June 27, 2022

Weekly EconMinute—Alberta’s venture capital attraction

In this week’s EconMinute, we’re talking about Alberta’s venture capital attraction.

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Venture capital (VC) is private financing provided to start-ups or smaller, privately held businesses future growth potential. Companies attracting VC are often too small, unestablished, and high-risk to access financing from the sources used by larger, more established businesses: public capital markets and/or bank loans.

For venture capitalists, investments tend to be high-risk and high-reward endeavours. VC investments often flow to businesses with innovative ideas, new technologies, and novel business plans, and larger VC deals are typically forged with businesses further along their path to maturity.

Improved regional VC attraction is typically evidence of an improving innovation landscape and is a nod of investor confidence in a region’s ability to scale new businesses. Recently released data indicates Alberta had a strong quarter for VC attraction, though the province’s share of Canada’s VC remains below its share of the population.

  • Alberta’s Quarter 1 (Q1) 2022 quarterly VC investment was its highest quarter on record ($466M via 26 deals).
  • Calgary made up 93% of Alberta’s total Q1 VC attraction and trailed only Toronto, Montreal, and Vancouver as the nation’s highest recipient by total value.
  • Alberta-based Neo Financial received the nation’s fifth-largest deal of the quarter ($191M Series C) and the largest deal outside Ontario or Quebec.
  • From 2019-2021 and in Q1 ‘22, Alberta attracted 3.6%, 10.3%, 3.8%, and 10.4%, respectively, of Canada’s total VC—all smaller than Alberta’s 11.6% share of the national population.
  • Q1 ’22 VC levels likely reflect carryover momentum from Q4 ’21 and will likely normalize in the months ahead as the tech investment environment has become more tepid.

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