Michael Grantmyre, Ryan Unruch
Apr 4, 2024
Osler’s Emerging and High Growth Companies Group issues the third annual Deal Points Report: Venture Capital Financings, a comprehensive study of 486 anonymized venture capital and growth equity preferred share financings completed by the firm from 2020 to 2023, representing approximately US$8 billion in total transactional value.
“This report is unique within the market as it draws on publicly available data on venture capital and growth equity financings, as well as Osler’s confidential anonymized data sources,” says one of the report’s lead author, Calgary-based partner Michael Grantmyre. “The 486 financings in this report represent, as a random sample, only a portion of Osler’s significant overall financing deal volume.”
In fact, from 2020 to 2023, Osler represented clients across the Canadian emerging and high-growth ecosystem in more than 1,100 financing transactions with an aggregate deal value of approximately US$14 billion, of which approximately US$2.2 billion were financings that closed in 2023.
Osler publishes the Deal Points Report to help provide data and insights for founders, entrepreneurs, and advisors who may be considering completing transactions in the next year.
“In 2023, we continued to see the effect of high interest rates, among other factors, impacting the Canadian economy and forcing a return of venture investment to pre-pandemic levels of activity,” says Grantmyre. “At the same time, our data shows that there were more down rounds and flat rounds than in prior years, as cash conservation and bridge financing strategies were exhausted, forcing companies to go back to the market to raise capital in challenging market conditions and on less favourable terms.”
Key report findings:
- The ecosystem demonstrated resilience as investments, and investment opportunities, in artificial intelligence and cleantech materially increased.
- Ontario, British Columbia and Québec continued to serve as the major engines of the Canadian venture space, while the Prairies and Atlantic Provinces proceed to emerge as critical destinations for venture and growth equity investment in Canada.
- Renewal also characterized 2023, as early-stage financings accounted for 78% of all such financings in the Deal Points Report, demonstrating investor and founder confidence in the future of the emerging and high growth companies ecosystem in Canada.
- For financings that closed in 2023 key venture financing terms remained largely consistent with prior years in which typical key terms were driven by an adherence to the CVCA model agreements in Canada and included
- 1x liquidation preferences
- no participation rights
- non-cumulative dividends
- broad-based weighted average anti-dilution rights
- no redemption rights
“For 2024, our team continues to monitor the ongoing growth in markets such as the Prairies and Atlantic Canada, and the growth of industries like Artificial Intelligence, Agtech and CleanTech, all of which are uniquely positioned to experience incredible growth in Canada,” says Chad Bayne, Co-Chair and partner, Emerging and High Growth Companies Group at Osler.
“Overall, we see a strong pipeline of early-stage Canadian companies that are being supported by investors who want to see them succeed. We expect to see this positive trend to continue in the year ahead,” says Bayne.
Read the report