Apr 13, 2023
Financing in the Canadian startup ecosystem proved resilient in a year of economic challenges stemming from higher interest rates, geopolitical conflict and lower consumer spending, according to Osler’s second annual Deal Points Report: Venture Capital Financings.
“We saw much fewer down rounds than we expected to see… we saw valuation still hold the line,” Michael Grantmyre, a lead author of the report and a partner in the firm’s Emerging and High Growth Companies Group, tells Canadian Lawyer.
A down round occurs when a company’s pre-financing valuation is lower than it was after its last financing round. Last year saw fewer down rounds (at 7% of all financings) than the average of the three-year period the report covers.
Michael suggests that some companies looking to fundraise last year may have opted to postpone their next round of funding, issue convertible instruments or pursue other strategies in order to avoid a weaker valuation or less favourable terms. The report also found a 30% increase in smaller, bridge financing rounds last year compared to 2021.
You can read the full story, “Start-up venture capital ‘resilient’ despite economic challenges: Osler report,” on the Canadian Lawyer website.