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Canadian Venture Capital
Landscape 2019
From the eyes of an
International Investor
Jean-Francois
Marcoux
Managing Partner
WHITE STAR CAPITAL
Christophe Bourque
General Partner
WHITE STAR CAPITAL
Julie Plouffe
CFO
WHITE STAR CAPITAL
White Star Capital 2
White Star Capital has been an active investor in the Canadian venture
capital market since 2007, leading financing rounds resulting in
success stories including Ludia (exited), Mnubo (exited), Drop Loyalty,
Dialogue, Vention, and Borrowell. We continue to be amazed by the
talent and the execution capabilities of Canadian entrepreneurs. We
are proud to continue investing in Canadian startups and to be an
important and differentiated partner for entrepreneurs to help them
scale internationally.
The next decade is exciting with companies scaling up and maturing in
sectors such as AI/IoT, Digital Health, Industrial automation, Robotics
and Fintech. We look forward to continue to be an active contributor in
this fast-growing ecosystem."
2019 is looking like it will be another record year for Canadian VC on all
fronts. If this momentum keeps up, it is exciting to think about what the
future will look like.
Canadian cities such as Montreal and Toronto will go from simply being
on the map to becoming world leading tech hubs. Given the high level of
seed stage investment over the last 2 years, I would say we are still 5 to
7 years away from that happening.
In the meantime, Canada is already a leader in terms of the diversity of
our tech ecosystem. Let’s keep it up! I look forward to continuing to be
an active and supportive contributor."
I am always amazed to see how the Canadian venture capital market has
evolved over the last decade. As you can read in this report, all elements
are now combined for Canada to be positioned as a top tier technology
hub, with access to great talent, a strong level of investing activities, as
well as government programs and larger financing rounds to support the
growth aspiration of our companies. All that with a key differentiator of
having a highly collaborative ecosystem amongst all players.
As an international investor, we take great pride of enabling our Canadian
entrepreneurs to succeed locally, but also to shine globally. Well done
Canada, the future is very promising!"
"I'm proud to see the 3rd edition of
this report come to light, personally
it has been incredible to see how
interest from around the world has
grown for Canada's VC ecosystem
since our first report and it continues
to be a pleasure to cover the topics
that get us excited about Canada."
"With an important influx of
foreign talent as well as startups
raising faster and bigger rounds,
Canada is increasingly mature
and on track to become one of the
leading VC regions in the world."
Sanjay Zimmermann
Senior Associate
Alexandre Witkowicz
Analyst
White Star Capital 3
2019 News Highlights
Another big year for Canadian Tech
Canada requires US$9.6k in comparison
to the UK requiring US$61.6k
Canada becomes the
country with the least funds
required for startup visa
C$50m was allocated to 7 alternative
VCs and C$50m to 3 CleanTech VCs
Government allocates
additional C$100m to VCCI,
for a total of C$450m
The transactions largely concern the
Toronto-Waterloo region with Wave
and Aeryon Labs’ acquisitions
Canada’s top 4 tech
acquisitions record a total
value of C$1bn
iNovia Capital has raised a total of
C$765m and Radical Ventures has raised an
initial fund of C$462m
Two important funds were
launched for a total of C$1.3bn
Google’s GV, Siemens’ Next47 and
Microsoft’s M12 invested in companies
such as CryptoKitties and Avidbots
Well-known CVCs made
several investments in
Canadian companies
The company, the city and the Canadian
government partner for a futuristic city
project to redevelop the waterfront’s
eastern end with “smart” features such
as snow-melting roadways and a slew of
data-collecting sensors
Beating out HootSuite’s C$218m
Series B in 2013
With a C$333m Series D, Clio
records the biggest tech
round of these last 10 years
Google unveils ‘Smart City’
plans for Toronto
15% of partners in Canada are women
(13% in the US)
The number of women
partners at Canadian venture
firms has risen since last year
Information systems analysts, software
engineers, and computer programmers
are the top 3
The top 3 jobs for
international applicants in
Canada are in ICT sectors
VC invested in H1 2019 was equal
to 60% of full year 2018
The pace of VC investments
in Canada continues to
increase
Canada Venture Capital: What’s new in 2019
White Star Capital 4
Montreal in the spotlight
2019 was an exciting year for the city’s tech scene
*White Star Capital’s portfolio companies
Bain Capital Ventures
made its first investment in
Quebec in almost 20 years
Funding
The giant US-based VC firm (AUM =
$5.1b) invested in Vention’s* Series A.
Lightspeed’s IPO in March
IPO
The company founded in 2005 by
Dax Dasilva soared in its trading
debut after raising C$240m in the
biggest IPO since Shopify in 2015.
The IPO valued the company at
about C$1.7bn and is today valued
at C$3.8bn.
Element AI raised a
C$200m Series B
Funding
A new milestone has been reached
in Canadian AI this year with Element
AI’s round representing 33.5% of all
AI investments in the country so far.
mnubo* was acquired for
C$115m
Acquisition
US-based Aspen Technology
acquired the big data analytics
startup founded in 2012.
A very dynamic startup
ecosystem
Key numbers
Bonjour Startup Montréal’s
ecosystem report reveals that the
city counts 1,300 startups, 2,800
startup founders, 1,300 tech events
per year as well as 30 incubators
and accelerators.
Canada Venture Capital: What’s new in 2019
White Star Capital
Section 1 Overview: Why We Continue to be 7–13
Excited About Canada
Section 2 Canadian Ecosystem: Stronger 15–23
than Ever
Section 3 VC Funding across Canadian 25–26
Regions
Section 4 Diversity, Immigration, Education 28–30
and Government Support
Section 5 Deep Dive on Canadian VCs 32–36
5
Contents
White Star Capital
1Overview: Why we
continue to be excited
about Canada
6
White Star Capital 7
Source: CBInsights
¹YTD refers to November 15th 2019
Note: All figures are in US$ unless specified otherwise
VC funding increases
More capital continues to be invested in larger rounds
While Canada has kept growing since 2013 and experienced a record VC funding in 2017,
2018 was not a year for growth. However, 2019 surpasses the peak years of 2017 and
2018, with YTD VC funding being at $4.7bn.
We continue to notice an increase in capital in larger rounds. In fact, the British-Columbia
startup Clio raised the most important financing round of these last 10 years (C$333m).
Additional details throughout the report will allow to see this decrease in deal volume but
this increase in deal amount especially in specific sectors such as Artificial Intelligence
and Fintech.
$1.9B
$2.1B
$2.3B
$3.2B
$3.8B $3.8B
$4.7B
2013 2014 2015 2016 2017 2018 2019YTD¹
VC funding continues to grow
Total funding allocated
to top 10 deals
34% 35%
23%
31%
40%
30% 30%
2013 2014 2015 2016 2017 2018 2019
YTD
$ 0m
$ 2m
$ 4m
$ 6m
$ 8m
$ 10m
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
20182019YTD
Average Deal ($m) Median Deal Value ($m)
Canada Venture Capital: Overview
¹
¹
White Star Capital 8
Source: CBInsights
¹YTD refers to November 15th 2019
Seed funding still
leading the way
While Series A and later stage investments increase their share of
total deals in Canada, % of VC-backed exits remains unchanged
Given the relatively small size average investment size and high failure rate of seed deals
vs. A+, seed deals should represent a high % of total deals in any healthy VC ecosystem.
As the Canadian market has continued to mature over the last 10 years, we’ve seen this
phenomenon occur in recent years.
However, over that same period, the proportion of VC-backed exits in Canada has remained
relatively unchanged. Although the foundation has been laid by an increasingly healthy
seed stage investment environment, this has not yet translated in greater outcomes in
disproportion to the overall market.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019YTD
Seed Series A Series B Series C Series D+
Number of Seed deals continue to grow
Canada Venture Capital: Overview
White Star Capital 9
Source: CBInsights
All values are in US$
Sizing up Canada
in a global context
Total Deal Volumes are increasing in major VC regions
with more important growth rates in Europe than in
North America
Region
Total Deal Amount
(H1 19)
Total Deal Volume
(H1 19)
CAGR Deal Volume
(H1 17 – H1 19)
USA $50.9bn 2,807 25.3%
United Kingdom $5.3bn 437 55.2%
France $2.4bn 214 54.9%
Germany $2.2bn 237 64.6%
Israel $1.7bn 122 39.9%
Canada $1.5bn 202 38.3%
Canada Venture Capital: Overview
White Star Capital 10
Source: CBInsights
China Germany Japan France UK Canada US
Seed/Angel
share of deals
35% 47% 47% 53% 52% 52% 38%
+6% (6)% +4% (10)% (11)% (10)% (10)%
Series A
share of deals
34% 30% 30% 30% 27% 23% 26%
(2)% +3% (3)% +5% +8% +7% +1%
Series B
share of deals
18% 16% 14% 13% 12% 15% 17%
(4)% +4% (3)% +5% +2% +1% +4%
Series C
share of deals
9% 4% 7% 3% 5% 7% 9%
(1)% (2)% +2% (1)% +1% (1)% +1%
Series D
share of deals
2% 3% 3% 1% 2% 1% 5%
(1)% +1% (1)% +1% +1% +2% +2%
Series E
share of deals
1% 1% 1% 1% 2% 2% 4%
+1% (1)% +1% (1)% +1% +1% +1%
Deal share by stage;
past 3 years
Canadian ecosystem starting to show signs of maturity
Although much smaller, Canada’s ecosystem is starting to look like certain mature markets
such as the UK. Overall, Canada is now inline with most of its peers at the Seed and Series
A stages and has a strong Series B+ ecosystem rising with the proportion of Series B deals
being higher than in Japan, France and the UK. With continued investment in the early stage
and growth in the total amount of VC invested, we expect Canada to catchup with its peers
over the coming years.
Canada Venture Capital: Overview
11
Source: Tracxn
¹YTD refers to November 15th 2019
White Star Capital
Volume of C$20m+
rounds increasing:
The number of C$20M - C$100M rounds experienced
a significant increase since 2018
• The number of C$20 - C$100m rounds was flat between 2015 and 2017. However, the
number of these rounds doubled last year. This momentum continued into 2019.
• An increasing amount of Canadian investors are now positioned to lead C$20m+ rounds
with the BDC and CDPQ being quite active. Similarly, an increasing number of international
investors such as JP Morgan and Barclays have participated in these rounds.
*White Star Capital’s portfolio companies
Source: Tracxn
Companies that raised C$20-C$100M rounds in 2019
6
13
17 16
18
35
44
2013 2014 2015 2016 2017 2018 2019YTD¹
x2
Number of C$20-C$100M rounds since 2013
*
**
Canada Venture Capital: Overview
Artificial Intelligence
Investment Activity
2019 Fundraise
2019 Fundraise
2019 Fundraise
2019 Fundraise
Investment Activity
IoT
E-Commerce
Investment Activity
Investment Activity
FinTech
12
Source: CBInsights & Tracxn
¹YTD refers to November 15th 2019
Deal Amount (US$m)No. of Deals
White Star Capital
H1 2019201820172016
276 315 408 451
46 353527
Canadian subsectors
The evolution of Canada’s strongest subsectors since 2016
H1 2019201820172016
59 52 156 121
46 322731
H1 2019201820172016
248 171 326 71
32 111626
H1 2019201820172016
328 704 687316
57 334647
Canada Venture Capital: Overview
*
*White Star Capital’s portfolio companies
13
Source: CBInsights & Tracxn
¹YTD refers to November 15th 2019
White Star Capital
World Class Tech
and VC events
Notable international event will continue to be hosted in Canada
September 22nd–23rd September 23rd–26th October 11th
October 16th–17th November 8th–9th November 26th–27th
2019
Vancouver Toronto Ottawa
Toronto Halifax Ottawa
April 29th June 3rd June 15th–16th
June 22nd–25th June 22nd–23rd July 17th–21st
2020
Toronto Toronto Toronto
Calgary Waterloo Montreal
Canada Venture Capital: Overview
White Star Capital
2Canadian ecosystem:
stronger than ever
14
15
Source: CVCA & Tracxn. Note: All values are in C$ on this slide
1
YTD refers to October 11th 2019
White Star Capital
Continued trend of
larger exits in 2019
ICT sector continues to dominate VC-backed acquisitions
2018
$2.6bn
Mitel
Founded in 1973
Telecom services
Ottawa
$521m
Hyper wallet
Founded in 2000
Fintech
Vancouver
$264m
Acceo
Founded in 1988
Internet Software & Services
Montreal
$263m
Thinking Capital
Founded in 2006
Internet Software & Services
Montreal
2019YTD1
$537m
Wave
Founded in 2009
SaaS Accounting
Toronto
$265m
Aeryon Labs
Founded in 2007
Autonomous aerial systems
Waterloo
$115m
Mnubo*
Founded in 2012
AI and analytics infrastructure
Montreal
$80m
Fanxchange
Founded in 2009
Online ticket marketplace
Toronto
Canada Venture Capital: Ecosystem
*White Star Capital’s portfolio company
16
Source: CBInsights
Note: Excludes funds raised during an IPO
White Star Capital
Top funded Canadian
companies
Companies which received funding over the last 10 years
468 465
453
389 388
373 369
343
308
295 295
280 272 265 257 256
New additions in 2019
Total funding C$m
Canada Venture Capital: Ecosystem
17
Source: 1 CVCA Infobase, 2 CBInsights, 3 Newswire. Note: All values are in US$ on this slide
Note: There were no Canadian IPOs in 2016 and 2018
White Star Capital
2019 has been a great
year for IPOs in Canada
2019 bounces back after no tech IPOs in 2018
This year has been a great year for IPOs in Canada. Lightspeed POS’ IPO made history
by making it the third company to join the Canadian unicorn companies club after Kik
Interactive (valued at $1bn in August 2015) and Shopify (valued at $1.3bn in May 2015).
At IPO in March, Lightspeed POS was valued at $1.3bn, becoming the first unicorn in the
Quebec province. Then, Coveo became the second Quebec-based unicorn on November
6th after its $172m Series F valuing the company at $1.1bn.
2014 2015 2017 2019
Canadian VC-Backed IPOs from 2014 to 2019
$42m1
Other Sectors
$101m1
$46m2
$97m2
$131m2
$157m1
$87m1
$83m2
$57m3
Canada Venture Capital: Ecosystem
ICT Sector
$179m2
18
Source: CBInsights. Note: 1
YTD refers to November 15th 2019
White Star Capital
Top Canadian VC
rounds in 2019YTD1
Companies which raised the biggest rounds this year
British-Colombia based333
200
227
159
81
67 63 60 58 55 53 47 43 41 40
Quebec based
Ontario based
D B E C B E C B B C C B B BSeries F
Round size C$m
*
*White Star Capital’s portfolio company
Canada Venture Capital: Ecosystem
*
White Star Capital 19
Source: Tracxn. Note: All values are in C$ on this slide
1
YTD refers to November 15th 2019
*New company since 2018 report
Largest funding rounds
over the last 4 years
2019 witnesses the biggest financing round of the
Canadian tech in the last 10 years
2016 2017 2018 2019YTD1
$140m Series B
2012
Wearable Technology
Kitchener
$260m Series E
1999
Quantum computing
and superconducting
electronics
Burnaby
$186m Series D
1995
Integrated EHR
platform for long term
providers
Toronto
$333m Series D
2008
Cloud-based legal
management solutions
Burnaby
$103m Series C
2005
Precision agriculture
and data management
Winnipeg
$216m Series D
2005
Mobile Software &
Services
Montreal
$130m Series E
2005
Internet Software &
Services
Quebec City
$227m Series F
2005
Internet Software &
Services
Quebec City
$134m Series A
2016
Launches and
Incubates advanced AI
solutions
Montreal
$130m Series C
2012
Brand of smart eyewear
Kitchener
$200m Series B
2016
Provides custom AI
service solutions
Montreal
$111m Series C
1995
Integrated EHR
platform for long term
providers
Toronto
$127m Series C
2007
Consumer Electronics
Toronto
$159m Series E
2010
POS for restaurants
Toronto
*
Canada Venture Capital: Ecosystem
In 2018, 4x the number of C$100m+ rounds compared to 2016
Canadian participants in mega rounds between 2018 and 2019
20
Note: None of the international funds displayed above participated into more than one mega round
White Star Capital
2
5
6
4
2016 2017 2018 2019YTD¹
Following the global
trend on mega rounds
Evolution of the market; still few mega rounds
but a rising interest from international investors
Source: Tracxn
1
YTD refers to November 15th 2019
International participants in mega rounds between 2018 and 2019
• Amongst Canadian funds, institutional investors and federal development banks such as CDPQ
and BDC have been quite active (i.e. BDC invested in Element AI’s and TouchBistro’s latest round)
• Amongst International funds, banks and CVCs such as Barclays, JP Morgan and Hanwha
have been quite active in these rounds as well (i.e. Barclays and JP Morgan both invested in
TouchBistro while Hanwha invested in Element AI) 
Funds particapting in 2019 rounds.
All other funds invested in 2018
Funds particapting in 2019 rounds. All other
funds invested in 2018
Canada Venture Capital: Ecosystem
White Star Capital 21
Source: CBInsights, Crunchbase, Impact Centre and Monster. Note 1: Financial Velocity = capital raised / years in existence.
Note 2: Does not take Telus Ventures’ strategic investment (January 2019) into account, amount undisclosed
The top 20 tech
narwhals in 2019
Ontario dominates Canada with 11 narwhals
(Quebec=5, British Columbia=4)
Rank Company Founded
Total Funding
($US Millions)
Financial
Velocity1 City Province
1 Element AI 2016 257.1 85.7 Montreal Quebec
2 Wealthsimple 2014 189.0 37.8 Toronto Ontario
3 Clearbanc 2015 120.0 30.0 Toronto Ontario
4 North 2012 192.7 27.5 Kitchener Ontario
5 Hootsuite 2008 279.9 25.4 Vancouver British Columbia
6 Clio 2008 277.0 25.2 Burnaby British Columbia
7 TouchBistro 2010 209.2 23.3 Toronto Ontario
8 Ritual 2014 113.5 22.7 Toronto Ontario
9 Kik 2009 220.5 22.1 Waterloo Ontario
10 Blockstream 2014 101.0 20.2 Victoria British Columbia
11 Integrate.ai 2017 38.22
19.1 Toronto Ontario
12 CryptoKitties 2017 38.2 19.1 Vancouver British Columbia
13 Dialogue* 2016 56.0 18.7 Montreal Quebec
14 Drop* 2015 71.3 17.8 Toronto Ontario
15 Hopper 2007 199.2 16.6 Montreal Quebec
16 Breather 2012 113.7 16.2 Montreal Quebec
17 Ecobee 2007 192.3 16.0 Toronto Ontario
18 League Inc. 2014 76.2 15.2 Toronto Ontario
19 Applyboard 2015 53.6 13.4 Kitchener Ontario
20 Kira Systems 2015 50.0 12.5 Toronto Ontario
The term “narwhal” was first coined in 2014 by Brent Holliday, CEO of Vancouver-based Garibaldi
Capital Advisors, to describe Canadian tech companies worth $1 billion (Canadian) or more.
Given that Canada produces a few number of Unicorns (Kik and Shopify in 2015, and Lightspeed
POS and Coveo this year), the term “narwhal” is now used to define Canadian companies on track
to become Unicorns in the near future.
Compared to 2018, the number of firms on track to become Unicorns almost doubled.
Also, the average financial velocity1
increased from 9.4 to 12.8.
*White Star Capital’s portfolio companies
Canada Venture Capital: Ecosystem
White Star Capital 22
Source: Hockeystick, VentureLabs, Fundica, Springboard, DailyHive, Bonjour Startup MTL, MaRS, Betakit and Founder Institute
Canadian incubators
and accelerators
There are now more than 250 incubators and accelerators in Canada
Ontario Quebec British Colombia Prairie Region Atlantic Region
L-SPARK McGill X-1 Founder Institute Manitoba Prince Edward Island
Venture LAB La Piscine Highline Beta Futurpreneur Canada Startup Zone
Futurpreneur Canada Ecofuel Alacrity
Manitoba Technology
Accelerator
propel
Highline Beta Institut d’Entrepreneuriat Expa North Forge LaunchPadPEI
NEXT 36 Startup En Résidence Accelerate Tectoria Innovate Manitoba Newfoundland
Next Canada FounderFuel METABRIDGE Saskatchewan Propel
MaRS Centech entrepreneurship@UVIC Co.Labs Genesis
Extreme Accelerator 373 Group ACCELERATE OKANAGAN Innovation Enterprise Futurpreneur Canada
INcubes Innocité MTL Spring Cultivator New Brunswick
Founder Institute Techstars AI Creative Destruction Lab Alberta B4C
Techstars Le Camp NEXT 36 Creative Destruction Lab Planet Hatch
DMZ MT Lab EMPOWERED STARTUPS NABI Venn
gBETA Inno Centre Radius Calgary Technologies Inc. Futurpreneur Canada
Accelerator Centre Cadence Accel-RX Innovation District Propel
JLABS Next AI New Ventures BC Innovate Calgary Nova Scotia
Invest Ottawa Diagram BCTIA centre4growth Creative Destruction Lab
Innovation Factory Tandem Launch HATCH VOLTA
Idea Boost CEM Wavefront Accelerator Futurpreneur Canada
Communitech Futurpreneur Canada Foresight Propel
LaunchYU District 3 League of Innovators Innovacorp
TFI Impact8 Futurpreneur Canada
The Entrepreneuship
Hatchery
Creative
Destruction Lab
Startup Boost Fintech Accelerator
Velocity Accelerator Founder Institute
Founder Institute
Techstars
111
Ryerson Futures
Canada Venture Capital: Ecosystem
White Star Capital 23
Source: CBRE
Tech job growth
The number of jobs created in the ICT sector is constantly on the rise
CITY
Number of tech
jobs created
between 2012
and 2017
Position in terms
of the number of
tech jobs created
between 2012
and 2017
Position in
North America’s
ranking for
top tech talent
market in 2019
Position in
North America’s
ranking for
top tech talent
market in 2018
Growth of the
number of tech
jobs (in %)
between 2012
and 2017
Toronto 82,100 1st 3rd 4th 51.5%
Montreal 22,300 6th 13th 14th 21.2%
Vancouver 16,100 11th 12th 25th 30.7%
Ottawa 9,700 22nd 19th 13th 15.9%
Canada has 832,900 tech workers, counting for 5.3% of the nation’s total workforce
On top of being part of LinkedIn’s top 25 hottest Canadian startups to work for right now, our
portfolio companies Drop* (6), Dialogue* (8) and Borrowell* (22) are constantly featured in
the top 10 Canadian startups hiring the most employees.
Number of tech jobs created between 2012 and 2017
28,900 in 2017 alone
+13.6% since 2016
82,100 2018 was the second consecutive year
that the Bay Area had less tech job
growth than Toronto
78,000
Toronto San Fransisco
*White Star Capital’s portfolio companies
Canada Venture Capital: Ecosystem
White Star Capital
3VC funding across
Canadian regions
24
White Star Capital Canada Venture Capital: VC funding 25
Source: Refinitiv & CBInsights
All values are in C$
VC activity by province
Number of deals Deal amount (C$m)
16-18
CAGR
2016 2017 2018 2019H1 2016 2017 2018 2019H1
Ontario 243 194 197 110 1,864 1,538 2,250 1,320 9.9%
Quebec 191 179 185 89 1,057 1,428 1,519 632 19.9%
British Columbia 79 68 97 45 500 945 711 620 19.2%
Alberta 14 18 20 15 22 199 59 70 65.8%
Saskatchewan 8 12 11 8 26 18 49 46 37.6%
Nova Scotia 14 10 13 7 55 62 29 44 -27.0%
Newfoundland 3 4 3 6 5 6 4 9 -12.3%
New Brusnwick 31 27 20 4 31 14 61 3 39.7%
Manitoba 7 2 1 2 137 43 7 25 -77.4%
Prince Edward
Island
1 1 1 1 3 1 0.5 16 -59.2%
British Columbia is the province with the highest average funding per investment ($13.8m)
compared to Ontario ($12.0m) and Quebec ($7.1m). This average more than doubled since
2016 with a $7.5m increase (Ontario = $4.3m and Quebec = $1.6m). New Brunswick is the
province with the lowest average funding per investment: $625k.
In terms of deal amount, Ontario and Quebec are continuously increasing while British
Columbia starts to increase again after a slow down in 2018. Alberta, Nova Scotia and
New Brunswick are fluctuating while Manitoba is decreasing. Finally, the momentum of
Saskatchewan’s record in 2018 continues in 2019.
Greatest activity is in Ontario & Quebec
White Star Capital 26
Source: CVCA & CBInsights
All values are in C$
VC activity by region
Number of deals Deal amount (C$m)
16-18
CAGR
2016 2017 2018 2019H1 2016 2017 2018 2019H1
Toronto 144 139 153 76 845 1,019 1,320 741 25.0%
Montreal 53 72 86 67 422 555 778 473 35.8%
Vancouver 56 65 91 27 459 436 608 158 15.1%
Halifax 24 22 16 12 29 50 14 42 -30.6%
Calgary 7 5 16 10 24 94 157 25 158.2%
Ottawa 20 23 18 8 196 84 198 56 0.5%
Kitchener, Waterloo,
Cambridge
35 27 30 7 351 225 130 157 -39.1%
Saskatoon 1 5 2 5 1 9 3 76 65.8%
The Waterloo-Kitchener-Cambridge area is the « city » with the highest average funding per
investment ($22.5m) compared to Toronto ($9.8m), Montreal ($7.1m) and British Columbia
($5.9m). This average more than doubled since 2016 with a $12.5m increase (Toronto=
$3.9m). In the contrary, it decreased by $0.9m for Montreal and by $2.3m for Vancouver.
Calgary is the city with the lowest average funding per investment: $2.5m.
In terms of deal amount, Toronto and Montreal are continuously increasing. However, on
another side, Vancouver and Calgary which experienced growth between 2016 and 2018
are both slowing down in 2019. Halifax, Ottawa, Saskatoon and the Kitchener-Waterloo-
Cambridge region keep fluctuating.
Greatest activity is in Toronto & Montreal
Canada Venture Capital: VC funding
White Star Capital
4Diversity, immigration,
and government support
27
Canada Venture Capital: Diversity 28White Star Capital
Women in the
startup ecosystem
of all VC dollars in
Canada was received by
women-founded firms
between 2017 and 2019
is the approximate proportion
of women working in Venture
Capital in Canada. 15% of the
Canadian partners are women
(13% in the US)
Source: CFA Institute, Newswire, StartupCan, TheBalanceSMB, Business Insider, Betakit, “Women in Venture” report from Highline Beta and
Female Funders, and Female Funders’ website
A few statistics regarding the presence of women in the ecosystem in Canada
4%
9%
Startup
Venture Capital
• Women entrepreneurs contribute $148 billion annually to the
Canadian economy and employ 1.5 million people
• Canadian women rank 1st globally in terms of involvement
with newer businesses, and 6th for established businesses
• The government will make available C$1.4 billion, starting
in 2018–19, in new financing for women entrepreneurs. This
commitment is in addition to an increase of C$130 million for
BDC’s Women in Technology Fund
• 30% of the women working in VC are principals (29% in
the US), 22% are associates (34% in the US) and 52% are
analysts (31% in the US)
• 67% of all the dollars committed to Canadian funds are
controlled by investment teams with no female in senior
positions and 84% of the dollars committed to Canadian
funds are controlled by funds with no women GPs
These results are clearly too low. However, efforts across the industry are starting to yield improvement. A
number of VC firms such as Highline BETA, iNovia, White Star Capital, Real Ventures, Information Venture
Partners, Relentless Pursuit Partners, Radical Ventures, Brightspark, Version One Ventures, Vanedge Capital,
Georgian Partners, Portag3, Yaletown, StandUP Ventures, Cycle Capital, EnerTech Capital, McRock Capital,
etc., were founded by or have senior team members in recent years. There has also been an emergence of
prominent Canadian start-ups which have women founders such as Borrowell, Dialogue, Mejuri, Element AI,
Clearbanc, Interaxon, Axonify, Allocadia, Trulioo, Maple, DOZR, Nudge Rewards, etc.
White Star Capital Canada Venture Capital: Immigration 29
Source: Government of Canada, Vox, InvestInOntario, CIC News and MaRS
Immigration in Canada
Canada’s unique and indisputable asset
About 82 percent of startups that saw
an increase in international interest had
applicants from the U.S., followed by India
and China, being the 5th, 3rd and 1st
countries respectively having the most
citizens being admitted as Canadian
permanent residents.
Top 5 jobs for international applicants
in Canada in 2017
1 Information systems analysts and consultants
2 Software engineers
3 Computer programmers and interactive media
developers
4 Financial auditors and accountants
5 Administrative assistants
There are 3 different categories of immigrants in Canada. Economic immigrants (skilled
workers and business people), family-related immigrants (closely related persons of
Canadian residents) and Refugees, Humanitarian and Compassionate immigrants
(people who are escaping persecution, torture or cruel and unusual punishment).
Immigration to Canada
321,000
2018
286,500
2017
330,000* 341,000* 350,000*
2019 2020 2021
of permanent
resident
admissions
were in the
Economic
Category
in 2017
56%
increase in
citizenship
applications
from end 2017
to June 2018
130%
*These numbers are forecasts
Canada welcomed 321,000
new immigrants last year, a
record since 1913 (401,000)
1997 2017
Economic Immigrant Destinations
Ontario, British Colombia and Quebec
Rest of Canada
10%
90%
34%
66%
White Star Capital Canada Venture Capital: Government support 30
Source: Government of Canada
Continuation of
the VCCI program
Throughout the year, the VCCI program dedicated a total
of C$450m to three different purposes, called streams
and presented below:
The VCCI (Venture Capital Catalyst Initiative) is
an initiative by the federal government to boost
VC activity in Canada
Stream 1 Stream 2 Stream 3
• Allocation of C$350m to
5 Funds of Funds
• Announced on June 26th
2018
• Allocation of C$50m to 7
alternative models such
as: matching funds, deal-
based fundraising models
and micro-funds
• Announced on November
5th 2018
• Allocation of C$50m to
3 CleanTech VCs
• Announced on June 5th
2019
5 Funds of Funds 7 Alternative Models 3 CleanTech VCs
White Star Capital
5Deep dive on
Canadian VCs
31
Canada Venture Capital: VC deep dive 32
Snapshot of largest
VC funds
Source: CVCA Infobase
Note: Rankings are per fund, not total AUM per firm
British
Colombia
White Star Capital
Based on most recent fund size
British Colombia
Vanedge Capital
Chrysalix Venture Capital
Yaletown
Quark Venture
Version One Ventures
Ontario
Georgian Partners
OMERS Ventures
Radical Ventures
Portag3 Ventures
Relay Ventures
Whitecap Venture Partners
Information Venture Partners
Round 13 Capital
McRock Capital
Golden Ventures
Prairie
EnerTechCapital
AVRIO
PFM Capital Inc
District Ventures Capital
Quebec
iNovia Capital
White Star Capital
Real Ventures
BrightSpark
Luge Capital
Panache Ventures
Atlantic
Build Ventures
FINBIF Innovation
Legend Fund Size (C$m)
300+
200-300
100-200
<100
33
Angel Investor landscape
Source: NACO. Note: All values are in C$ on this slide
White Star Capital
Greatest Angel activity is in Quebec & Ontario
Investments and membership
by region in 2018
Western Canada
11% of total
number of
investments
9% of total
amount
invested
531 investors
$12.1m in 65 investments
Central Canada
86% of total
number of
investments
90% of total
amount
invested
1,350 investors
$128.6m in 502 investments
Eastern Canada
3% of total
number of
investments
1% of total
amount
invested
37 investors
$2.1m in 16 investments
2015 2016 2017 2018
$1.16m $1.731m $1.908m $2.512m
Syndication Partners
Average Deal Size
Other 1%
Angel Groups 5%
VC 1%
Government 15%
Combination of Syndicate Partners 25%
Individual Angel Investors 53%
Dollar Amount Number of deals
1. Norther Ontario Angels York Angel Investors
2. IGAN Partners Anges Québec
3. Anges Québec Norther Ontario Angels
4. Brightspark Keiretsu Forum
5. Anges Québec Capital Capital Angel Network
Syndication Partners
Canada Venture Capital: VC deep dive
34
Most active
foreign VCs
Source: CBInsights
*Made the list in 2019
British
Colombia
White Star Capital
VCs with Foreign Head Quarters which participated in
the most VC deals in Canada over the last 10 years
Investor State # of deals
500 startups CA 43
Funders Club CA 20
Plug and Play Ventures CA 20
Social Capital CA 13
Uncork Capital CA 12
Bessemer Venture Partners* CA 11
Investor State # of deals
SOSV NJ 51
Accomplice MA 19
OrbiMed Advisors NY 15
Braemar Energy Ventures NY 13
Union Square Ventures NY 12
Insight Partners* NY 12
BOLDstart Ventures NY 11
Rho Ventures NY 9
ff Venture Capital* NY 9
RRE Ventures* NY 8
Lerer Hippeau Ventures* NY 7
Edison Partners* NJ 7
Investor Country # of deals
White Star Capital United States
United Kingdom
Canada
France
Hong Kong
Japan
10
Investor Country # of deals
Acton Capital Partners Germany 10
Go Capital France 9
Point Nine Capital Germany 8
Emerald Technology Ventures Switzerland 7
Investor Country # of deals
Horizons Ventures Hong Kong 11
Canada Venture Capital: VC deep dive
35
Source: CBInsights
New companies since 2018 report
White Star Capital
Canadian institutional
investors
Most Active Canadian Financial Institutions; per direct VC investments
over the last 2 years
Private
Investor Investor type
Bank
Bank
Asset/Investment
Manager
Diversified Financial
Services
Holding Company
Diversified Financial
Services
Public
Investor Investor type
Diversified Financial
Services
Asset/Investment
Manager
Government
Diversified Financial
Services Bank
Bank
Public-Private Partnerships
Investor Investor type
Public-Private
Pension Fund
Public-Private
Pension Fund
Public-Private
Pension Fund
Canada Venture Capital: VC deep dive
White Star Capital 36
Source: CBInsights
New companies since 2018 report
Most active
corporate VCs
Most Active Corporate venture capital firms in Canada in the last 18 months
Corporate VC Sectors
Direct
Investment
Investment
in VC Fund
Select
Canadian
Investment
1 ICT
2 ICT
3
Cloud Computing;
CRM; Enterprise
Software
4
Automation; CRM;
Energy Efficiency;
Healthcare;
Enabling
Technologies
5
Voice technology
innovation;
Hardware for Alexa
6
Life Science; AI;
Robotics;
Transportation;
Cyber Security
7 ICT
8
Cloud and Edge
Computing
9 ICT
10
Electrification;
Automation;
Digitalization
11
Water Management;
Production
Enhancement;
Emerging Materials;
Power Systems; IT
Canada Venture Capital: VC deep dive
White Star Capital
White Star
Capital’s Ecosystem
37
38
Introduction to
White Star Capital
White Star Capital is a transatlantic fund investing in Series A and B.
Our footprint is global: we have 6 offices in the world in New York, Paris,
London, Montreal, Tokyo and Hong Kong.
We are partnering with exceptional entrepreneurs with global ambitions
and leverage our extensive experience and international networks
to help them scale their business internationally. Our investments in
Canada include mnubo, Drop, Borrowell, Vention and Dialogue.
We leverage
our experience
founding and
scaling businesses
to support the
internationalization
of our start-ups.
I18N
With a presence
in North America,
Europe and East
Asia, we invest
in early stage
companies with
global ambitions.
3 Continents
Our current funds
have close to $300m
under management
and a portfolio of
25+ core companies
which have raised
over $1bn+.
Track Record
An ideal balance
between
entrepreneurial
and operational
experience with
financial and M&A
experience.
Team
White Star Capital
Global Presence and Portfolio
Canada
Physical Hubs Core Hubs
United States France, Germany, ROE
United Kingdom & Nordics
East Asia
White Star Capital 39
Other White Star Capital
Country Deep Dives
We actively publish detailed reports on different VC Ecosystems
French Venture Capital
Landscape 2019
Japanese Venture Capital
Landscape 2018
UK Venture Capital
Landscape 2019
Eastern US Venture Capital
Landscape 2019
German Venture Capital
Landscape 2018
South Korean Venture
Capital Landscape 2018
Diving into Eastern US 2019 Venture
Capital landscape
White Star Capital Canadian Venture Capital Landscape 2019

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White Star Capital Canadian Venture Capital Landscape 2019

  • 1. Canadian Venture Capital Landscape 2019 From the eyes of an International Investor
  • 2. Jean-Francois Marcoux Managing Partner WHITE STAR CAPITAL Christophe Bourque General Partner WHITE STAR CAPITAL Julie Plouffe CFO WHITE STAR CAPITAL White Star Capital 2 White Star Capital has been an active investor in the Canadian venture capital market since 2007, leading financing rounds resulting in success stories including Ludia (exited), Mnubo (exited), Drop Loyalty, Dialogue, Vention, and Borrowell. We continue to be amazed by the talent and the execution capabilities of Canadian entrepreneurs. We are proud to continue investing in Canadian startups and to be an important and differentiated partner for entrepreneurs to help them scale internationally. The next decade is exciting with companies scaling up and maturing in sectors such as AI/IoT, Digital Health, Industrial automation, Robotics and Fintech. We look forward to continue to be an active contributor in this fast-growing ecosystem." 2019 is looking like it will be another record year for Canadian VC on all fronts. If this momentum keeps up, it is exciting to think about what the future will look like. Canadian cities such as Montreal and Toronto will go from simply being on the map to becoming world leading tech hubs. Given the high level of seed stage investment over the last 2 years, I would say we are still 5 to 7 years away from that happening. In the meantime, Canada is already a leader in terms of the diversity of our tech ecosystem. Let’s keep it up! I look forward to continuing to be an active and supportive contributor." I am always amazed to see how the Canadian venture capital market has evolved over the last decade. As you can read in this report, all elements are now combined for Canada to be positioned as a top tier technology hub, with access to great talent, a strong level of investing activities, as well as government programs and larger financing rounds to support the growth aspiration of our companies. All that with a key differentiator of having a highly collaborative ecosystem amongst all players. As an international investor, we take great pride of enabling our Canadian entrepreneurs to succeed locally, but also to shine globally. Well done Canada, the future is very promising!" "I'm proud to see the 3rd edition of this report come to light, personally it has been incredible to see how interest from around the world has grown for Canada's VC ecosystem since our first report and it continues to be a pleasure to cover the topics that get us excited about Canada." "With an important influx of foreign talent as well as startups raising faster and bigger rounds, Canada is increasingly mature and on track to become one of the leading VC regions in the world." Sanjay Zimmermann Senior Associate Alexandre Witkowicz Analyst
  • 3. White Star Capital 3 2019 News Highlights Another big year for Canadian Tech Canada requires US$9.6k in comparison to the UK requiring US$61.6k Canada becomes the country with the least funds required for startup visa C$50m was allocated to 7 alternative VCs and C$50m to 3 CleanTech VCs Government allocates additional C$100m to VCCI, for a total of C$450m The transactions largely concern the Toronto-Waterloo region with Wave and Aeryon Labs’ acquisitions Canada’s top 4 tech acquisitions record a total value of C$1bn iNovia Capital has raised a total of C$765m and Radical Ventures has raised an initial fund of C$462m Two important funds were launched for a total of C$1.3bn Google’s GV, Siemens’ Next47 and Microsoft’s M12 invested in companies such as CryptoKitties and Avidbots Well-known CVCs made several investments in Canadian companies The company, the city and the Canadian government partner for a futuristic city project to redevelop the waterfront’s eastern end with “smart” features such as snow-melting roadways and a slew of data-collecting sensors Beating out HootSuite’s C$218m Series B in 2013 With a C$333m Series D, Clio records the biggest tech round of these last 10 years Google unveils ‘Smart City’ plans for Toronto 15% of partners in Canada are women (13% in the US) The number of women partners at Canadian venture firms has risen since last year Information systems analysts, software engineers, and computer programmers are the top 3 The top 3 jobs for international applicants in Canada are in ICT sectors VC invested in H1 2019 was equal to 60% of full year 2018 The pace of VC investments in Canada continues to increase Canada Venture Capital: What’s new in 2019
  • 4. White Star Capital 4 Montreal in the spotlight 2019 was an exciting year for the city’s tech scene *White Star Capital’s portfolio companies Bain Capital Ventures made its first investment in Quebec in almost 20 years Funding The giant US-based VC firm (AUM = $5.1b) invested in Vention’s* Series A. Lightspeed’s IPO in March IPO The company founded in 2005 by Dax Dasilva soared in its trading debut after raising C$240m in the biggest IPO since Shopify in 2015. The IPO valued the company at about C$1.7bn and is today valued at C$3.8bn. Element AI raised a C$200m Series B Funding A new milestone has been reached in Canadian AI this year with Element AI’s round representing 33.5% of all AI investments in the country so far. mnubo* was acquired for C$115m Acquisition US-based Aspen Technology acquired the big data analytics startup founded in 2012. A very dynamic startup ecosystem Key numbers Bonjour Startup Montréal’s ecosystem report reveals that the city counts 1,300 startups, 2,800 startup founders, 1,300 tech events per year as well as 30 incubators and accelerators. Canada Venture Capital: What’s new in 2019
  • 5. White Star Capital Section 1 Overview: Why We Continue to be 7–13 Excited About Canada Section 2 Canadian Ecosystem: Stronger 15–23 than Ever Section 3 VC Funding across Canadian 25–26 Regions Section 4 Diversity, Immigration, Education 28–30 and Government Support Section 5 Deep Dive on Canadian VCs 32–36 5 Contents
  • 6. White Star Capital 1Overview: Why we continue to be excited about Canada 6
  • 7. White Star Capital 7 Source: CBInsights ¹YTD refers to November 15th 2019 Note: All figures are in US$ unless specified otherwise VC funding increases More capital continues to be invested in larger rounds While Canada has kept growing since 2013 and experienced a record VC funding in 2017, 2018 was not a year for growth. However, 2019 surpasses the peak years of 2017 and 2018, with YTD VC funding being at $4.7bn. We continue to notice an increase in capital in larger rounds. In fact, the British-Columbia startup Clio raised the most important financing round of these last 10 years (C$333m). Additional details throughout the report will allow to see this decrease in deal volume but this increase in deal amount especially in specific sectors such as Artificial Intelligence and Fintech. $1.9B $2.1B $2.3B $3.2B $3.8B $3.8B $4.7B 2013 2014 2015 2016 2017 2018 2019YTD¹ VC funding continues to grow Total funding allocated to top 10 deals 34% 35% 23% 31% 40% 30% 30% 2013 2014 2015 2016 2017 2018 2019 YTD $ 0m $ 2m $ 4m $ 6m $ 8m $ 10m 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 20182019YTD Average Deal ($m) Median Deal Value ($m) Canada Venture Capital: Overview ¹ ¹
  • 8. White Star Capital 8 Source: CBInsights ¹YTD refers to November 15th 2019 Seed funding still leading the way While Series A and later stage investments increase their share of total deals in Canada, % of VC-backed exits remains unchanged Given the relatively small size average investment size and high failure rate of seed deals vs. A+, seed deals should represent a high % of total deals in any healthy VC ecosystem. As the Canadian market has continued to mature over the last 10 years, we’ve seen this phenomenon occur in recent years. However, over that same period, the proportion of VC-backed exits in Canada has remained relatively unchanged. Although the foundation has been laid by an increasingly healthy seed stage investment environment, this has not yet translated in greater outcomes in disproportion to the overall market. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019YTD Seed Series A Series B Series C Series D+ Number of Seed deals continue to grow Canada Venture Capital: Overview
  • 9. White Star Capital 9 Source: CBInsights All values are in US$ Sizing up Canada in a global context Total Deal Volumes are increasing in major VC regions with more important growth rates in Europe than in North America Region Total Deal Amount (H1 19) Total Deal Volume (H1 19) CAGR Deal Volume (H1 17 – H1 19) USA $50.9bn 2,807 25.3% United Kingdom $5.3bn 437 55.2% France $2.4bn 214 54.9% Germany $2.2bn 237 64.6% Israel $1.7bn 122 39.9% Canada $1.5bn 202 38.3% Canada Venture Capital: Overview
  • 10. White Star Capital 10 Source: CBInsights China Germany Japan France UK Canada US Seed/Angel share of deals 35% 47% 47% 53% 52% 52% 38% +6% (6)% +4% (10)% (11)% (10)% (10)% Series A share of deals 34% 30% 30% 30% 27% 23% 26% (2)% +3% (3)% +5% +8% +7% +1% Series B share of deals 18% 16% 14% 13% 12% 15% 17% (4)% +4% (3)% +5% +2% +1% +4% Series C share of deals 9% 4% 7% 3% 5% 7% 9% (1)% (2)% +2% (1)% +1% (1)% +1% Series D share of deals 2% 3% 3% 1% 2% 1% 5% (1)% +1% (1)% +1% +1% +2% +2% Series E share of deals 1% 1% 1% 1% 2% 2% 4% +1% (1)% +1% (1)% +1% +1% +1% Deal share by stage; past 3 years Canadian ecosystem starting to show signs of maturity Although much smaller, Canada’s ecosystem is starting to look like certain mature markets such as the UK. Overall, Canada is now inline with most of its peers at the Seed and Series A stages and has a strong Series B+ ecosystem rising with the proportion of Series B deals being higher than in Japan, France and the UK. With continued investment in the early stage and growth in the total amount of VC invested, we expect Canada to catchup with its peers over the coming years. Canada Venture Capital: Overview
  • 11. 11 Source: Tracxn ¹YTD refers to November 15th 2019 White Star Capital Volume of C$20m+ rounds increasing: The number of C$20M - C$100M rounds experienced a significant increase since 2018 • The number of C$20 - C$100m rounds was flat between 2015 and 2017. However, the number of these rounds doubled last year. This momentum continued into 2019. • An increasing amount of Canadian investors are now positioned to lead C$20m+ rounds with the BDC and CDPQ being quite active. Similarly, an increasing number of international investors such as JP Morgan and Barclays have participated in these rounds. *White Star Capital’s portfolio companies Source: Tracxn Companies that raised C$20-C$100M rounds in 2019 6 13 17 16 18 35 44 2013 2014 2015 2016 2017 2018 2019YTD¹ x2 Number of C$20-C$100M rounds since 2013 * ** Canada Venture Capital: Overview
  • 12. Artificial Intelligence Investment Activity 2019 Fundraise 2019 Fundraise 2019 Fundraise 2019 Fundraise Investment Activity IoT E-Commerce Investment Activity Investment Activity FinTech 12 Source: CBInsights & Tracxn ¹YTD refers to November 15th 2019 Deal Amount (US$m)No. of Deals White Star Capital H1 2019201820172016 276 315 408 451 46 353527 Canadian subsectors The evolution of Canada’s strongest subsectors since 2016 H1 2019201820172016 59 52 156 121 46 322731 H1 2019201820172016 248 171 326 71 32 111626 H1 2019201820172016 328 704 687316 57 334647 Canada Venture Capital: Overview * *White Star Capital’s portfolio companies
  • 13. 13 Source: CBInsights & Tracxn ¹YTD refers to November 15th 2019 White Star Capital World Class Tech and VC events Notable international event will continue to be hosted in Canada September 22nd–23rd September 23rd–26th October 11th October 16th–17th November 8th–9th November 26th–27th 2019 Vancouver Toronto Ottawa Toronto Halifax Ottawa April 29th June 3rd June 15th–16th June 22nd–25th June 22nd–23rd July 17th–21st 2020 Toronto Toronto Toronto Calgary Waterloo Montreal Canada Venture Capital: Overview
  • 14. White Star Capital 2Canadian ecosystem: stronger than ever 14
  • 15. 15 Source: CVCA & Tracxn. Note: All values are in C$ on this slide 1 YTD refers to October 11th 2019 White Star Capital Continued trend of larger exits in 2019 ICT sector continues to dominate VC-backed acquisitions 2018 $2.6bn Mitel Founded in 1973 Telecom services Ottawa $521m Hyper wallet Founded in 2000 Fintech Vancouver $264m Acceo Founded in 1988 Internet Software & Services Montreal $263m Thinking Capital Founded in 2006 Internet Software & Services Montreal 2019YTD1 $537m Wave Founded in 2009 SaaS Accounting Toronto $265m Aeryon Labs Founded in 2007 Autonomous aerial systems Waterloo $115m Mnubo* Founded in 2012 AI and analytics infrastructure Montreal $80m Fanxchange Founded in 2009 Online ticket marketplace Toronto Canada Venture Capital: Ecosystem *White Star Capital’s portfolio company
  • 16. 16 Source: CBInsights Note: Excludes funds raised during an IPO White Star Capital Top funded Canadian companies Companies which received funding over the last 10 years 468 465 453 389 388 373 369 343 308 295 295 280 272 265 257 256 New additions in 2019 Total funding C$m Canada Venture Capital: Ecosystem
  • 17. 17 Source: 1 CVCA Infobase, 2 CBInsights, 3 Newswire. Note: All values are in US$ on this slide Note: There were no Canadian IPOs in 2016 and 2018 White Star Capital 2019 has been a great year for IPOs in Canada 2019 bounces back after no tech IPOs in 2018 This year has been a great year for IPOs in Canada. Lightspeed POS’ IPO made history by making it the third company to join the Canadian unicorn companies club after Kik Interactive (valued at $1bn in August 2015) and Shopify (valued at $1.3bn in May 2015). At IPO in March, Lightspeed POS was valued at $1.3bn, becoming the first unicorn in the Quebec province. Then, Coveo became the second Quebec-based unicorn on November 6th after its $172m Series F valuing the company at $1.1bn. 2014 2015 2017 2019 Canadian VC-Backed IPOs from 2014 to 2019 $42m1 Other Sectors $101m1 $46m2 $97m2 $131m2 $157m1 $87m1 $83m2 $57m3 Canada Venture Capital: Ecosystem ICT Sector $179m2
  • 18. 18 Source: CBInsights. Note: 1 YTD refers to November 15th 2019 White Star Capital Top Canadian VC rounds in 2019YTD1 Companies which raised the biggest rounds this year British-Colombia based333 200 227 159 81 67 63 60 58 55 53 47 43 41 40 Quebec based Ontario based D B E C B E C B B C C B B BSeries F Round size C$m * *White Star Capital’s portfolio company Canada Venture Capital: Ecosystem *
  • 19. White Star Capital 19 Source: Tracxn. Note: All values are in C$ on this slide 1 YTD refers to November 15th 2019 *New company since 2018 report Largest funding rounds over the last 4 years 2019 witnesses the biggest financing round of the Canadian tech in the last 10 years 2016 2017 2018 2019YTD1 $140m Series B 2012 Wearable Technology Kitchener $260m Series E 1999 Quantum computing and superconducting electronics Burnaby $186m Series D 1995 Integrated EHR platform for long term providers Toronto $333m Series D 2008 Cloud-based legal management solutions Burnaby $103m Series C 2005 Precision agriculture and data management Winnipeg $216m Series D 2005 Mobile Software & Services Montreal $130m Series E 2005 Internet Software & Services Quebec City $227m Series F 2005 Internet Software & Services Quebec City $134m Series A 2016 Launches and Incubates advanced AI solutions Montreal $130m Series C 2012 Brand of smart eyewear Kitchener $200m Series B 2016 Provides custom AI service solutions Montreal $111m Series C 1995 Integrated EHR platform for long term providers Toronto $127m Series C 2007 Consumer Electronics Toronto $159m Series E 2010 POS for restaurants Toronto * Canada Venture Capital: Ecosystem
  • 20. In 2018, 4x the number of C$100m+ rounds compared to 2016 Canadian participants in mega rounds between 2018 and 2019 20 Note: None of the international funds displayed above participated into more than one mega round White Star Capital 2 5 6 4 2016 2017 2018 2019YTD¹ Following the global trend on mega rounds Evolution of the market; still few mega rounds but a rising interest from international investors Source: Tracxn 1 YTD refers to November 15th 2019 International participants in mega rounds between 2018 and 2019 • Amongst Canadian funds, institutional investors and federal development banks such as CDPQ and BDC have been quite active (i.e. BDC invested in Element AI’s and TouchBistro’s latest round) • Amongst International funds, banks and CVCs such as Barclays, JP Morgan and Hanwha have been quite active in these rounds as well (i.e. Barclays and JP Morgan both invested in TouchBistro while Hanwha invested in Element AI)  Funds particapting in 2019 rounds. All other funds invested in 2018 Funds particapting in 2019 rounds. All other funds invested in 2018 Canada Venture Capital: Ecosystem
  • 21. White Star Capital 21 Source: CBInsights, Crunchbase, Impact Centre and Monster. Note 1: Financial Velocity = capital raised / years in existence. Note 2: Does not take Telus Ventures’ strategic investment (January 2019) into account, amount undisclosed The top 20 tech narwhals in 2019 Ontario dominates Canada with 11 narwhals (Quebec=5, British Columbia=4) Rank Company Founded Total Funding ($US Millions) Financial Velocity1 City Province 1 Element AI 2016 257.1 85.7 Montreal Quebec 2 Wealthsimple 2014 189.0 37.8 Toronto Ontario 3 Clearbanc 2015 120.0 30.0 Toronto Ontario 4 North 2012 192.7 27.5 Kitchener Ontario 5 Hootsuite 2008 279.9 25.4 Vancouver British Columbia 6 Clio 2008 277.0 25.2 Burnaby British Columbia 7 TouchBistro 2010 209.2 23.3 Toronto Ontario 8 Ritual 2014 113.5 22.7 Toronto Ontario 9 Kik 2009 220.5 22.1 Waterloo Ontario 10 Blockstream 2014 101.0 20.2 Victoria British Columbia 11 Integrate.ai 2017 38.22 19.1 Toronto Ontario 12 CryptoKitties 2017 38.2 19.1 Vancouver British Columbia 13 Dialogue* 2016 56.0 18.7 Montreal Quebec 14 Drop* 2015 71.3 17.8 Toronto Ontario 15 Hopper 2007 199.2 16.6 Montreal Quebec 16 Breather 2012 113.7 16.2 Montreal Quebec 17 Ecobee 2007 192.3 16.0 Toronto Ontario 18 League Inc. 2014 76.2 15.2 Toronto Ontario 19 Applyboard 2015 53.6 13.4 Kitchener Ontario 20 Kira Systems 2015 50.0 12.5 Toronto Ontario The term “narwhal” was first coined in 2014 by Brent Holliday, CEO of Vancouver-based Garibaldi Capital Advisors, to describe Canadian tech companies worth $1 billion (Canadian) or more. Given that Canada produces a few number of Unicorns (Kik and Shopify in 2015, and Lightspeed POS and Coveo this year), the term “narwhal” is now used to define Canadian companies on track to become Unicorns in the near future. Compared to 2018, the number of firms on track to become Unicorns almost doubled. Also, the average financial velocity1 increased from 9.4 to 12.8. *White Star Capital’s portfolio companies Canada Venture Capital: Ecosystem
  • 22. White Star Capital 22 Source: Hockeystick, VentureLabs, Fundica, Springboard, DailyHive, Bonjour Startup MTL, MaRS, Betakit and Founder Institute Canadian incubators and accelerators There are now more than 250 incubators and accelerators in Canada Ontario Quebec British Colombia Prairie Region Atlantic Region L-SPARK McGill X-1 Founder Institute Manitoba Prince Edward Island Venture LAB La Piscine Highline Beta Futurpreneur Canada Startup Zone Futurpreneur Canada Ecofuel Alacrity Manitoba Technology Accelerator propel Highline Beta Institut d’Entrepreneuriat Expa North Forge LaunchPadPEI NEXT 36 Startup En Résidence Accelerate Tectoria Innovate Manitoba Newfoundland Next Canada FounderFuel METABRIDGE Saskatchewan Propel MaRS Centech entrepreneurship@UVIC Co.Labs Genesis Extreme Accelerator 373 Group ACCELERATE OKANAGAN Innovation Enterprise Futurpreneur Canada INcubes Innocité MTL Spring Cultivator New Brunswick Founder Institute Techstars AI Creative Destruction Lab Alberta B4C Techstars Le Camp NEXT 36 Creative Destruction Lab Planet Hatch DMZ MT Lab EMPOWERED STARTUPS NABI Venn gBETA Inno Centre Radius Calgary Technologies Inc. Futurpreneur Canada Accelerator Centre Cadence Accel-RX Innovation District Propel JLABS Next AI New Ventures BC Innovate Calgary Nova Scotia Invest Ottawa Diagram BCTIA centre4growth Creative Destruction Lab Innovation Factory Tandem Launch HATCH VOLTA Idea Boost CEM Wavefront Accelerator Futurpreneur Canada Communitech Futurpreneur Canada Foresight Propel LaunchYU District 3 League of Innovators Innovacorp TFI Impact8 Futurpreneur Canada The Entrepreneuship Hatchery Creative Destruction Lab Startup Boost Fintech Accelerator Velocity Accelerator Founder Institute Founder Institute Techstars 111 Ryerson Futures Canada Venture Capital: Ecosystem
  • 23. White Star Capital 23 Source: CBRE Tech job growth The number of jobs created in the ICT sector is constantly on the rise CITY Number of tech jobs created between 2012 and 2017 Position in terms of the number of tech jobs created between 2012 and 2017 Position in North America’s ranking for top tech talent market in 2019 Position in North America’s ranking for top tech talent market in 2018 Growth of the number of tech jobs (in %) between 2012 and 2017 Toronto 82,100 1st 3rd 4th 51.5% Montreal 22,300 6th 13th 14th 21.2% Vancouver 16,100 11th 12th 25th 30.7% Ottawa 9,700 22nd 19th 13th 15.9% Canada has 832,900 tech workers, counting for 5.3% of the nation’s total workforce On top of being part of LinkedIn’s top 25 hottest Canadian startups to work for right now, our portfolio companies Drop* (6), Dialogue* (8) and Borrowell* (22) are constantly featured in the top 10 Canadian startups hiring the most employees. Number of tech jobs created between 2012 and 2017 28,900 in 2017 alone +13.6% since 2016 82,100 2018 was the second consecutive year that the Bay Area had less tech job growth than Toronto 78,000 Toronto San Fransisco *White Star Capital’s portfolio companies Canada Venture Capital: Ecosystem
  • 24. White Star Capital 3VC funding across Canadian regions 24
  • 25. White Star Capital Canada Venture Capital: VC funding 25 Source: Refinitiv & CBInsights All values are in C$ VC activity by province Number of deals Deal amount (C$m) 16-18 CAGR 2016 2017 2018 2019H1 2016 2017 2018 2019H1 Ontario 243 194 197 110 1,864 1,538 2,250 1,320 9.9% Quebec 191 179 185 89 1,057 1,428 1,519 632 19.9% British Columbia 79 68 97 45 500 945 711 620 19.2% Alberta 14 18 20 15 22 199 59 70 65.8% Saskatchewan 8 12 11 8 26 18 49 46 37.6% Nova Scotia 14 10 13 7 55 62 29 44 -27.0% Newfoundland 3 4 3 6 5 6 4 9 -12.3% New Brusnwick 31 27 20 4 31 14 61 3 39.7% Manitoba 7 2 1 2 137 43 7 25 -77.4% Prince Edward Island 1 1 1 1 3 1 0.5 16 -59.2% British Columbia is the province with the highest average funding per investment ($13.8m) compared to Ontario ($12.0m) and Quebec ($7.1m). This average more than doubled since 2016 with a $7.5m increase (Ontario = $4.3m and Quebec = $1.6m). New Brunswick is the province with the lowest average funding per investment: $625k. In terms of deal amount, Ontario and Quebec are continuously increasing while British Columbia starts to increase again after a slow down in 2018. Alberta, Nova Scotia and New Brunswick are fluctuating while Manitoba is decreasing. Finally, the momentum of Saskatchewan’s record in 2018 continues in 2019. Greatest activity is in Ontario & Quebec
  • 26. White Star Capital 26 Source: CVCA & CBInsights All values are in C$ VC activity by region Number of deals Deal amount (C$m) 16-18 CAGR 2016 2017 2018 2019H1 2016 2017 2018 2019H1 Toronto 144 139 153 76 845 1,019 1,320 741 25.0% Montreal 53 72 86 67 422 555 778 473 35.8% Vancouver 56 65 91 27 459 436 608 158 15.1% Halifax 24 22 16 12 29 50 14 42 -30.6% Calgary 7 5 16 10 24 94 157 25 158.2% Ottawa 20 23 18 8 196 84 198 56 0.5% Kitchener, Waterloo, Cambridge 35 27 30 7 351 225 130 157 -39.1% Saskatoon 1 5 2 5 1 9 3 76 65.8% The Waterloo-Kitchener-Cambridge area is the « city » with the highest average funding per investment ($22.5m) compared to Toronto ($9.8m), Montreal ($7.1m) and British Columbia ($5.9m). This average more than doubled since 2016 with a $12.5m increase (Toronto= $3.9m). In the contrary, it decreased by $0.9m for Montreal and by $2.3m for Vancouver. Calgary is the city with the lowest average funding per investment: $2.5m. In terms of deal amount, Toronto and Montreal are continuously increasing. However, on another side, Vancouver and Calgary which experienced growth between 2016 and 2018 are both slowing down in 2019. Halifax, Ottawa, Saskatoon and the Kitchener-Waterloo- Cambridge region keep fluctuating. Greatest activity is in Toronto & Montreal Canada Venture Capital: VC funding
  • 27. White Star Capital 4Diversity, immigration, and government support 27
  • 28. Canada Venture Capital: Diversity 28White Star Capital Women in the startup ecosystem of all VC dollars in Canada was received by women-founded firms between 2017 and 2019 is the approximate proportion of women working in Venture Capital in Canada. 15% of the Canadian partners are women (13% in the US) Source: CFA Institute, Newswire, StartupCan, TheBalanceSMB, Business Insider, Betakit, “Women in Venture” report from Highline Beta and Female Funders, and Female Funders’ website A few statistics regarding the presence of women in the ecosystem in Canada 4% 9% Startup Venture Capital • Women entrepreneurs contribute $148 billion annually to the Canadian economy and employ 1.5 million people • Canadian women rank 1st globally in terms of involvement with newer businesses, and 6th for established businesses • The government will make available C$1.4 billion, starting in 2018–19, in new financing for women entrepreneurs. This commitment is in addition to an increase of C$130 million for BDC’s Women in Technology Fund • 30% of the women working in VC are principals (29% in the US), 22% are associates (34% in the US) and 52% are analysts (31% in the US) • 67% of all the dollars committed to Canadian funds are controlled by investment teams with no female in senior positions and 84% of the dollars committed to Canadian funds are controlled by funds with no women GPs These results are clearly too low. However, efforts across the industry are starting to yield improvement. A number of VC firms such as Highline BETA, iNovia, White Star Capital, Real Ventures, Information Venture Partners, Relentless Pursuit Partners, Radical Ventures, Brightspark, Version One Ventures, Vanedge Capital, Georgian Partners, Portag3, Yaletown, StandUP Ventures, Cycle Capital, EnerTech Capital, McRock Capital, etc., were founded by or have senior team members in recent years. There has also been an emergence of prominent Canadian start-ups which have women founders such as Borrowell, Dialogue, Mejuri, Element AI, Clearbanc, Interaxon, Axonify, Allocadia, Trulioo, Maple, DOZR, Nudge Rewards, etc.
  • 29. White Star Capital Canada Venture Capital: Immigration 29 Source: Government of Canada, Vox, InvestInOntario, CIC News and MaRS Immigration in Canada Canada’s unique and indisputable asset About 82 percent of startups that saw an increase in international interest had applicants from the U.S., followed by India and China, being the 5th, 3rd and 1st countries respectively having the most citizens being admitted as Canadian permanent residents. Top 5 jobs for international applicants in Canada in 2017 1 Information systems analysts and consultants 2 Software engineers 3 Computer programmers and interactive media developers 4 Financial auditors and accountants 5 Administrative assistants There are 3 different categories of immigrants in Canada. Economic immigrants (skilled workers and business people), family-related immigrants (closely related persons of Canadian residents) and Refugees, Humanitarian and Compassionate immigrants (people who are escaping persecution, torture or cruel and unusual punishment). Immigration to Canada 321,000 2018 286,500 2017 330,000* 341,000* 350,000* 2019 2020 2021 of permanent resident admissions were in the Economic Category in 2017 56% increase in citizenship applications from end 2017 to June 2018 130% *These numbers are forecasts Canada welcomed 321,000 new immigrants last year, a record since 1913 (401,000) 1997 2017 Economic Immigrant Destinations Ontario, British Colombia and Quebec Rest of Canada 10% 90% 34% 66%
  • 30. White Star Capital Canada Venture Capital: Government support 30 Source: Government of Canada Continuation of the VCCI program Throughout the year, the VCCI program dedicated a total of C$450m to three different purposes, called streams and presented below: The VCCI (Venture Capital Catalyst Initiative) is an initiative by the federal government to boost VC activity in Canada Stream 1 Stream 2 Stream 3 • Allocation of C$350m to 5 Funds of Funds • Announced on June 26th 2018 • Allocation of C$50m to 7 alternative models such as: matching funds, deal- based fundraising models and micro-funds • Announced on November 5th 2018 • Allocation of C$50m to 3 CleanTech VCs • Announced on June 5th 2019 5 Funds of Funds 7 Alternative Models 3 CleanTech VCs
  • 31. White Star Capital 5Deep dive on Canadian VCs 31
  • 32. Canada Venture Capital: VC deep dive 32 Snapshot of largest VC funds Source: CVCA Infobase Note: Rankings are per fund, not total AUM per firm British Colombia White Star Capital Based on most recent fund size British Colombia Vanedge Capital Chrysalix Venture Capital Yaletown Quark Venture Version One Ventures Ontario Georgian Partners OMERS Ventures Radical Ventures Portag3 Ventures Relay Ventures Whitecap Venture Partners Information Venture Partners Round 13 Capital McRock Capital Golden Ventures Prairie EnerTechCapital AVRIO PFM Capital Inc District Ventures Capital Quebec iNovia Capital White Star Capital Real Ventures BrightSpark Luge Capital Panache Ventures Atlantic Build Ventures FINBIF Innovation Legend Fund Size (C$m) 300+ 200-300 100-200 <100
  • 33. 33 Angel Investor landscape Source: NACO. Note: All values are in C$ on this slide White Star Capital Greatest Angel activity is in Quebec & Ontario Investments and membership by region in 2018 Western Canada 11% of total number of investments 9% of total amount invested 531 investors $12.1m in 65 investments Central Canada 86% of total number of investments 90% of total amount invested 1,350 investors $128.6m in 502 investments Eastern Canada 3% of total number of investments 1% of total amount invested 37 investors $2.1m in 16 investments 2015 2016 2017 2018 $1.16m $1.731m $1.908m $2.512m Syndication Partners Average Deal Size Other 1% Angel Groups 5% VC 1% Government 15% Combination of Syndicate Partners 25% Individual Angel Investors 53% Dollar Amount Number of deals 1. Norther Ontario Angels York Angel Investors 2. IGAN Partners Anges Québec 3. Anges Québec Norther Ontario Angels 4. Brightspark Keiretsu Forum 5. Anges Québec Capital Capital Angel Network Syndication Partners Canada Venture Capital: VC deep dive
  • 34. 34 Most active foreign VCs Source: CBInsights *Made the list in 2019 British Colombia White Star Capital VCs with Foreign Head Quarters which participated in the most VC deals in Canada over the last 10 years Investor State # of deals 500 startups CA 43 Funders Club CA 20 Plug and Play Ventures CA 20 Social Capital CA 13 Uncork Capital CA 12 Bessemer Venture Partners* CA 11 Investor State # of deals SOSV NJ 51 Accomplice MA 19 OrbiMed Advisors NY 15 Braemar Energy Ventures NY 13 Union Square Ventures NY 12 Insight Partners* NY 12 BOLDstart Ventures NY 11 Rho Ventures NY 9 ff Venture Capital* NY 9 RRE Ventures* NY 8 Lerer Hippeau Ventures* NY 7 Edison Partners* NJ 7 Investor Country # of deals White Star Capital United States United Kingdom Canada France Hong Kong Japan 10 Investor Country # of deals Acton Capital Partners Germany 10 Go Capital France 9 Point Nine Capital Germany 8 Emerald Technology Ventures Switzerland 7 Investor Country # of deals Horizons Ventures Hong Kong 11 Canada Venture Capital: VC deep dive
  • 35. 35 Source: CBInsights New companies since 2018 report White Star Capital Canadian institutional investors Most Active Canadian Financial Institutions; per direct VC investments over the last 2 years Private Investor Investor type Bank Bank Asset/Investment Manager Diversified Financial Services Holding Company Diversified Financial Services Public Investor Investor type Diversified Financial Services Asset/Investment Manager Government Diversified Financial Services Bank Bank Public-Private Partnerships Investor Investor type Public-Private Pension Fund Public-Private Pension Fund Public-Private Pension Fund Canada Venture Capital: VC deep dive
  • 36. White Star Capital 36 Source: CBInsights New companies since 2018 report Most active corporate VCs Most Active Corporate venture capital firms in Canada in the last 18 months Corporate VC Sectors Direct Investment Investment in VC Fund Select Canadian Investment 1 ICT 2 ICT 3 Cloud Computing; CRM; Enterprise Software 4 Automation; CRM; Energy Efficiency; Healthcare; Enabling Technologies 5 Voice technology innovation; Hardware for Alexa 6 Life Science; AI; Robotics; Transportation; Cyber Security 7 ICT 8 Cloud and Edge Computing 9 ICT 10 Electrification; Automation; Digitalization 11 Water Management; Production Enhancement; Emerging Materials; Power Systems; IT Canada Venture Capital: VC deep dive
  • 37. White Star Capital White Star Capital’s Ecosystem 37
  • 38. 38 Introduction to White Star Capital White Star Capital is a transatlantic fund investing in Series A and B. Our footprint is global: we have 6 offices in the world in New York, Paris, London, Montreal, Tokyo and Hong Kong. We are partnering with exceptional entrepreneurs with global ambitions and leverage our extensive experience and international networks to help them scale their business internationally. Our investments in Canada include mnubo, Drop, Borrowell, Vention and Dialogue. We leverage our experience founding and scaling businesses to support the internationalization of our start-ups. I18N With a presence in North America, Europe and East Asia, we invest in early stage companies with global ambitions. 3 Continents Our current funds have close to $300m under management and a portfolio of 25+ core companies which have raised over $1bn+. Track Record An ideal balance between entrepreneurial and operational experience with financial and M&A experience. Team White Star Capital Global Presence and Portfolio Canada Physical Hubs Core Hubs United States France, Germany, ROE United Kingdom & Nordics East Asia
  • 39. White Star Capital 39 Other White Star Capital Country Deep Dives We actively publish detailed reports on different VC Ecosystems French Venture Capital Landscape 2019 Japanese Venture Capital Landscape 2018 UK Venture Capital Landscape 2019 Eastern US Venture Capital Landscape 2019 German Venture Capital Landscape 2018 South Korean Venture Capital Landscape 2018 Diving into Eastern US 2019 Venture Capital landscape