PRINT THIS PAGE 2004 Review of venture capital investment activity in Canada01/06/2005. Source: CVCA.
Capital invested by Canada’s venture capital industry increased slightly in 2004 however, funds raised by the industry declined in 2004 according to the industry’s annual statistics report of 150 venture capital investment firms released today by the CVCA and research partner Macdonald & Associates. Capital disbursed (invested) by venture investors in Canada grew to $1.8 billion in 2004 from $1.7 billion in 2003. This was the first year-over-year increase in venture industry capital invested since 2000.
”The year over year increase in investment is a positive indicator that the industry is resuming its long-term growth trajectory.” said Dr. Robin Louis, President of the CVCA and President of Ventures West Management Inc. “The past few years have seen a major adjustment from the “bubble” of the late 1990s and have been challenging ones for the venture capital industry and for portfolio firms. However, we are hopeful that the industry has returned to a period of sustainable growth.”
In 2004, $1.7 billion was raised by venture capital companies in Canada, down by 15% from last year’s $2.0 billion. Much of the decline was attributable to reduced sales by LSVCC and other retail funds. One encouraging sign was a 67% growth in new commitments to private-independent funds, from $266 million in 2003 to $443 million this year.
While this trend is encouraging, the increase is on a relatively small base. In the US, there was a substantial increase in capital raised by the venture capital industry with commitments to new funds growing from US$ 10.6 billion in 2003 to US$17.6 billion in 2004.
“The industry continues to face significant challenges to its ability to attract new capital,” said Dr. Louis. “2004 is the 3rd consecutive year of declines in new capital coming into the industry. Now that the rate of venture capital investment has started to increase, venture capital companies will have to secure new capital commitments to maintain the investment pace.”
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The CVCA - Canada’s Venture Capital & Private Equity Association, was founded in 1974 and is the association that represents Canada’s venture capital and private equity industry. Its over 1000 members are firms and organizations which manage the majority of Canada’s pools of capital designated to be committed to venture capital and private equity investments. The CVCA fosters professional development, networking, communication, research and education within the venture capital and private equity sector and represents the industry in tax and regulatory matters.
Macdonald & Associates Limited is recognised as the leading source of data, analysis and strategic market intelligence on the venture capital and private equity markets in Canada. Detailed transaction information on over 1,300 investors across Canada and the United States is available in its online, proprietary database VCReporter.
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