​Canada's venture capital market continued to outperform in the third quarter, despite a slowdown in activity.

Canadian VC investment totaled US$2.62 billion in the third quarter, marking the third highest quarterly total on record, according to the Q3'21 edition of the KPMG Private Enterprise Venture Pulse report. 202 deals were completed in Q3, down from 256 deals in Q2 and 274 deals in Q1.

While the total amount invested in the third quarter is lower than the record-breaking US$4.6 billion recorded in Q2, the Canadian VC ecosystem continues to see strong investment across a wide range of sectors such as healthcare, biotech, fintech, and even travel.

Investment in Canada's venture capital ecosystem totaled $10.1 billion in the first nine months of 2021, nearly doubling the previous annual record of $5.4 billion in 2019.

The last two years have seen the most fervid period of VC investment activity in Canada, a sign of maturation of the Canadian VC ecosystem.

In the third quarter, nine separate companies raised US$100 million or more, bringing the total number of Canadian companies that have raised US$100 million or more to 16, according to PitchBook.

Globally, venture capital investment continues to surge to new highs. VC-backed companies raised US$171.7 billion across 8,682 deals in Q3, driven primarily by late-stage deals. Many of the notable deals in the quarter were in cleantech, illustrating a growing investor appetite for ESG (environmental, social, governance) investments around the world.

Looking ahead to Q4, VC investment is poised for more growth, both globally and closer to home. As startups continue to mature, deal sizes will likely increase as well, and exit activity could be a bigger theme as companies consider an IPO or other M&A opportunities.

For more information on Canadian and global VC trends, see KPMG Private Enterprise's quarterly Venture Pulse report.

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