Goal 13

Venture Capital - Deep Dive


Goal Status

checkmark icon to signify progressing Progressing Not On Track
Baseline: -28.3
Current: -22.05
Target: 0
Bands

The annual VC funding per capita in Nova Scotia fell just above 2016 levels in 2018, however this is still one of the strongest annual performances on record. This decrease in VC funding experienced by Nova Scotia was not reflected in the Canadian national data, which resulted in the largest gap between Nova Scotia and Canada’s VC funding per capita since 2014.

Year NS Canada
2013 $15.95 $54.01
2014 $19.18 $57.43
2015 $55.52 $64.11
2016 $67.88 $89.20
2017 $80.99 $95.78
2018 $69.80 $99.84

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Venture Capital research firm CB Insights shows the year-over-year (YoY) growth in the number of deals over the last five years was 25.01% in Nova Scotia, compared to only 17.24% in Canada overall. However, the YoY growth in funding was 4.04% for Nova Scotia, and 11.85% for Canada.

Quarter Canada Nova Scotia
2014 Q1 123 2
2014 Q2 151 4
2014 Q3 132 6
2014 Q4 166 7
2015 Q1 192 4
2015 Q2 141 3
2015 Q3 137 4
2015 Q4 197 12
2016 Q1 263 18
2016 Q2 185 8
2016 Q3 239 7
2016 Q4 206 17
2017 Q1 261 24
2017 Q2 246 14
2017 Q3 266 7
2017 Q4 299 12
2018 Q1 285 8
2017 Q2 366 11
2018 Q3 263 11
2018 Q4 353 28

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Quarter Canada Nova Scotia
2014 Q1 1332.6 10.35
2014 Q2 590.72 5.72
2014 Q3 1309.86 21.27
2014 Q4 1253.97 3.26
2015 Q1 1432.63 1.3
2015 Q2 780.74 6.49
2015 Q3 1283.62 3.87
2015 Q4 1421.75 19.79
2016 Q1 697.78 6.54
2016 Q2 1232.03 9.67
2016 Q3 1138.48 2.78
2016 Q4 3998.63 21.11
2017 Q1 925.32 9.04
2017 Q2 1434.95 11.6
2017 Q3 1696.03 16.2
2017 Q4 1350.85 22.25
2018 Q1 1391.18 14.62
2017 Q2 3120.64 3.89
2018 Q3 1485.18 26.1
2018 Q4 1858.99 4.87

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Years Dartmouth Halifax Amherst Bedford Beechville Bible Hill Bridgewater Burnside Centreville Debert Fall River Hammonds Plains Herring Cove
2009 1 2 0 0 0 0 0 0 0 0 0 0 0
2010 1 3 0 0 0 0 0 0 0 0 0 0 0
2011 2 3 0 0 0 0 0 0 0 0 0 0 0
2012 2 4 0 1 0 0 0 0 0 0 0 0 0
2013 3 13 0 0 0 1 0 0 0 0 0 0 0
2014 2 11 1 2 0 0 1 1 1 0 0 0 0
2015 3 17 0 3 0 0 0 0 0 0 0 0 1
2016 4 33 0 2 1 1 1 0 0 0 0 1 0
2017 4 37 0 1 0 0 1 2 0 1 1 1 0
2018 7 35 0 6 0 0 0 0 0 0 0 1 0

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While most VC growth has occurred in Halifax, recent years have also seen progress in other regions of the province. Strong growth in the number of VC backed investments is a powerful indicator of the strength of the local entrepreneurial ecosystem. High growth firms flourish in distinctive types of supportive entrepreneurial ecosystems with specific supports most often found in central hubs. This is promising for the continued growth of VC deals in the province, because it indicates a strong hub in Halifax, but also connections and benefits throughout the rest of the province.

Currently, most VC backed funding in Nova Scotia takes place at the ‘Seed/Angel Stage’ , with little funding occurring in subsequent (early, formative, and later) stages. While this provides funding for start-ups to initially get off the ground, the lack of funding at later stages may prevent further growth, where greater employment opportunities may arise.

In the last 5 years, 78 per cent of all Nova Scotia’s VC deals were at the seed stage, compared to 60 per cent for Canada, and 46 per cent for the United States.

*In the context of private equity, 'seed stage' refers to the state of a company when it has just been incorporated and its founders are developing their product or service. (NSDAQ)

Location Seed / Angel Series A Series B Series C Series D Series E+
NS 78% 16% 4% 3% 0% 0%
Canada 60% 25% 9% 4% 2% 0%
US 46% 24% 15% 8% 4% 3%

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VC deals in Nova Scotia also tend to be smaller than those in the rest of Canada and the United States. The median for seed stage investments in Nova Scotia was $670,000 (USD) for the five-year period from 2014-2018. Whereas over the same period, the median for seed stage investments in Canada was $1.21 million (USD) and $1.85 million in the United States.

 NS Canada US
Seed / Angel $0.67 $1.21 $1.85
Series A $4.73 $9.85 $11.18
Series B $9 $15.54 $21.31
Series C $2.38 $29.69 $34.22
Series D $0 $46.81 $52.99
Series E+ $0 $83.30 $90.33

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Nova Scotia is progressing on this measure and but based on a slight decrease from 2017-2018 may not be on track to achieve the goal of matching or surpassing the Canadian three-year VC investment average. These indicators also speak to the maturity of Nova Scotia’s up-and-coming startup ecosystem. They are important to monitor because they are related to the sustainability of current growth. If that growth is to continue, it will be important to increase the level of maturity of investment deals by type, the median size of investments, and the geographic distribution of VC activity.

 

CHANGES TO THE INDICATOR, BASELINE, OR TARGET:

  • Due to a break in the data series, data from Canadian Venture Capital and Private Equity Association (CVCA) used for this measure are now only available starting in 2013. As VC funding is volatile, we wanted to maintain a multi-year average. However, a five-year average was too long to establish a baseline given this new, shorter time-series. Thus, the indicator was changed from a five-year average to a three-year average.
  • The baseline was adjusted to the three-year average from 2013 to 2015. The current actual is the latest available three-year average from 2016-2018.
  • This indicator aims to measure the gap between the Nova Scotian and Canadian per capita levels of funding.