Yaletown Partners Research Highlights Canada’s Opportunity to Enhance Technology Growth by Closing Investment Gaps
July 6, 2016
Vancouver, BC – Yaletown Partners today released a detailed study on Canada’s financing activity, which reveals significant gaps in capital available for the country’s technology companies. Access to capital, talent and markets are the three key drivers of Canada’s innovation ecosystem. The report shows that gaps in Canada’s capital supply cause Canadian companies to scale more slowly, take longer to exit, and achieve smaller outcomes than U.S. technology peers.
“We took a comprehensive look at technology financing in Canada, looking not just at stage of financing or size, but at the impact of capital flow over time,” said Eric Bukovinsky, Principal, Yaletown Partners. “We found that the capital supply in Canada is both insufficient and inadequately distributed beyond early stage. Canada’s biggest opportunity to realize greater value from our technology sector lies in closing this growth capital gap, currently at a billion dollars and growing.”
The report reflects Yaletown’s first-hand investment experience as one of Canada’s most active private technology investors, presently raising a new $135 million fund. Capital for seed and early-stage companies is quite available in Canada, however once companies reach the next stage of growth, there is a capital supply gap for $5 to $25 million financings to accelerate growth. Yaletown’s investments in emerging-growth companies have demonstrated the ability to accelerate growth, shorten exit timeframes and earn strategic premiums by providing adequate access to capital.
The research findings are outlined in Yaletown’s report: Canada’s Technology Investment Gap. For the study, Yaletown reviewed over 20,000 financings in the decade since 2006 and 3,000 exits since 2000 across Canada and the United States. The research analyzed data from Pitchbook, Thomson Reuters, CVCA, NVCA, and Yaletown’s own proprietary datasets.
- The average financing size for Canadian companies is less than one-third of the level in the United States.
- Companies in the United States are 2.6x more likely to raise $5 to $25 million emerging growth financings.
- Since 2000, disclosed exits in Canada valued at greater than $100 million raise on average 50% less capital compared to those in the United States. Exits valued between $100 and 250 million take 2.5 years longer and are half as frequent as in the United States.
- Since 2000, Large exits, greater than $500 million have occurred in 1% of all disclosed Canadian exits versus 10% in the United States.
View Yaletown Partners report Canada’s Technology Investment Gap.
About Yaletown Partners – yaletown.com
Yaletown invests in emerging-growth technology companies in Canada that enhance sustainability and productivity for industrial and enterprise customers. Our investments help Canadian technology companies in their initial growth phase to accelerate their growth, shorten exit timeframes and achieve strong exit premiums. Since 2013, Thomson Reuters’ has ranked Yaletown as one of Canada’s most active private independent technology investors. Yaletown is led by a team with more than 120 years collective experience building and financing technology companies, and is backed by leading institutional investors and a network of successful technology entrepreneurs, executives and angel investors. Find out more about Yaletown and our portfolio of companies at www.yaletown.com.
Email: claudia @ materialinsight.com
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