Ottawa's tally of VC deals rising despite pandemic, report says

Canadian money

The COVID-19 pandemic didn’t seem to dampen investors’ enthusiasm for Ottawa startups in the first half of 2020 as the city bucked a trend that saw a sharp decline in VC activity across the country as a whole, according to a new study.

A total of 16 local companies landed VC financing in the first six months of this year, up from a dozen in the first half of 2019, the latest Canadian Venture Capital Report compiled by CPE Analytics says. 

Fledgling firms in Canada’s capital received a total of $83 million in fresh funding between January and June of this year, according to the document. CPE’s 2019 report did not include dollar figures for Ottawa companies.

Ottawa placed fifth in the total number of VC deals in the first half of the year, behind Vancouver, Toronto, Montreal and Calgary. 

Meanwhile, the city’s total funding haul ranked seventh, well behind Toronto’s nation-leading tally of $522 million. Vancouver ($471 million), Montreal ($406 million), Quebec City ($284 million), Kitchener ($268 million) and Calgary ($112 million) also cracked the $100-million mark in VC funding in the first six months of 2020.

While local firms got off to a slow start to the year in the venture financing race, raising just $19 million in the first quarter, the startup scene picked up steam as 2020 went on. Major Ottawa deals announced between April and June included Solink’s $23-million series-B round, $17 million in new funding for Equispheres, software startup Tehama’s US$10-million round and cybersecurity firm Corsa Security’s $7-million deal

Canada-wide investments down from 2019

Nationally, however, it was a much different story as the pandemic appeared to keep many institutional investors on the sidelines.

VC firms contributed a total of $2.59 billion to Canadian companies in the first half of 2020, down 19 per cent from 2019. The total number of deals, meanwhile, plummeted 22 per cent year-over-year to 281.

“The data for H1, 2020 indicate that venture capital investing has been significantly affected by the eruption of COVID-19, much like the broader economy,” Richard Rémillard, president of Ottawa-based Rémillard Consulting Group, said of the report’s findings in a statement. 

“The data reflect some particularities of venture capital too as this part of the financial services industry has long relied on face-to-face meetings with startup and early stage firm entrepreneurs prior to making investment decisions.”

A major Ottawa-based law firm also cracked the list of Canada’s top firms catering to VC deals. According to the report, LaBarge Weinstein LLP was involved in 13 national transactions worth a combined $255 million in the first six months of 2020, the third-highest totals in the country.