Canadian VC investment craters in second quarter as US money retreats - Consulting.ca | Canada News Media
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Canadian VC investment craters in second quarter as US money retreats – Consulting.ca

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Canadian venture capital disbursements fell to $1.17 billion in the second quarter of 2022 – down 67% from Q1 2022 and down 76% from Q2 2021 – as US and foreign investors abandoned the Canadian market, according to analysis from research firm CPE Media.

For context, VC investments in the US fell moderately in Q2 and H1 2022, as investors pulled back amid recessionary storm clouds and more expensive capital. According to stats from Pitchbook, VC activity in the US in Q2 2022 dropped 24% from Q1 2022 and 23% from Q2 2021, and decreased by 9% in H1 2022 compared to H1 2021.

American investors have traditionally accounted for a substantial portion of VC investment in Canada. The country’s VC market rode strong US investment to a record $13.58 billion in disbursements in 2021. Richard Rémillard, president of Rémillard Consulting Group, noted at the time “an over-reliance on the US which could place Canada in a vulnerable position should American funds pull back and given the relatively small amounts of venture capital drawn from other international sources.”

Canadian VC disbursements in H1 2022 fell 40% from H1 2021 to $4.72 billion.

The breakdown by funding source in H1 2022 was: US private VCs ($1.69 billion), foreign corporates ($574 million), Canadian private VCs ($410 million), US corporates ($323 million), Canadian governments ($250 million), and Canadian corporates ($247 million).

“As expected, Q2, 2022 VC investing volumes were down significantly in Canada. Not only have VC investments fallen dramatically quarter over quarter and year over year in Q2, but the Canadian market has experienced a much sharper downturn than in the US,” Rémillard said.

“The reliance on US and foreign VC investment, while actively pursued by federal and provincial authorities alike does reveal a strategic vulnerability in the innovation economy that will likely need to be addressed as the peak to trough to peak cycle in VC is likely to be an enduring feature of the asset class,” he added. “One partial solution, in the eyes of many, has been the potential contribution of corporate Canada to fuelling VC investment volumes. But, as this data set reveals, such an expectation is not likely to be met any time soon given the paltry contribution of the Canadian corporate VC to the overall level of investment.”

By province, Ontario companies raised $1.8 billion, followed by Quebec ($1.37 billion), British Columbia ($885 million), and Alberta ($431 million).

ICT companies continued to attract the lion’s share of capital, at $2.78 billion or 59% overall. Biotech fell from its typical runner-up position to fourth place, with $464 million raised. Financial companies received $634 million and cleantech companies received $603 million.

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Tesla shares soar more than 14% as Trump win is seen boosting Elon Musk’s electric vehicle company

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NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.

Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.

“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”

Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.

Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.

Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.

Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.

In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.

The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.

And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.

Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.

The stock is now showing a 16.1% gain for the year after rising the past two days.

The Canadian Press. All rights reserved.

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S&P/TSX composite up more than 100 points, U.S. stock markets mixed

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TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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S&P/TSX up more than 200 points, U.S. markets also higher

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TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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