* Q1 venture capital C$276 mln vs C$279 mln year ago
* Q1 private equity deals number 26 vs 20 year ago
TORONTO May 18 Venture capital, the class of
investment that gave birth to such Canadian technologies as the
BlackBerry smartphone, languished in the first quarter as
investors favored safer places to put their money.
According to data compiled by the Canadian Venture Capital
and Private Equity Association (CVCA) and Thomson Reuters, a
total of C$276 million ($267 million) was invested in the
sector in the first three months of the year.
The figure is lower even than the C$279 million invested
last year, when venture capital investing was at its lowest
"While the rate of decline in Canada's venture industry
seems to have declined, it is still very concerning," said CVCA
President Gregory Smith, a managing partner with Brookfield
Venture capital is financing for small, high-risk
businesses with growth potential, most typically in the
The sector is credited with funding the birth of Research
In Motion RIM.TO RIMM.O, the company that created the
BlackBerry, the now-ubiquitous smartphone that hooked a
generation of executives on secure wireless e-mailing.
These days, IT continues to guide most venture capital
investing. Bets on the IT sector, most of them out of the
French-speaking province of Quebec, dominated what investment
there was in the first quarter.
IT accounted for 37 percent of all disbursements, and
investment from Quebec-based venture capitalists accounted for
37 percent of all VC activity.
PRIVATE EQUITY BUYOUT
Canada's private equity buyout industry, which invests in
established private or publicly listed firms, showed more life
than the venture capital sector, where companies are unproven,
recording an uptick in the volume of deals done.
The CVCA said the private equity buyout industry recorded
some 26 completed and pending transactions in Canada in the
first three months of the year. That compares to about 20 deals
in the first quarter of 2009.
"The strong fund raising record of the last three years is
now being deployed to take advantage of business opportunities
at home and across the globe," said Smith.
Private equity funds stockpiled large amounts of cash
during the global economic crisis, and are now eager to deploy
the capital that long lay idle.
Among the most notable deals in the quarter was the $327
million investment by the Canada Pension Plan Investment Board
(CPPIB) in Progress Energy Resources Corp to help the company
to acquire gas properties in British Columbia. CPPIB invests
funds from the Canada Pension Plan to which all working
(Reporting by Pav Jordan in Toronto; Editing by Frank