Access to capital, talent and markets are the three key drivers of Canada’s innovation ecosystem. Yaletown Partners today released a detailed study on Canada’s financing activity, which reveals significant gaps in capital available for the country’s technology companies.
The report, “Canada’s Technology Investment Gap,” shows that gaps in Canada’s capital supply cause Canadian companies to scale more slowly, take longer to exit, and achieve smaller outcomes than U.S. technology peers.
“We took a comprehensive look at technology financing in Canada, looking not just at stage of financing or size, but at the impact of capital flow over time,” said Eric Bukovinsky, Principal, Yaletown Partners. “We found that the capital supply in Canada is both insufficient and inadequately distributed beyond early stage.”
According to the report, the average financing size for Canadian companies is less than one-third of the level in the United States. And companies in the United States are 2.6x more likely to raise $5 to $25 million emerging growth financings.
Since 2000, disclosed exits in Canada valued at greater than $100 million raise on average 50% less capital compared to those in the United States, the report shows. And exits valued between $100 and 250 million take 2.5 years longer and are half as frequent as in the United States.
Since 2000, large exits (greater than $500 million) have occurred in 1% of all disclosed Canadian exits versus 10% in the United States, according to the report.
For the study, Yaletown reviewed over 20,000 financings in the decade since 2006 and 3,000 exits since 2000 across Canada and the United States. The research analyzed data from Pitchbook, Thomson Reuters, CVCA, NVCA, and Yaletown’s own proprietary datasets.oe