Canadian venture capital investments jump in quarter

TORONTO Tue Nov 15, 2011 9:57am EST

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TORONTO (Reuters) - Venture capital investments in Canadian start-ups 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.

The CVCA said most Canadian technology sectors saw higher levels of VC investment, led by information technology-related activity with C$177 million invested, or 31 percent more than in the year-ago period.

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 that of 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, dealmaking was most robust in the provinces of British Columbia, Alberta, Quebec and Nova Scotia.

($1=$1.02 Canadian)

(Reporting by Pav Jordan, editing by Gerald E. McCormick)

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