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Venture investing in Canada falls to seven-year low

Venture Capital investment in Canada fell to a seven-year low in the first quarter of 2003. Geo-political uncertainty and the SARS outbreak have been blamed for the dramatic slide in venture activity.

The value of venture investments in Canada fell to $305m from $754m in the fourth quarter of 2002. This dramatic decline follows a 51 per cent leap in the fourth quarter of last year according to figures released by the Canadian Venture Capital Association and Toronto-based Macdonald & Associates.

The most significant decline was in the size of the average deal, which has plummeted to $1.4m in the first quarter of 2003 from $2.9m in the fourth quarter of last year, $3.6m for the whole of 2002 and $5.1m in 2001.

‘In addition to the lack of mega-deals in the first quarter of 2003, investors cautiously reacted like “deer in the headlights” to external factors such as SARS, and the then impending war in Iraq,' said Brad Ashley, president of the CVCA and managing partner of PRIVEQ Capital Funds.

Canadian fund-raising has also proved more sluggish in 2003, with $1bn in new capital commitments compared with $1.5bn in the same period last year.

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