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