VC funding to Ottawa firms continues downward slide in Q1, new report says

Venture capital

While Canadian firms raised a record amount of venture capital in the first quarter of 2021, the amount of money flowing to Ottawa-based companies continued its downward slide, the Canadian Venture Capital and Private Equity Association said Tuesday.

The CVCA said Canadian companies received $2.7 billion in venture capital over 178 deals in the first three months of the year, three times the total of $916 million that VC firms invested in 128 deals a year ago.

But here in Ottawa, VC investments in local companies plummeted sharply year-over-year to $9 million across four deals. That’s down more than 50 per cent from the total of $19 million in the first quarter of 2020 reported by CPE Analytics.

According to the CVCA, the National Capital Region lagged far behind runaway fundraising leader Toronto. Firms in the GTA hauled in a total of $920 million in VC funding across 41 deals in the first quarter, with Montreal finishing a distant second at $322 million over 26 deals.

Ottawa also ranked behind Calgary ($206 million from 15 deals), Vancouver ($203 million, 17 deals), Halifax ($19 million, seven deals), Edmonton ($12 million, three deals) and Fredericton ($10 million, three deals) in total deal value.

It’s the second year in a row that Ottawa’s first-quarter VC funding haul has taken a major tumble.

Fuelled by major deals such as Solink’s $16.3-million series-A round, local companies raised a cumulative total of $81.4 million in the first quarter of 2019 en route to a full-year funding haul of $168 million. Ottawa firms raised a total of $111 million in 2020, a 30 per cent drop from the year before.

One local firm on Narwhal List

The capital fared no better when it came to producing top-notch IPO prospects, the CVCA’s latest report pointed out.

Just one Ottawa-based firm, software-maker Assent Compliance, made the 2021 Narwhal List of Canada’s top 40 high-potential companies based on their financial “velocity” – the amount of funding they’ve raised over the number of years they’ve been in business – as well as employee growth and overall number of workers. 

Last year, three local enterprises – Assent Compliance, data-transfer technology firm Ranovus and fintech trailblazer MindBridge Ai – appeared on the list.

Meanwhile, a major Ottawa-based law firm once again cracked the list of Canada’s top firms catering to VC deals, the latest Canadian Venture Capital Report compiled by CPE Analytics says. 

According to the report released Tuesday, LaBarge Weinstein LLP was involved in seven national transactions in the first quarter, the fourth-highest total of any firm in the country.