Continuing our global look into the torrid pace of venture capital investment in the second quarter, today we turn to Canada. While many markets have posted impressive results, like the United States setting the pace for new all-time records in dollars invested into startups, Canada’s numbers stand out.
The country, now famous in the startup world for giving birth to Shopify, has already crushed prior yearly records for venture investment thus far in 2021. Indeed, CB Insights data indicates that Canadian startups this year have already raised more than double their 2020 totals.
The same data set indicates that Canada’s venture capital results now rival those of the entire Latin American region, with exits and megadeals coming in roughly on par in the second quarter, and a similar number of total venture capital rounds in the period.
That caught our attention.
The Exchange explores startups, markets and money.
The Exchange reached out to a number of venture capitalists to expand our perspective on the Canadian market beyond the data points. Matt Cohen, a Toronto-based investor at Ripple Ventures, told The Exchange that “Canada is in a venture explosion” today, leading to results that are “unprecedented” for the country.
Taking the data and investor notes in aggregate, Canada’s startup industry seems to be benefiting from both domestic and international trends, a wide genre focus and more than one hub. Let’s talk aboot it.
A venture capital blowout
In the first half of 2021, Canadian startups raised $6.3 billion across 414 deals, per CB Insights data. Both numbers compare favorably to Canada’s 2020 results, when 617 deals led to $2.9 billion in total capital raised by Canadian startups. Canada has already bested its previous record in venture dollars invested ($4.3 billion, 2019), and is on pace to beat its all-time deal count as well (720, 2018).
By itself, the second quarter’s outsize results are even more extreme than its H1 2021 results might have led you to expect, amazingly. Observe the following chart from the same data set:
Canadian startups just had their single best quarter ever in both deal volume and dollar volume terms. Furthermore, the country boosted capital raised by nearly 10x from its local minimum in Q4 2020.
Notably, no Canadian startup deal in the quarter was worth more than $500 million; indeed, Trulioo’s $394 million Series D was the largest. From there the list includes $300 million for ApplyBoard’s Series D and Vena’s $242 million Series C. We read that list of results as indicative of an investing landscape in Canada that is not dominated by a handful of companies raising billion-dollar rounds. That’s good news, mind you: The data implies that the Canadian startup market is not being bolstered by one or two standout companies, but rather performing well more generally.
Canadian private sector sees drop in investment from 2015-19: report – Toronto Star
7 of 15 Canadian industries experienced an overall decline in investment from 2015 to 2019, according to a new analysis by the Fraser Institute, an independent non-partisan Canadian think tank.
“In a troubling trend, a wide range of industries in Canada have experienced a decline in investment, which is bad news for the economy,” said Steven Globerman, a senior fellow at the Fraser Institute and co-author of Industry-Level Private Sector Capital Expenditures in Canada: 1990-2019.
From 2015 to 2019 more domestic industries experienced decreases in capital investment than at any time since 1990. This, despite the absence of a significant recession similar to what Canada experienced in the early 1990s and 2008-09. The oil and gas industry experienced the most significant decrease at -48%. Other industries that experienced significant decrease included agriculture, forestry, and fishing -19%, utilities -19%, and retail trade -11%.
“If policymakers in Ottawa and across Canada want to help improve private-sector investment performance, they should enact tax and regulatory reforms, particularly now as Canada emerges from the COVID recession,” said Globerman. There’s some fear that an associated decline in investment in equipment, machinery and intellectual property will also affect productivity and property standards.
Mohsin Abbas, The Milton Reporter
Telehealth investments soar even as market matures – Healthcare Dive
- Spurred by the COVID-19 pandemic, investments in telehealth reached a record $5 billion in the second quarter of this year, according to a new report by CB Insights. The investments are more than double what they were in the second quarter of 2020. Six telehealth firms also reached unicorn status.
- However, it appears the sector is reaching a level of maturity. According to CB Insights, late-stage investments outpaced money going into early-stage deals. Moreover, investor exits also reached a record high.
- Investments in traditional telemedicine platforms also saw an investment decline, with virtual care, remote monitoring and telepharmacy reaping growing shares of investments. Nevertheless, providers are still investing heavily in telemedicine to improve the experience for their patients.
It’s currently telehealth’s day in the sun. With a large portion of the world eschewing face-to-face contact in 2020 due to the COVID-19 pandemic, millions of patients flocked to telehealth for their care needs. Large companies such as Amazon also heavily invested in telehealth pilot programs for its employees.
Overall, global telehealth investments increased 169% from the second quarter of 2020, and were up 17% from the first quarter of 2021. The five largest deals were worth $1.6 billion, out of roughly $5 billion in total.
The CB Insights report also noted that there has been a shift in the way money is flowing into the segment. The teletherapy, coaching and care management segments accounted for 40% of all deals during the quarter. Meanwhile, investor exits from telemedicine platforms hit a record, while funding declined 43%. There was a similar level of activity for virtual and digital care enablement.
Nevertheless, traditional providers are still moving into the virtual space. About 60% of healthcare organizations are adding new digital initiatives, while 42% are accelerating some or all of their existing digital transition plans. And 75% say they are currently investing in telemedicine to improve their patient experience. That compares to 42% in 2019. The level of attention being paid to telemedicine by providers is currently higher than investments in EHR interoperability and patient portals and messaging systems.
Meanwhile, CB Insights has concluded that the use of telemedicine is stabilizing for the longer term. They comprised about 5% of medical claims as of April of this year, compared to 7% in January. The figure is similar to September of last year, as the pandemic hit a trough after its initial first waves.
Emerging Markets Offer Big Investment Opps for ESG-Focused Investors, Report Says – Environment + Energy Leader
A new report touting the importance of ESG factors and their impact on investments and investment decisions has found that better environmental stewardship can unlock significant value in private equity. Another key finding is that emerging markets offer some of the world’s most consequential investment opportunities for investors focused on mitigating global climate and social risks.
The semiannual Global Intelligence report from Manulife Investment Management highlights the fact that “sustainable investing is no longer an option. It is a necessity…,” says Christopher P. Donkey, CFA, global head of public markets at Manulife Investment Management.
When it comes to emerging markets (EMs), the report finds that emerging market companies currently rival their developed-market counterparts in terms of the sophistication of sustainability practice and growth potential.
The IEA stated in 2019 that, “There is a new reality in clean energy.” The world’s major emerging economies — including China, India, and several others — are moving to the center stage of the clean energy transition, it said, adding, “In fact, taken as a whole, Asia — which dominates the MSCI Emerging Markets Index — is the world’s largest investor in low-carbon energy sources.”
The significant stake in green energy capacity couldn’t have arrived too soon for emerging markets — or the world — as Asia is expected to drive more than two-thirds of new global energy demand over the next 20 years, per the report. However, the report prevaricates that, “…if we see a collective failure to coordinate climate policy, practice, and investment, then EM growth itself is more likely to precipitate a disappointing and painful future of ongoing structural dislocations.”
Businesses Must Heed the Call
Businesses that are inattentive to growing calls for responsible stewardship of environmental and social capital are likely to lose competitive advantages and find themselves spurned by consumers and investors alike, the report warns.
“Whether coming from customers, employees, suppliers, or communities more broadly, the call for sustainable practices has only increased since the start of the pandemic,” it says.
Consumers say their spending is migrating toward companies conducting operations sustainably, and investors have been taking notice. In fact, sustainability has become an imperative since so many investors now demand it. While they still require strong investment returns, sustainability has risen to a commensurate level for many investors.
The reasons aren’t purely altruistic, according to the report. In fact, 66% of limited partners say that value creation is a leading driver of their ESG initiatives (per PwC).
Three-quarters expect sustainability to influence their investment decisions over the next five years, according to Coller Capital; additionally, says Ceres, 86% expect ESG investment opportunities to increase, and 93% agree that focusing on ESG themes will generate attractive investment opportunities.
Another recent indication of how ESG investing is on the rise was the announcement earlier this week that more than 20 leading companies — including 3M, ADM, Apple, Bank of America, FedEx, General Motors, Honeywell, Nike, Smithfield Foods and TD Bank Group — have invested in TPG Rise Climate, the climate investing strategy of TPG’s global impact investing platform. TPG Rise Climate announced its first-close of $5.4 billion in subscriptions to its inaugural fund, Environment + Energy Leader reported.
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