Ventures 2 2
Amazon Alexa Fund 0 3
INDUSTRY LEADERS HAVE BEEN INCREASING
THEIR RELIANCE ON CANADIAN TECH TALENT
US Giants are expanding their R&D and
Operations teams in Canada
Source: Tracxn
Source: CBInsights
Radial Point
Founded in 1997
Sales and technical support services to ISVs and
service providers
Montreal, QC
ICT SECTOR DOMINATES VC-BACKED ACQUISITIONS,
TOP TRANSACTION SIZE DOUBLES IN H1-2017
11
Bitstrips
Founded in 2007
Emoji and sticker generation app
Toronto, ON
QuickPlay Media
Founded in 2003
Distribution of multi-screen video to IP-
connected devices
Toronto
Bit Stew Systems Inc
Founded in 2005
Platform for Software Defined Operations for
the Industrial Internet
Burnaby, BC
Luxury Retreats
Founded in 1999
Luxury Villa Rentals
Montreal
Maluuba
Founded in 2011
Deep learning/machine learning
Waterloo
BlueCat Network
Founded in 2001
DNS and DHCP appliance and security solution
Toronto
$400m
$310m1
Sandvine
Founded in 2001
Intelligence web traffic optimization.
Waterloo
$444m
$64m
$200m
Undisclosed $175m2
Undisclosed
2016 2017
1 Based on CVCA reported exit value of C$393m
2 The Maluuba deal value was undisclosed. However, the value is estimated to have been of approximately US$175m
Source: Tracxn
1
12
CANADIAN START-UPS ARE LEADING IN HIGH
POTENTIAL FIELDS
In High-Growth Sectors
Ecommerce
• Shopify
Powers over 500,000 businesses around
the world with over $40B in goods and
services sold over the platform
Marketing Tech
• Hootsuite
Over 15 million users and the world's top
brands use Hootsuite to connect with
multiple social networks and hundreds of
apps
In Emerging Sectors
Quantum Computing
• D-Wave
D-Wave is the leader in the development and
delivery of quantum computing systems and
software, and the world’s only commercial
supplier of quantum computers
Robotics
• Thalmic Labs
Thalmic Labs is reimagining human-computer
interaction with products such as its wearable
gesture control armband, Myo, which lets you
control your phone, computer, and more, touch-
free.
And Attracting Multiple Investments From Leading Global VC Firms
(Example of top investment firms which invested multiple times in Canadian ventures over the last 10 years, according to Tracxn)
Total Raised: $360m, Valuation: US$10.7B (Aug, 2017) Total Raised: $182m
Total Raised: $230m, Valuation: $750m (Sept, 2014) Total Raised: $135m
Source: CBInsights
13
TOP FUNDED CANADIAN ICT COMPANIES, WHICH
RECEIVED FUNDING OVER THE LAST 10 YEARS
Company Founded
Total Funding
(US$M)
Industry Sub-Industry
2004 360 eCommerce eCommerce enablement
1987 355 Telecom Devices & Equipment -
2004 318 Internet Software & Services Real Estate
2008 230 Internet Software & Services Business Intelligence & Analytics
1999 182 Supercomputers -
1999 165 Internet Software & Services Education & Training
2000 162 Fiber Optics -
2004 147 Biotech -
2012 135 Consumer Electronics -
2005 126 Mobile Software & Services Point of Sale
1992 122 Internet Software & Services Scientific, Engineering
2009 116 Mobile Software & Services Social
1999 109 eCommerce Home Furnishings & Improvement
2016 102 Consulting & Outsourcing Management & Strategy Consulting
2007 99 Mobile Software & Services Travel
2010 92 Internet Software & Services HR & Workforce Management
Note: Excludes funds raised during an IPO
Source:CBInsights
ICT SECTOR ALSO DOMINATES TOP CANADIAN
VC-BACKED IPOS, IPO SIZES INCREASE
In line with exits through acquisition, ICT sector
companies have been the largest Canadian VC-
Backed IPOs every year of this decade.
Furthermore, Canadian VC-Backed IPOs have seen
continuous growth in the size of the largest IPO per
year over the same period
Legend: ICT Sector Other Sectors
Note: There were no Canadian IPOs in 2012 or in 2016, Does not include Reverse Takeovers (RTOs) or Reverse Mergers
$101m1
$46m2
$42m1
$131m2
$97m2
$5m2
$157m1
$87m1
2014 20152011-2013 2017
$58m2
$25m1
Canadian VC-Backed IPOs from 2011 to H1-2017
14
Source: 1 CVCA Infobase 2 CBInsights
Series C
$103M
2005
Precision agriculture and data-
management
Winnipeg
Series E
$200M
1999
Quantum computing and
superconducting electronics
Burnaby
Series D
$95M
2010
cloud-based analytics
Vancouver
Series B
$140M
2012
Wearable Technology
Kitchener
Series C
$77m
2007
Digitalization of circulars/flyers
Toronto
Hopper
Series C
$95M
2007
Predicts airfare
Montreal
2017
CANADA EXPERIENCED RECORD VC FUNDING IN 2016,
AND THE MOMENTUM CONTINUES IN 2017
Series C
$111m
1995
Integrated EHR platform for
long term providers
Toronto
Element AI
Series A
$102M
2016
Launches and Incubates
advanced AI Solutions
Montreal
<$100m
>$100m
LEGEND
Notable Recent ICT Canadian Deals, based on deal value
15
201620152014
Series C
$61M
2005
SaaS Retail Management
Montreal
Series D
$60M
2004
Residential Appraisal Platform
Markham
Series D
$50M
2009
Mobile Messaging App
Toronto
Series D
$45M
2007
Autonomous Hovering Aerial
Imagery
Waterloo
Series B
$85M
2009
Learning Management System
Kitchener
Series B
$55M
2003
Fraud Detection, Anti-Money
Laundering Solution
Newfoundland
Source:Tracxn
• Canadian entrepreneurs tend not to dream big enough
• Researchers and teachers do not often have a “mindset”
towards commercialization
• Founders are tempted to take a smaller exit sooner
• Lack of ambition for global scaling
• Mindset that $100 million is a great exit, rather than
striving to be a unicorn
• Venture Capital in Canada is Focused in Montreal,
Toronto-Waterloo, and Vancouver - leaving the rest of the
country underpenetrated
16
CANADA STILL HAS CHALLENGES
• Tech talent and entrepreneurs believe the best
opportunities are in the Valley and remain attracted by
the higher salaries, powerful brand names, and larger VC
and tech ecosystems
• The failure of Nortel and the downsizing of Research in
Motion ( Blackberry phones) have left voids in the
Canadian Tech ecosystem.
• The lack of technology firms with annual revenues of at
least $1B is a significant barriers to the industry as such
giants are required in a healthy ecosystem
• The lack of experienced senior executive talent,
particularly in sales & marketing, is a major barrier for
many tech firms seeking to scale.
• There remains a lack of VCs capable of supporting large
later-round investments, and many VCs do not possess
the experience in scaling late-stage companies and
creating tech champions.
Lack of $1B+ Tech Companies
Shallow Talent Pool of Senior Talent with
Scaling Experience
Late Stage Funding
“Smaller Dreams” Mindset
Silicon Valley Allure
Geographic Distribution
Geographic DistributionScaling
Canadian Mindset
PUBLIC SECTOR CONTINUES TO
PRIORITIZE GROWTH IN VC AND TECH
• The creation of a $1.26 billion five-year Strategic Innovation Fund
• $380 million over three years for Business Development Bank and the Economic
Development Corporation to provide equity financing.
• $75 million over two years to solve cleantech challenges, $300 million over 11 years for smart
cities challenges.
• Canadian governments have recently invested over $500m in AI in Canada
• The Scientific Research and Experimental Development program (SR&ED) hands out about
$4-billion annually to companies of all sizes in Canada
• The base federal rate for SR&ED refunds is 35 per cent, but almost all the provinces and
territories add some top-up funding for companies in their jurisdiction. For example, in
Ontario there is an extra 10 per cent available while in Quebec as much as 35 per cent
• The federal government first unveiled its Global Skills Strategy in early November during its
fall economic update, which included a standard processing time of 10 days to two weeks for
work permit visas.
• Successful applicants to this program will be able to immigrate to Canada
as permanent residents with no conditions attached to the success of their business.
18
CANADIAN PUBLIC SECTOR SPENDING BILLIONS TO
PROMOTE INNOVATION; ATTRACT AND CREATE TALENT
Canada Start-Up Visa:
Streamlined Skilled-Visa Process
Research and development funding
Innovation Funding
Date Program Name Level
Amount
($m)
Purpose
May-17 Quebec AI Cluster Provincial $100
• Academic and entrepreneurial AI funding in
Quebec
Jun-16 IVADO Federal $94
• Institute to advance artificial intelligence (AI) and
big data
• Goal of Creating computers with quasi-human-
level performance.
Mar-17
Pan-Canadian Artificial
Intelligence Strategy
(administered by
CIFAR)
Federal $125
• Attract and retain top academic talent in Canada
• Increase the number of post-graduate trainees and
researchers studying artificial intelligence
• Promote collaboration between Canada's main AI
centres (Montreal, Toronto-Waterloo and
Edmonton
Mar-17 CIFAR Federal $35
• Enable transformative knowledge by catalyzing
global networks of the world’s pre-eminent
researchers
Mar-17
VECTOR Institute for
Artificial Intelligence
Federal &
Povincial
$100
• Expand the applications of AI through explorations
in deep learning and other forms of machine
learning
Recent Government Funding for Artificial Intelligence in Canada
19
INCLUDING INVESTING OVER $500M IN AI TO
MAINTAIN CANADA’S LEAD
FEDERAL GOVERNMENT PROGRAMS PROMOTE
VC INVESTING BY MINIMIZING DOWNSIDE RISKS
• The Venture Capital Action Plan (VCAP) rolled out in Jan. 2014
• The Canadian government injected C$450m in 4 Funds of Funds (FOFs) and C$50m in VCs
• Private investors then invested C$906m in the 4 FOFs
• 21 Canadian VC funds received funding from the 4 FOFs or from VCAP
VCCI RecapVCCI Recap
VCAP Recap
• The 2017 Federal Budget pledged to inject C$400m in the new Venture Capital Catalyst Initiative
• The federal government was in the process of holding consultations until July 17, 2017
20*Percentages are for illustration purposes only
CANADIAN TALENT AMONGST THE
BEST IN THE WORLD
Business Schools5 Computer Science6
Artificial Intelligence
EDUCATION IN CANADA
Canada’s World Class Universities
Artificial Intelligence
64
60
40
35
30
27
25
23
31
23
10
One of only 5 countries to rank in the top 10 in the
world in Math, Science and Reading 4
Canada has the world's highest proportion of
working-age adults who have been through higher
education - 55% compared with an average in
OECD countries of 35%. 1
PRIMARY EDUCATION
Canada's teenagers are among the best educated in
the world – far ahead of similar countries such as the
U.S., U.K, and France4
POPULATION (%) WITH
HIGHER EDUCATION
SCIENCE PHDS
Over 55% of Canada’s PHD graduates are in STEM,
far exceeding the OECD average of 50% 2
NUMBER OF AI STARTUPS
Canada placed fourth in total funded AI startups
(45 total) in 2016 3
4.7 percent of Canada’s total workforce were ICT
specialists, the sixth highest among its peers. 2
ICT SPECIALISTS
#1
#3
#4
#6
TOP 5
Far Ahead OF THE US & UK
22Source: 1 BBC, 2 OECD, 3 Accenture, 4 PISA, 5 Poets & Quants, 6 Times
CANADA’S EDUCATION SYSTEM HAS CONTRIBUTED
TO SOME OF THE WORLDS TOP TECH INNOVATORS
23
Top AI Researchers who teach in Canadian Universities
• Emeritus Professor at the
University of Toronto
• Engineering Fellow at
Google, manages Brain
Team Toronto
• Full Professor at the
University of Montreal
• Co-founder of Element
AI
• Professor at the
University of Alberta
• Leader of Google’s
Deepmind Alberta
Geoff Hinton Yoshua Bengio Richard Sutton
• Founded: Paypal, Tesla,
Space X, Solar City, The
Boring Company
• Studied at Queen’s
University from 1992 to
1995
• Founded Slack
in Canada• Co-founded Etherum
and Bitcoin magazine
• Dropped out of the
University of Waterloo
in 2014 when he
received the $100,000
Thiel Fellowship
Prominent Tech Innovators educated in Canada
Elon Musk
Stewart
ButterfieldVitalik Buterin
Ted Graduated
from Waterloo
Moved to San Francisco to
get a higher net salary
Ted moves back to Canada
and brings his tech
experience to a Canadian
Startup
Ted found the cost of living
too high and the quality of
life too low
Exodus of West Coast
Talent Back to Canada
• Creator of Java
James Gosling
DEEP DIVE ON CANADIAN VCS
25
Atlantic
Ontario Quebec
Prairie
British Columbia
Note: Rankings are per fund, not total AUM per firm
LEGEND Fund Size (CAD$m)
300+
200-300
100-200
< 100
LARGEST CANADIAN VC FUNDS, BASED ON
MOST RECENT FUND SIZE
Source: CVCA Infobase
Firm Investment
Sectors
Top Canadian Portfolio Companies Top Exits
AI, Analytics,
Security
Retail, Fintech,
Biotech,
Transportation
Agnostic
Fintech, IoT, AI,
Ecommerce
Mobile, Internet
software
IT, Commerce,
Communication
Enterprise
applications
26
Source:Crunchbase
SNAPSHOT OF CANADIAN VC FUNDS
Firm Investment
Sectors
Top Canadian Portfolio Companies Top Exits
Agnostic
Agnostic
ICT, CleanTech,
Healthcare
Agnostic
Agnostic
Agnostic
SNAPSHOT OF VC FIRMS AT THE SEED STAGE
27
Source:Crunchbase
ANGEL INVESTOR LANDSCAPE
28
Investments and membership by region in 2016 Top 5 Angel Groups by:
1
2
3
4
5
Dollar Amount # of deals
Average Deal Size Syndication Partners
Source:NACO
Firm
Investment
Sectors
Top Canadian Portfolio Companies Unique Angle
Fintech Incubator model
Fintech Backed by Power Corp.
IoT Industrial IoT focussed
Deep Tech Deep tech focused
THE EMERGENCE OF SPECIALIZED VCS
The evolving Canadian VC ecosystems has grown to include
venture capital firms which have adopted unique angle. Certain
VCs have concentrated their efforts on a specific investment
sector such as those listed below.
Others have adopted unique business models such as
Brightspark Ventures – a venture capital firm which takes a
unique approach to fundraising. Albeit these firms are neither
the largest nor the most active, they fill unique voids in the
Canadian ecosystem.
29
Source:Crunchbase
30
MOST ACTIVE FOREIGN VCS
VCs with Foreign Head Quarters which participated in the most VC deals in
Canada over the last 10 years
Investor State # Deals
500 Startups* CA
FundersClub CA
SoftTech VC CA
Social Capital CA
Accel Partners CA
Foundation Capital CA
Investor State # Deals
Accomplice MA
Braemar Energy Ventures NY
Union Square Ventures NY
Rho Ventures NY
EnerTech Capital PA
Bessemer Venture Partners NY
Highland Capital Partners MA
OrbiMed Advisors NY
RRE Ventures NY
SOSV NJ
BOLDstart Ventures NY
Investor Country # Deals
White Star Capital
Investor Country # Deals
Emerald Technology Ventures
Acton Capital Partners
Point Nine Capital
TVM Capital Life Science
Investor S.A.R. # Deals
Horizons Ventures
LEGEND Number of Deals
15+
10-14
7-9
*On July 31st, 2017 500 Startups Canada announced
they would be terminating their fund)
Source:CBInsights
31
MOST ACTIVE FINANCIAL INCUMBENTS/INSTITUTIONS,
PUBLIC AND PRIVATE, AS PER DIRECT VC INVESTMENTS
OVER THE LAST 2 YEARS
Investor Investor Type
Diversified Financial
Services
Asset/Investment
Management
Bank
Diversified Financial
Services
Advisory
Asset/Investment
Management
Diversified Financial
Services
Diversified Financial
Services
Holding Company
Investor Investor Type
Bank
Asset/Investment
Management
Diversified Financial Services
Diversified Financial Services
Asset/Investment
Management
Private Public
Public-Private Partnerships
Investor Investor Type
Public-Private Pension Fund
Public-Private Pension Fund
Source:CBInsights
32
MOST ACTIVE CVCS IN CANADA IN THE LAST
18 MONTHS
CVC Sectors
Direct
Investment
Investment
in VC fund
Select Canadian
Investments
Machine Learning; Makes
business work better X
ICT; Healthcare; Energy, Lighting
and IoT; Manufacturing X X
ICT X
Voice technology innovation;
Hardware for Alexa X
ICT X
Technologies in the advertising,
consumer, enterprise and
infrastructure spaces
X
ICT X
Improvements to Agricultures
from biotechnology to software X
Energy, Digital, Robotics,
Advanced Materials X
Products that build on top of
slack; Tech for the workplace X X
1
2
3
4
5
6
7
8
9
10
Source:CBInsights
Funds of Funds Size (CAD$M) VCAP Direct Investments
375* Yes
306 Yes
300 Yes
90 No
33
MOST ACTIVE CANADIAN PRIVATE FUNDS OF
FUNDS INVESTING IN VCS
375 Yes
*Teralys also has a previous fund, the Teralys Capital Fund of Funds L.P. which raised $600m
While HarbourVest is not Canadian, they have created the HarbourVest Canada Growth Fund which received financing
under VCAP
Source:CVCA Infobase
CURRENT STATE OF VC FUNDING PER CITY
47.5% 48.3% 55.0% 45.3% 44.2%
16.8% 26.1% 25.8% 15.1% 11.2%
5.0% 3.4% 3.3% 11.3% 4.2%
1.5% 1.0% 0.9% 0.0% 1.4%
0.5% 0.0% 0.4% 0.0% 0.4%
18.5% 16.7% 11.3% 22.6% 21.8%
10.3% 4.4% 3.3% 5.7% 16.8%
Series A
Series B
Series C
Acquired
Series D+
Seed
Public
Canada Montreal
Toronto -
KW
Ottawa Vancouver
Current stage of VC-funding of tech startups founded since 2007
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2013 2014 2015 2016 H1-2017
Deal Volume per city (%)
Vancouver
Tech sector is the second largest
employer (111,700)
Kitchener-Waterloo
Tech sector is the third
largest employer (23,200)
Toronto
Tech sector is the third largest
employer (286,100)
Ottawa
Tech sector is the second largest
employer (111,700)
Montreal
• Tech sector is third largest
employer (222,200)
34Source: CVCASource: Tracxn
Compared to national average, Toronto and Montreal have more
promising future given high % of seed and Series A stage firms
while Vancouver has outpaced historically in terms of exits
Montreal
Toronto
Kitchener - Waterloo
Ottawa
Vancouver
Other
35Sources 1) Juniper Research 2) Statista 3) KPMG/CBInsight 4) Tractica 5) IBM
IoT and M2M
There will be 40b(1)
sensors by 2020 and
with the ability to speak
and act on their own
Disruptive
Commerce
Digital commerce will rise
to $1.18t by 2020(2)
driven by emerging
markets and mobile
Digitalization of
Finance
$7.5b invested into
FinTech companies(3) in
H1’16 with London and
New York as two key
global hubs
Data
2.3 trillion gigabytes(5) are now created each day. Negligible cost of storage
allows business to truly use data as a competitive advantage.
AI
AI-powered applications in the enterprise is expected to reach $11b by 2024(4).
Machine learning is unlocking innovation across all industries and will continue to
accelerate. Evolution into “AI as an API.”
TRENDS WE ARE FOCUSED ON AND PORTFOLIO
INTRODUCTION TO WHITE STAR CAPITAL
White Star Capital
We invest in ambitious entrepreneurs on both sides of the
Atlantic. Between us, we have founded, scaled and sold many
successful technology businesses. We leverage our collective
experience, expertise and global network to help our startups
succeed.
Physical hubs
Additional
hubs
Montreal
New York
London
Paris
Toronto
Stockholm
Berlin
Christian Hernandez Gallardo
General Partner - London
Jean-François Marcoux
General Partner - Montreal
Eric Martineau-Fortin
General Partner - New York
www.whitestarvc.com

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White Star Capital - Canadian Venture Capital Landscape 2017

  • 2. 2 A WORD FROM OUR CANADIAN PARTNER Jean-Francois Marcoux Co-Founder & Managing Partner WHITE STAR CAPITAL Authors/ Contributors Sanjay Zimmermann Associate “Canada has it all. Nothing can’t be built here” Joshuah Lebacq Summer Associate “Canada has a closely-knit yet extensive VC ecosystem. Great things will continue to come from Canada” “We are proud to be a partner of choice for Canadian entrepreneurs. The Canadian ecosystem is building some amazing companies with global ambitions, led by hustling founders and talented world-class teams” In this report, we aim to share our enthusiasm on the Canadian tech and Venture Capital ecosystem. We begin by outlining why we are bullish about Canada which ties into the strong momentum in successful exits, large funding rounds and increased presence of tech giants entering the market. Then, we look at two unique Canadian advantages stemming from clever public sector support and access to deep talent pools. Finally we end with a deep dive on VC’s and other investors making up the space. At White Star Capital, we started investing in Canada in 2007 and have made over 10 investments since and are looking forward to many more. We hope you enjoy reading this report! External Data Sources
  • 3. TABLE OF CONTENTS 3 1. Overview: Why We Are Bullish About Canada Page 5-7 2. Canadian Ecosystem Continues to Gain Momentum & Support Page 8-16 3. Public Sector Continues to Prioritize Growth in VC and Tech Page 17-20 4. Canadian Talent Amongst the Best in the World Page 21-23 5. Deep Dive on Canadian VCs Page 24-34
  • 4. OVERVIEW: WHY WE ARE BULLISH ABOUT CANADA
  • 5. VC-backed funding in Canada has nearly doubled since 2014 VC FUNDING HAS DOUBLED SINCE 2014 IN ICT1 AND HEALTHCARE, LARGER DEALS A REALITY IN CANADA Industry expertise and successful start-up activity in Canada has captured the attention of investors. Canada experienced record VC funding in 2016, and the momentum continues in 2017. In fact, the total amount of funding per year has nearly doubled since 2014. The increase in quantity of funds and quality of startups has made it possible to fund larger rounds – something that was previously a challenge in Canada. Furthermore. the country has seen the average deal size increase over the last few years. 34% 35% 23% 31% 40% 2013 2014 2015 2016 H1 - 2017 0 2 4 6 8 10 Average Deal ($m) Median Deal Value ($m) Total funding percentage captured by the top 10 Canadian Deals VC-backed funding H1-2017 marks a record for the total funding allocated to the 10 largest deals 5 Source: CBInsights Source: CVCA Source: CVCA Newsletter Note 1: Information and Communications Technology Note 2: 2017E based on two times 2017 H1 actuals $1.9B $2.0B $2.3B $3.2B $3.3B 2013 2014 2015 2016 2017E2
  • 6. 6 THE PERCENTAGE OF DEAL VOLUME AT THE SEED-STAGE HAS INCREASED BY 66% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Seed Series A Series B Series C Series D+ % of Canadian deal volume per stage, per year As a greater percentage of funding value is captured by the largest Canadian deals, Canada has also experienced 66% increase over the last 10 years of the percentage of total deal volume captured by Seed-stage funding. This is a positive indicator for Series A and later stage funds as an increase in the number of Seed financing deals implies more prospective investments at later stages further enabling VC-backed exits opportunities to grow in-line with total Canadian exits. The number of Canadian exits has been steadily rising year-over-year since 2009 Source: CBInsights 8 12 21 24 25 29 31 29 4431 59 165 233 291 444 471 517 724 2009 2010 2011 2012 2013 2014 2015 2016 2017E Number of exits in Canada (VC Backed) Number of exits in Canada (Total)
  • 7. CANADA SITS WITH TOP REGIONS FOR VENTURE DEALS AND CONTINUING TO GROW Top Regions for Venture Deals (excluding US)* U.K. France Germany Canada Israel $1.4B $622M $292M $404M $526M 208 141 89 97 59 Region Total Deal Amount (Q2 17) Total Deal Volume (Q2 17) Source: CB Insights 7 CAGR Deal Volume (2014-2016) +4.0% +27.7% +11.3% +5.0% +3.6% *Western Hemisphere only, VC deals Angel round through Series E+
  • 8. CANADIAN ECOSYSTEM CONTINUES TO GAIN MOMENTUM & SUPPORT
  • 9. Canada is known for Video Games (Ubisoft has a flagship office in Montreal), Aerospace (Bombardier, Pratt & Whitney), and Artificial Intelligence (Canadian Researchers invented Neural Networks – the latest trend in AI securing millions of dollars in investments.) 9 Advanced Manufacturing and Energy • Next47 (Siemens) • GE Ventures • Chevron Technology Ventures • Inversiones Financieras Perseo Telecom • TELUS Ventures • Deutsche Telekom Strategic Investments • Innovacom (France Telecom) • Verizon Ventures Automotive • Robert Bosch Venture Capital • Motorola Solutions Venture Capital • BMW i Ventures Technology • Intel Capital • In-Q-Tel (Central Intelligence Agency) • GE Ventures Healthcare • BlueCross BlueShield Venture Partners • Pfizer Venture Investments • SR One (GlaxoSmithKline) • Johnson & Johnson Innovation Voice Technology • Amazon Alexa Fund Digital Media • Bertelsmann Digital Media Investments • Burda Digital Ventures (Hubart Burda Media) Enterprise Software • Bloomberg Beta • Salesforce Ventures • Cisco Investments Canada also excels in a number of other industries attracting numerous corporate venture capital firms (CVCs). Classifying the most active CVCs in Canada over the last ten years by industry provides insight into which industries attract CVC investments – and what industries are deemed as innovative in Canada by CVCs. Most Active Corporate VCs in Canada Over the Last 10 Years, By Sector Source: CBInsights CANADIAN TALENT ATTRACTS CORPORATE VCS IN A VARIETY OF INDUSTRIES
  • 10. Tech Giants are acquiring Canadian startups from coast to coast Tech Giant acquisition presence per province over the last 10 years Cloud Computing • Google built its first Canadian cloud computing facility in Montreal • Amazon Web Services has opened a cluster of data centers near Montreal Artificial Intelligence • Thomson Reuters announced it would open a center for “cognitive computing” in Toronto • Major technology companies, like Google, Microsoft and IBM, are adding to their A.I. research teams in Canada • Google DeepMind opened its first ever international AI research office in Edmonton • Google Brain has expanded to Montreal and Toronto Autonomous Vehicles • Uber announced the establishment of a new Toronto research hub dedicated to the development of self-driving vehicles • General Motors said it was going to locate one of its research and engineering hubs for self-driving cars in Toronto 10 Europe Canada And are financing Canadian ventures at an accelerated pace • Tech firms have not limited their activity in Canada to expanding their operations, they have also invested in Canadian ventures. • Microsoft ventures and Amazon Alexa Fund have invested in an equal or greater number of deals in Canada as in the entirety of Europe over the last 5 years (YTD) Tech Giant Venture Capital Financing over the last 5 years Google Ventures 5 1 Microsoft Ventures 2 2 Amazon Alexa Fund 0 3 INDUSTRY LEADERS HAVE BEEN INCREASING THEIR RELIANCE ON CANADIAN TECH TALENT US Giants are expanding their R&D and Operations teams in Canada Source: Tracxn Source: CBInsights
  • 11. Radial Point Founded in 1997 Sales and technical support services to ISVs and service providers Montreal, QC ICT SECTOR DOMINATES VC-BACKED ACQUISITIONS, TOP TRANSACTION SIZE DOUBLES IN H1-2017 11 Bitstrips Founded in 2007 Emoji and sticker generation app Toronto, ON QuickPlay Media Founded in 2003 Distribution of multi-screen video to IP- connected devices Toronto Bit Stew Systems Inc Founded in 2005 Platform for Software Defined Operations for the Industrial Internet Burnaby, BC Luxury Retreats Founded in 1999 Luxury Villa Rentals Montreal Maluuba Founded in 2011 Deep learning/machine learning Waterloo BlueCat Network Founded in 2001 DNS and DHCP appliance and security solution Toronto $400m $310m1 Sandvine Founded in 2001 Intelligence web traffic optimization. Waterloo $444m $64m $200m Undisclosed $175m2 Undisclosed 2016 2017 1 Based on CVCA reported exit value of C$393m 2 The Maluuba deal value was undisclosed. However, the value is estimated to have been of approximately US$175m Source: Tracxn
  • 12. 1 12 CANADIAN START-UPS ARE LEADING IN HIGH POTENTIAL FIELDS In High-Growth Sectors Ecommerce • Shopify Powers over 500,000 businesses around the world with over $40B in goods and services sold over the platform Marketing Tech • Hootsuite Over 15 million users and the world's top brands use Hootsuite to connect with multiple social networks and hundreds of apps In Emerging Sectors Quantum Computing • D-Wave D-Wave is the leader in the development and delivery of quantum computing systems and software, and the world’s only commercial supplier of quantum computers Robotics • Thalmic Labs Thalmic Labs is reimagining human-computer interaction with products such as its wearable gesture control armband, Myo, which lets you control your phone, computer, and more, touch- free. And Attracting Multiple Investments From Leading Global VC Firms (Example of top investment firms which invested multiple times in Canadian ventures over the last 10 years, according to Tracxn) Total Raised: $360m, Valuation: US$10.7B (Aug, 2017) Total Raised: $182m Total Raised: $230m, Valuation: $750m (Sept, 2014) Total Raised: $135m Source: CBInsights
  • 13. 13 TOP FUNDED CANADIAN ICT COMPANIES, WHICH RECEIVED FUNDING OVER THE LAST 10 YEARS Company Founded Total Funding (US$M) Industry Sub-Industry 2004 360 eCommerce eCommerce enablement 1987 355 Telecom Devices & Equipment - 2004 318 Internet Software & Services Real Estate 2008 230 Internet Software & Services Business Intelligence & Analytics 1999 182 Supercomputers - 1999 165 Internet Software & Services Education & Training 2000 162 Fiber Optics - 2004 147 Biotech - 2012 135 Consumer Electronics - 2005 126 Mobile Software & Services Point of Sale 1992 122 Internet Software & Services Scientific, Engineering 2009 116 Mobile Software & Services Social 1999 109 eCommerce Home Furnishings & Improvement 2016 102 Consulting & Outsourcing Management & Strategy Consulting 2007 99 Mobile Software & Services Travel 2010 92 Internet Software & Services HR & Workforce Management Note: Excludes funds raised during an IPO Source:CBInsights
  • 14. ICT SECTOR ALSO DOMINATES TOP CANADIAN VC-BACKED IPOS, IPO SIZES INCREASE In line with exits through acquisition, ICT sector companies have been the largest Canadian VC- Backed IPOs every year of this decade. Furthermore, Canadian VC-Backed IPOs have seen continuous growth in the size of the largest IPO per year over the same period Legend: ICT Sector Other Sectors Note: There were no Canadian IPOs in 2012 or in 2016, Does not include Reverse Takeovers (RTOs) or Reverse Mergers $101m1 $46m2 $42m1 $131m2 $97m2 $5m2 $157m1 $87m1 2014 20152011-2013 2017 $58m2 $25m1 Canadian VC-Backed IPOs from 2011 to H1-2017 14 Source: 1 CVCA Infobase 2 CBInsights
  • 15. Series C $103M 2005 Precision agriculture and data- management Winnipeg Series E $200M 1999 Quantum computing and superconducting electronics Burnaby Series D $95M 2010 cloud-based analytics Vancouver Series B $140M 2012 Wearable Technology Kitchener Series C $77m 2007 Digitalization of circulars/flyers Toronto Hopper Series C $95M 2007 Predicts airfare Montreal 2017 CANADA EXPERIENCED RECORD VC FUNDING IN 2016, AND THE MOMENTUM CONTINUES IN 2017 Series C $111m 1995 Integrated EHR platform for long term providers Toronto Element AI Series A $102M 2016 Launches and Incubates advanced AI Solutions Montreal <$100m >$100m LEGEND Notable Recent ICT Canadian Deals, based on deal value 15 201620152014 Series C $61M 2005 SaaS Retail Management Montreal Series D $60M 2004 Residential Appraisal Platform Markham Series D $50M 2009 Mobile Messaging App Toronto Series D $45M 2007 Autonomous Hovering Aerial Imagery Waterloo Series B $85M 2009 Learning Management System Kitchener Series B $55M 2003 Fraud Detection, Anti-Money Laundering Solution Newfoundland Source:Tracxn
  • 16. • Canadian entrepreneurs tend not to dream big enough • Researchers and teachers do not often have a “mindset” towards commercialization • Founders are tempted to take a smaller exit sooner • Lack of ambition for global scaling • Mindset that $100 million is a great exit, rather than striving to be a unicorn • Venture Capital in Canada is Focused in Montreal, Toronto-Waterloo, and Vancouver - leaving the rest of the country underpenetrated 16 CANADA STILL HAS CHALLENGES • Tech talent and entrepreneurs believe the best opportunities are in the Valley and remain attracted by the higher salaries, powerful brand names, and larger VC and tech ecosystems • The failure of Nortel and the downsizing of Research in Motion ( Blackberry phones) have left voids in the Canadian Tech ecosystem. • The lack of technology firms with annual revenues of at least $1B is a significant barriers to the industry as such giants are required in a healthy ecosystem • The lack of experienced senior executive talent, particularly in sales & marketing, is a major barrier for many tech firms seeking to scale. • There remains a lack of VCs capable of supporting large later-round investments, and many VCs do not possess the experience in scaling late-stage companies and creating tech champions. Lack of $1B+ Tech Companies Shallow Talent Pool of Senior Talent with Scaling Experience Late Stage Funding “Smaller Dreams” Mindset Silicon Valley Allure Geographic Distribution Geographic DistributionScaling Canadian Mindset
  • 17. PUBLIC SECTOR CONTINUES TO PRIORITIZE GROWTH IN VC AND TECH
  • 18. • The creation of a $1.26 billion five-year Strategic Innovation Fund • $380 million over three years for Business Development Bank and the Economic Development Corporation to provide equity financing. • $75 million over two years to solve cleantech challenges, $300 million over 11 years for smart cities challenges. • Canadian governments have recently invested over $500m in AI in Canada • The Scientific Research and Experimental Development program (SR&ED) hands out about $4-billion annually to companies of all sizes in Canada • The base federal rate for SR&ED refunds is 35 per cent, but almost all the provinces and territories add some top-up funding for companies in their jurisdiction. For example, in Ontario there is an extra 10 per cent available while in Quebec as much as 35 per cent • The federal government first unveiled its Global Skills Strategy in early November during its fall economic update, which included a standard processing time of 10 days to two weeks for work permit visas. • Successful applicants to this program will be able to immigrate to Canada as permanent residents with no conditions attached to the success of their business. 18 CANADIAN PUBLIC SECTOR SPENDING BILLIONS TO PROMOTE INNOVATION; ATTRACT AND CREATE TALENT Canada Start-Up Visa: Streamlined Skilled-Visa Process Research and development funding Innovation Funding
  • 19. Date Program Name Level Amount ($m) Purpose May-17 Quebec AI Cluster Provincial $100 • Academic and entrepreneurial AI funding in Quebec Jun-16 IVADO Federal $94 • Institute to advance artificial intelligence (AI) and big data • Goal of Creating computers with quasi-human- level performance. Mar-17 Pan-Canadian Artificial Intelligence Strategy (administered by CIFAR) Federal $125 • Attract and retain top academic talent in Canada • Increase the number of post-graduate trainees and researchers studying artificial intelligence • Promote collaboration between Canada's main AI centres (Montreal, Toronto-Waterloo and Edmonton Mar-17 CIFAR Federal $35 • Enable transformative knowledge by catalyzing global networks of the world’s pre-eminent researchers Mar-17 VECTOR Institute for Artificial Intelligence Federal & Povincial $100 • Expand the applications of AI through explorations in deep learning and other forms of machine learning Recent Government Funding for Artificial Intelligence in Canada 19 INCLUDING INVESTING OVER $500M IN AI TO MAINTAIN CANADA’S LEAD
  • 20. FEDERAL GOVERNMENT PROGRAMS PROMOTE VC INVESTING BY MINIMIZING DOWNSIDE RISKS • The Venture Capital Action Plan (VCAP) rolled out in Jan. 2014 • The Canadian government injected C$450m in 4 Funds of Funds (FOFs) and C$50m in VCs • Private investors then invested C$906m in the 4 FOFs • 21 Canadian VC funds received funding from the 4 FOFs or from VCAP VCCI RecapVCCI Recap VCAP Recap • The 2017 Federal Budget pledged to inject C$400m in the new Venture Capital Catalyst Initiative • The federal government was in the process of holding consultations until July 17, 2017 20*Percentages are for illustration purposes only
  • 21. CANADIAN TALENT AMONGST THE BEST IN THE WORLD
  • 22. Business Schools5 Computer Science6 Artificial Intelligence EDUCATION IN CANADA Canada’s World Class Universities Artificial Intelligence 64 60 40 35 30 27 25 23 31 23 10 One of only 5 countries to rank in the top 10 in the world in Math, Science and Reading 4 Canada has the world's highest proportion of working-age adults who have been through higher education - 55% compared with an average in OECD countries of 35%. 1 PRIMARY EDUCATION Canada's teenagers are among the best educated in the world – far ahead of similar countries such as the U.S., U.K, and France4 POPULATION (%) WITH HIGHER EDUCATION SCIENCE PHDS Over 55% of Canada’s PHD graduates are in STEM, far exceeding the OECD average of 50% 2 NUMBER OF AI STARTUPS Canada placed fourth in total funded AI startups (45 total) in 2016 3 4.7 percent of Canada’s total workforce were ICT specialists, the sixth highest among its peers. 2 ICT SPECIALISTS #1 #3 #4 #6 TOP 5 Far Ahead OF THE US & UK 22Source: 1 BBC, 2 OECD, 3 Accenture, 4 PISA, 5 Poets & Quants, 6 Times
  • 23. CANADA’S EDUCATION SYSTEM HAS CONTRIBUTED TO SOME OF THE WORLDS TOP TECH INNOVATORS 23 Top AI Researchers who teach in Canadian Universities • Emeritus Professor at the University of Toronto • Engineering Fellow at Google, manages Brain Team Toronto • Full Professor at the University of Montreal • Co-founder of Element AI • Professor at the University of Alberta • Leader of Google’s Deepmind Alberta Geoff Hinton Yoshua Bengio Richard Sutton • Founded: Paypal, Tesla, Space X, Solar City, The Boring Company • Studied at Queen’s University from 1992 to 1995 • Founded Slack in Canada• Co-founded Etherum and Bitcoin magazine • Dropped out of the University of Waterloo in 2014 when he received the $100,000 Thiel Fellowship Prominent Tech Innovators educated in Canada Elon Musk Stewart ButterfieldVitalik Buterin Ted Graduated from Waterloo Moved to San Francisco to get a higher net salary Ted moves back to Canada and brings his tech experience to a Canadian Startup Ted found the cost of living too high and the quality of life too low Exodus of West Coast Talent Back to Canada • Creator of Java James Gosling
  • 24. DEEP DIVE ON CANADIAN VCS
  • 25. 25 Atlantic Ontario Quebec Prairie British Columbia Note: Rankings are per fund, not total AUM per firm LEGEND Fund Size (CAD$m) 300+ 200-300 100-200 < 100 LARGEST CANADIAN VC FUNDS, BASED ON MOST RECENT FUND SIZE Source: CVCA Infobase
  • 26. Firm Investment Sectors Top Canadian Portfolio Companies Top Exits AI, Analytics, Security Retail, Fintech, Biotech, Transportation Agnostic Fintech, IoT, AI, Ecommerce Mobile, Internet software IT, Commerce, Communication Enterprise applications 26 Source:Crunchbase SNAPSHOT OF CANADIAN VC FUNDS
  • 27. Firm Investment Sectors Top Canadian Portfolio Companies Top Exits Agnostic Agnostic ICT, CleanTech, Healthcare Agnostic Agnostic Agnostic SNAPSHOT OF VC FIRMS AT THE SEED STAGE 27 Source:Crunchbase
  • 28. ANGEL INVESTOR LANDSCAPE 28 Investments and membership by region in 2016 Top 5 Angel Groups by: 1 2 3 4 5 Dollar Amount # of deals Average Deal Size Syndication Partners Source:NACO
  • 29. Firm Investment Sectors Top Canadian Portfolio Companies Unique Angle Fintech Incubator model Fintech Backed by Power Corp. IoT Industrial IoT focussed Deep Tech Deep tech focused THE EMERGENCE OF SPECIALIZED VCS The evolving Canadian VC ecosystems has grown to include venture capital firms which have adopted unique angle. Certain VCs have concentrated their efforts on a specific investment sector such as those listed below. Others have adopted unique business models such as Brightspark Ventures – a venture capital firm which takes a unique approach to fundraising. Albeit these firms are neither the largest nor the most active, they fill unique voids in the Canadian ecosystem. 29 Source:Crunchbase
  • 30. 30 MOST ACTIVE FOREIGN VCS VCs with Foreign Head Quarters which participated in the most VC deals in Canada over the last 10 years Investor State # Deals 500 Startups* CA FundersClub CA SoftTech VC CA Social Capital CA Accel Partners CA Foundation Capital CA Investor State # Deals Accomplice MA Braemar Energy Ventures NY Union Square Ventures NY Rho Ventures NY EnerTech Capital PA Bessemer Venture Partners NY Highland Capital Partners MA OrbiMed Advisors NY RRE Ventures NY SOSV NJ BOLDstart Ventures NY Investor Country # Deals White Star Capital Investor Country # Deals Emerald Technology Ventures Acton Capital Partners Point Nine Capital TVM Capital Life Science Investor S.A.R. # Deals Horizons Ventures LEGEND Number of Deals 15+ 10-14 7-9 *On July 31st, 2017 500 Startups Canada announced they would be terminating their fund) Source:CBInsights
  • 31. 31 MOST ACTIVE FINANCIAL INCUMBENTS/INSTITUTIONS, PUBLIC AND PRIVATE, AS PER DIRECT VC INVESTMENTS OVER THE LAST 2 YEARS Investor Investor Type Diversified Financial Services Asset/Investment Management Bank Diversified Financial Services Advisory Asset/Investment Management Diversified Financial Services Diversified Financial Services Holding Company Investor Investor Type Bank Asset/Investment Management Diversified Financial Services Diversified Financial Services Asset/Investment Management Private Public Public-Private Partnerships Investor Investor Type Public-Private Pension Fund Public-Private Pension Fund Source:CBInsights
  • 32. 32 MOST ACTIVE CVCS IN CANADA IN THE LAST 18 MONTHS CVC Sectors Direct Investment Investment in VC fund Select Canadian Investments Machine Learning; Makes business work better X ICT; Healthcare; Energy, Lighting and IoT; Manufacturing X X ICT X Voice technology innovation; Hardware for Alexa X ICT X Technologies in the advertising, consumer, enterprise and infrastructure spaces X ICT X Improvements to Agricultures from biotechnology to software X Energy, Digital, Robotics, Advanced Materials X Products that build on top of slack; Tech for the workplace X X 1 2 3 4 5 6 7 8 9 10 Source:CBInsights
  • 33. Funds of Funds Size (CAD$M) VCAP Direct Investments 375* Yes 306 Yes 300 Yes 90 No 33 MOST ACTIVE CANADIAN PRIVATE FUNDS OF FUNDS INVESTING IN VCS 375 Yes *Teralys also has a previous fund, the Teralys Capital Fund of Funds L.P. which raised $600m While HarbourVest is not Canadian, they have created the HarbourVest Canada Growth Fund which received financing under VCAP Source:CVCA Infobase
  • 34. CURRENT STATE OF VC FUNDING PER CITY 47.5% 48.3% 55.0% 45.3% 44.2% 16.8% 26.1% 25.8% 15.1% 11.2% 5.0% 3.4% 3.3% 11.3% 4.2% 1.5% 1.0% 0.9% 0.0% 1.4% 0.5% 0.0% 0.4% 0.0% 0.4% 18.5% 16.7% 11.3% 22.6% 21.8% 10.3% 4.4% 3.3% 5.7% 16.8% Series A Series B Series C Acquired Series D+ Seed Public Canada Montreal Toronto - KW Ottawa Vancouver Current stage of VC-funding of tech startups founded since 2007 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2013 2014 2015 2016 H1-2017 Deal Volume per city (%) Vancouver Tech sector is the second largest employer (111,700) Kitchener-Waterloo Tech sector is the third largest employer (23,200) Toronto Tech sector is the third largest employer (286,100) Ottawa Tech sector is the second largest employer (111,700) Montreal • Tech sector is third largest employer (222,200) 34Source: CVCASource: Tracxn Compared to national average, Toronto and Montreal have more promising future given high % of seed and Series A stage firms while Vancouver has outpaced historically in terms of exits Montreal Toronto Kitchener - Waterloo Ottawa Vancouver Other
  • 35. 35Sources 1) Juniper Research 2) Statista 3) KPMG/CBInsight 4) Tractica 5) IBM IoT and M2M There will be 40b(1) sensors by 2020 and with the ability to speak and act on their own Disruptive Commerce Digital commerce will rise to $1.18t by 2020(2) driven by emerging markets and mobile Digitalization of Finance $7.5b invested into FinTech companies(3) in H1’16 with London and New York as two key global hubs Data 2.3 trillion gigabytes(5) are now created each day. Negligible cost of storage allows business to truly use data as a competitive advantage. AI AI-powered applications in the enterprise is expected to reach $11b by 2024(4). Machine learning is unlocking innovation across all industries and will continue to accelerate. Evolution into “AI as an API.” TRENDS WE ARE FOCUSED ON AND PORTFOLIO INTRODUCTION TO WHITE STAR CAPITAL White Star Capital We invest in ambitious entrepreneurs on both sides of the Atlantic. Between us, we have founded, scaled and sold many successful technology businesses. We leverage our collective experience, expertise and global network to help our startups succeed. Physical hubs Additional hubs Montreal New York London Paris Toronto Stockholm Berlin Christian Hernandez Gallardo General Partner - London Jean-François Marcoux General Partner - Montreal Eric Martineau-Fortin General Partner - New York www.whitestarvc.com