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PwC’s Latest Quarterly Report Details a Strong Year-End Investment Finish

PwC has released their third quarter MoneyTree Canada report in partnership with CB Insights and the results point towards a strong finish for the country’s investment market.

Canada as a whole is on track for its second consecutive $2 billion USD annual investment total, though this funding is coming from less total deals than 2016. At the end of 2017’s Q3, $1.77 billion has been invested across 228 deals, while 2016 saw $2.19 billion across 336 deals.

The first two quarters of 2017 saw sluggish investment and deal totals, but Q3 has more than made up for it. The monetary total for investments in Q3 nearly equals that of the first two quarters combined, coming in at $858 million across 81 deals. The first and second quarter saw $486 million and $408 million respectively across 142 combined deals.

“Canadian tech had a strong Q3 with a substantial rise in both deal volume and dollars invested,” said Chris Dulny, a technology industry leader with PwC Canada. “With this momentum, we look forward to a strong close to the year, as we’re on track to surpass US$2B invested.”

In terms of what kinds of deals are taking place, seed-stage funding saw a considerable decline while early-stage and expansion-stage deals climbed substantially.

A chart from PwC's report outlining financing deal shares by company stage.

A chart from PwC’s report outlining financing deal shares by company stage.

Internet investments dominated the third quarter, as companies in the sector saw double the amount of deals compared to the second-place industry. In total, there was $247 million invested into Internet companies through 34 deals, and $169 million into healthcare through 17 deals. Mobile and telecom came in at third with $131 million invested across 12 deals.

“Healthy activity in the Internet sector was led by financings of fintech and businesses focused on data,” said Shivalika Handa, director of corporate finance at PwC Canada. “Average deal size has increased, providing evidence that Canadian technology companies continue to attract the capital needed to scale.”

Some of the largest internet deals included a $59 million round to Absorb Software and a $43 million round to FreshBooks.

The share of total investment deals in healthcare grew enormously in Q3, jumping up 15 per cent. Over the past two years, mobile and healthcare have been fairly even in deal share, but those ratios have flip-flopped the past three quarters.

The PwC report also took some time to look at AI financing in 2017 and found that the current activity is already on a record pace. Through three quarters, AI funding has totalled $191 million across 22 deals, the highest total ever. That financing amount even beats 2015 and 2016 combined. This comes as no surprise though as several massive companies, including Facebook, are looking to Canada as an AI world leader.

In 2017 Q3, the global total for investments amounted to $42 billion across 2,645 deals.

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