Canadian venture capital (VC) investment dropped in 2011’s second quarter, as fundraising activity stalled amid ongoing market volatility.
According to Canada’s Venture Capital & Private Equity Association, investments in early-stage business across Canada was down 2% in the second quarter to $335 million compared with the same period in 2010.
“After a period of steady, if moderate, expansion in VC invested, it is very concerning to see weaker dollar flows at this point,” said Gregory Smith, president of the CVCA and managing partner, Brookfield Financial.
“Clearly there is demand coming from young, entrepreneurial businesses – a fact that is borne out by year-over-year growth in company financings – but this demand is not being met by an adequate supply of value-added risk capital.”
Smith blamed slow rates in venture capital fundraising as one of the primary market influences in the second quarter.
New commitments to venture capital funds were down 57% in the second quarter to $132 million compared with the same period in 2010, according to a report published by the association and research partner Thompson Reuters.
“The fundraising situation continues to undermine deal-making, and impedes our capacity to draw out the natural strengths inherent in Canada’s emerging technology sectors and entrepreneurial managers.”
Joel McKay
Twitter:jmckaybiv