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Alternative Market Briefing

Canada: Average VC deal size in 2021 increases 112% from the previous year

Monday, May 23, 2022

Laxman Pai, Opalesque Asia:

Canadian venture capital (VC) deals broke records, largely in information technology, with the average deal size in 2021 increasing 112% from 2020's average deal size, said a study.

"While VC deals made in Canada broke records in 2021, the increase in aggregate deal value was disproportionately large. This doesn't inherently mean that valuations are on the up. The average deal size in 2021 hit $24mn with a change of 112% up from 2020's average deal size," said the study " Canada Venture Capital Factsheet" published by Preqin.

The study further revealed that these VC deals were largely in information technology, as in 2020, with a noticeable dip in deal flow within healthcare. This shouldn't be too surprising as eight of the ten largest venture capital funds closed by Canadian fund managers in 2021 were in the IT sector. The largest of these was Georgian Alignment Fund I, which hit over $1bn.

Meanwhile, the number of funds closed in Canadian venture capital last year was also extremely high, at 26, compared to historical records.

The previous record was 23 in 2020, marking two back-to-back successful years. Aggregate capital raised also increased slightly from $2,581mn in 2020 to $2,592mn in 2021.

Generally, LPs have been opting to consolidate capital with fewer, more experienced, fund managers. However, in 2021 new fund managers in the Canadian venture space matched the previous high of 11 funds closed. These ......................

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