Canadian venture capital investment activity remains slow in Q3

However, venture capital investment activity in the third quarter actually improved on results recorded in this year's first two quarters (CAN$304m in Q2 and CAN$352m in Q1).

Between January and September, over CAN$1bn was invested in 296 companies, down 33 per cent from the CAN$1.5bn put into 336 companies during the same nine-month period in 2007.

The average amount invested per business was a low CAN$3.5m in the first nine months of 2008, compared to an average of CAN$4.6m the year before.

'These investment numbers, which ultimately reflect the availability of capital in the venture capital industry, are worrisome in that they further confirm Canada's ongoing weakness in driving innovation,' said Gregory Smith, president of the CVCA and president of Macquarie Capital Funds Canada. 'The CVCA has developed a four-point commercialisation support programme to help address these venture capital industry trends and to increase the availability of venture capital for high-growth small businesses.'

By region, Ontario experienced one of the most substantial declines in venture capital activity between July and September. A total of CAN$163m was invested in 36 companies in the province, 43 per cent less than the CAN$283m in Q3 2007.

As of 30 September, a total of CAN$886m was raised in the market, effectively matching the CAN$889m raised during the first nine months of last year. However, fundraising in 2007 was the slowest on record, since the mid-1990s.

Exit opportunities for Canadian portfolio companies remained limited in 2008. In the first nine months of the year, 20 M&A exits were recorded, which was down 33 per cent from the 30 recorded during the same period last year. Just one IPO exit was recorded in the first nine months of the year, compared to seven in the same period last year. Average transaction and offering sizes were also down 54 per cent and 46 per cent, respectively.

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