B.C. tech sector ‘punches above its weight’ despite drops in venture capital fundraising

Hootsuite's HQ2 building in Vancouver's Mount Pleasant neighbourhood.

Despite declines in venture capital (VC) fundraising across Canada in the third quarter, interest in B.C.’s tech sector still “punches above its weight” in terms of dollars invested.

The Canadian Venture Capital and Private Equity Association (CVCA) reports VC funds invested $734 milling during Q3 financing rounds, up 26% compared with the same period a year earlier when $581 million was invested.

“However, new capital commitments to Canadian VC funds continued to decline in the third quarter which is concerning,” the report said.

Fundraising dropped 39% from $258 million in Q3 2013 to $158 million in Q3 2014.

However, CVCA CEO Mike Woollatt said there is a lot to highlight in B.C., especially when taking into account the success its tech sector has had with companies like Hootsuite.

The social media management site announced in September it had closed a US$60 million round of financing, bringing its total financing to US$250 million.

“On the VC side B.C. always does really well and in some ways punches above its weight,” Mike Woollatt said.

The CVCA showed B.C. ranks third in Canada in terms of venture capital invested year-to-date, its $339 million accounting for 21% of the market during the first nine months of 2014 even though just 13% of Canada’s population lives in the province.

Ontario came in first with $580 million and Quebec was second at $397 million.

Meanwhile, the Tim Hortons-Burger King merger helped set Canada on track for its biggest year ever in the private equity market.

Deals in the buy out and private equity market during Q3 amounted to $19.8 billion — $12.5 billion of which came from the fast-food merger.

Just $1.2 billion in deals were reported during the same period in 2013.

“Private equity is going through a boom and it’s not going to stop,” Wollat said.