Canada VC Levels Drop Steeply In Q2

While American entrepreneurs keep whining about declining venture capital investments, it’s their neighbors to the north who really have something to complain about.

According to a report released last week by the Canadian Venture Capital Association (CVCA) and MacDonald & Associates, second quarter venture disbursements into Canada-based companies dropped by an astounding 45% from first quarter totals. Moreover, the CA$416 million invested in 188 Canada-based companies in Q2 2002 was off approximately 69% from the CA$1.3 billion invested over the same period in 2001.

The CVCA partially attributes the investment plunge to public market turmoil, but also cites a surprising absence of large deals. It reports that no deals in excess of CA$50 million were closed in the second quarter, while such deals comprised 44% of Q1 disbursement totals.

The drop may also have to do with reduced U.S. activity. Several speakers at the CVCA annual conference in Toronto this past June noted that U.S. VCs played a big role in Canada’s Q1 totals.

On the upside, Canada-based venture funds continued to raise impressive amounts of capital in Q2. A total of CA$352 million was raised between April and June, bringing the first half fund-raising total to CA$567 million, or 17% more than the first half of 2001.

Contact Dan Primack