Foreign Venture Capital Taking Note of Canadian Startups, Trend Poised to Continue

Canada has a solid roster of venture capital firms: funds like iNovia Capital, Relay Ventures, and Omers Ventures regularly invest in local technology startups and inject valuable capital into our nation's blossoming startup ecosystem.

But alone, these VC firms are struggling to take Canada's startup space to the next level – if for no other reason than insufficient capital. Fortunately, there's strong evidence of Canada's maturing ecosystem—which has resulted in US and even overseas funds taking note of our impressive startups and bringing their money here.

Major foreign funds such as Sanderling, Enertech, TVM, and Lumira have invested in Canadian companies recently. And they're doing so for multiple reasons: our companies are innovative and, on a global scale, cheap.

"They [foreign funds] see our raw technology and the quality of our companies and think early stage opportunities are often better priced here," Neal Hill, BDC Venture Capital’s vice president of fund investments, explained to Techvibes in an interview.

Why are Canadian startups trading at a discount, so to speak? Because, while we may feel our nation's startup space is well developed, the ecosystem is still comparatively young.

"Because we have fewer venture funds and therefore less competition, the prices on the deals are better here," Hill says. "That's a common theme you hear from VCs outside of Canada."

It's easy to take that as a slight, but being cheap isn't a bad thing—as an emerging ecosystem in high demand, we're entering a time of unprecedented potential.

Hill, whose role at BDC VC includes attracting these foreign firms to Canada, suggests there are two levels of phenomenon happening: foreign VC funds investing in Canadian companies from afar, and foreign VC funds physically setting up shop in Canada to establish local presences. Both benefit our nation, he says—and more important, both trends are poised to continue for the foreseeable future.

In fact, Hill is also excited by a third trend: an increase of Canadian funds successfully raising venture capital in the US.

"That's been almost a total zero for a long time," he says. "And now we're seeing a fewCanadian funds raise a majority of their capital from outside of Canada."

The future looks bright for Canada's startup space on all fronts as our talented entrepreneurs and their innovative companies continue to make their mark on the world and catch the eyes of VCs all over the globe.

BDC Capital
Montréal, Québec, Canada

A subsidiary of the Business Development Bank of Canada (BDC), BDC Capital offers a full spectrum of specialized financing and investment solutions to help Canadian entrepreneurs achieve their full growth potential. With more than $1 billion under management, BDC Capital takes a strategic, patient approach to nurture companies’ development over the long term. From venture capital to equity to... more

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Knowlton Thomas

Knowlton Thomas

Knowlton is the managing editor of Techvibes and author of Tempest Bound. Based in Vancouver, Knowlton has been published in national publications and has also appeared on television and radio. Previously he was an editor for New Westminster weekly The Other Press and served on its board of directors. When not working, Knowlton enjoys hiking, tennis, and martial arts. more

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