UPDATE 2-Canada venture capital investments jump in quarter

Tue Nov 15, 2011 8:41am EST

* Canada VC investments up 51 pct in 3rd qtr to C$388 mln

* VC funds raise C$365 mln 3rd qtr VS C$47 mln yr-ago

By Pav Jordan

TORONTO, Nov 15 (Reuters) - Venture capital investments in Canadian startups rose 51 percent in the third quarter as individual investors, pension administrators and government poured money into VC funds.

Such investments in Canadian companies rose to C$388 million (C$380 million) in the three months to the end of September, according to figures complied by the Canadian Venture Capital and Private Equity Association and Thomson Reuters, the association's research partner.

Venture capital funds raised C$365 million in the period, more than seven times the C$47 million raised in the year-earlier quarter.

"After a comparatively slow first half of 2011, venture capital market activity in Canada made gains in the third quarter, with particularly substantial year-over-year growth in dollars invested," the CVCA said in a statement.

Venture capital investment rose in most Canadian technology sectors, led by IT-related activity with C$177 million invested, or 31 percent more than a year earlier.

Life sciences companies secured C$106 million in investments, or 83 percent more than in the third quarter last year.

But Canadian venture capital still lagged the United States.

"Even with the growth in disbursements in the most recent quarter, Canadian innovative firms receive only 40 percent of the dollars going to their competitors in the United States," said CVCA President Gregory Smith.

In Canada, deal-making was most robust in the provinces of British Columbia, Alberta, Quebec and Nova Scotia.

Quebec led the pack with an 81 percent rise in deal-making activity, with C$145 million invested in venture capital.

The top venture capital deal of the quarter was a C$39.1 million investment by six funds in Enobia Pharma Inc, a Quebec based developer of therapies to treat serious genetic bone disorders for which there are no approved treatments.

Second place went to Unique Solutions Design, a Dartmouth, Nova Scotia, company that develops advanced body measurement technologies for the health and fitness, sports and fashion industries.

Unique Solutions Design received C$30 million in funding from Northwater Capital Management, a privately held investment management company with offices in Toronto, New York and Chicago. It focuses on investments in intellectual property and intellectual property rich companies.

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