After a high ride throughout the pandemic, venture capital (VC) funding for Canadian companies has finally come down to Earth.
Catch-up: In 2020, low interest rates mixed with the heyday of technology resulted in VC firms pouring record-setting amounts into Canadian startups ($14.2 billion last year alone).
What happened: Last quarter, Canadian startups raised $1.65 billion in funding, down 67% from the previous quarter and 76% year-over-year… but still close to 2019 levels.
- The global tech market downturn, aggressive interest rate hikes, and (newly) risk-averse investors are all contributing to the slowdown.
- Later-stage companies looking for one last push before going public, and those in biotech and fintech sectors, have been most affected by the funding slump.
It wasn’t all doom and gloom, though. Startups in their baby stages still saw a record number of investments, as some investors fled to smaller gambles with less exposure.
- There is also some optimism about cleantech companies, which could reach the same investment levels seen in 2021 (but only time will tell).
Why it matters: Investors are looking into how the slowdown may factor into valuations, meaning emerging Canadian companies might have to brace for some smaller paydays.