Venture Pulse Q4 2020: One for the books

Venture Pulse Q4 2020: One for the books

Despite a fifth quarterly dip, Canadian VC investment remains robust

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Sunil Mistry

Audit Partner, Enterprise and TMT

KPMG in Canada

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Canada recorded its second-highest level of venture capital investment ever in 2020, despite global uncertainty resulting from the COVID-19 pandemic, the U.S. presidential election, Brexit, and trade tensions between the U.S. and China, according to the Q4'20 edition of the KPMG Enterprise Venture Pulse report. VC funding in Canada reached US$3.8 billion across 635 deals in 2020, compared to a record US$4.9 billion across 780 deals in 2019.

Despite a fifth straight drop in quarterly VC investment, fourth-quarter VC funding in Canada was robust compared to historical norms at US$841.9 million, down 8 per cent from US$913.2 million in the third quarter and 32 per cent from a near record US$1.24 billion in the same period a year earlier.

For a year fraught with challenges, Canada's VC industry performed impressively well overall. The combined total for the second half of 2020 came in at US$1.76 billion, almost equalling the first half's US$2-billion results.

Funds continue to flow to firms developing technologies to combat the impacts of COVID-19. As 2021 unfolds, we expect VC investment to remain robust, particularly in areas like logistics and delivery, fintech, biotech, healthcare, life sciences, and edtech.

Globally, annual VC investment totalled US$300.5 billion – the second-highest level of funding ever, next to 2018 (US$329.7 billion). The fourth quarter remained robust, with US$80.8 billion in investment across 5,418 deals, driven by the continued resurgence of investment activity in Asia, particularly in China. The Americas accounted for more than half of global VC investment in the fourth quarter, with US$41 billion of investment across 2,725 deals. The U.S. accounted for the bulk of activity, US$38.8 billion across 2,526 deals.

For more information on Canadian and global VC trends, check out KPMG Enterprise's latest quarterly Venture Pulse report.

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