Alberta gains on Québec in venture activity

There are plenty of insights to mine from Torys’ recently released annual Venture Financing Report. 

Topline, Canadian venture deal activity in 2023 mimicked the down market of 2022, and overall deal volume fell 14 percent last year. Notably, early- and mid-stage financings were down 37 percent last year. Meanwhile, later-stage companies experienced a softer decline of five percent, likely because those firms, having secured financing during the pandemic boom, were transitioning to later stages, ran out of runway, and needed to raise funding again. 

But what I found most interesting in the findings is that, despite an overall decline in Canada, deal activity in Alberta shot up from nearly 11 percent in 2022 to 17.5 percent last year, gaining three years in a row. 

At that pace, Alberta could unseat Québec as the province with the second most active venture capital market (Québec’s deal activity declined from 22.4 percent to 19 percent in 2023). Investors are piling into the western province’s robust cleantech industry, the report said. 

I spoke with Crystal Phillips, VP of Calgary-based Thin Air Labs’ Fund I, who said VCs are leveraging the “wealth of intellectual property” coming out of well-funded university labs.

“This …, coupled with the rapid maturation of Alberta’s innovation ecosystem in recent years, provides an incredible opportunity for aspiring entrepreneurs.”

Alberta entrepreneurs, what’s your take on the province’s tech trajectory? My inbox is open.

Bianca Bharti
Newsletter Editor

TOP STORIES OF THE WEEK

Software dev consultancy Monadical launches Developer Capital to fund early-stage AI startups

Canada has gained another artificial intelligence investor in Developer Capital (DevCap), but this one looks a bit different from your standard venture capital firm.

Born out of Montréal-based full-stack software development consultancy Monadical, DevCap is structured as an investment corporation with no management fees and the capacity to move quickly, which enabled it to close $2.5 million CAD in funding and begin investing in pre-seed and seed-stage startups in only three months.

“We think the next mega tech companies are going to be born in 2024 and beyond, and we don’t want to miss the start,” Steiner, DevCap’s CEO, told BetaKit in an exclusive interview.

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DarwinAI acquired by Apple amid Big Tech arms race

Speaking on condition of anonymity, multiple sources familiar with DarwinAI confirmed to BetaKit that Apple reached a deal to acquire the startup. One confirmed that the acquisition has now closed and that Apple has acquired the entire company—including DarwinAI’s employees, tech, and intellectual property.

According to unnamed individuals who spoke to Bloomberg, who first reported the story, Apple acquired the startup earlier this year, and dozens of DarwinAI staff have joined Apple’s artificial intelligence (AI) division. As of press time, DarwinAI’s website is down, and neither the startup nor Apple have publicly confirmed the news. Bloomberg’s report did not mention the purchase price of the deal.

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Ex-BDC partner aims to back early-stage “AI frontier” startups with Defined Capital

Mark Trevitt, who had been investing in AI with BDC Capital since 2014, left the Crown corporation last year to found Vancouver-based Defined Capital as its managing partner. Through Defined, the former BDC partner plans to focus on early-stage technology startups across North America that are “shaping the AI frontier.”

Defined has closed on over a third of its $15-million USD target for its first fund from a group of limited partners that includes Inovia Capital, Band Venture Partners, and a slew of successful British Columbia tech entrepreneurs.

The VC firm has invested in five startups already, acting quickly to capitalize on some of the possibilities fuelled by recent advances on the data, architecture, and computing fronts. “It’s a Cambrian explosion of opportunity, so I wanted to nimbly move to be in market as fast as possible,” Trevitt said in an exclusive interview with BetaKit.

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Minerva thinks it can stop the flow of dirty money faster with AI

In Canada, intelligence agencies estimate between $45 billion and $113 billion is laundered each year. Financial institutions (FI) are tasked with repeatedly assessing their clients’ risk profiles to block dirty money from passing through legitimate financial systems.

While Toronto-based Minerva got its start serving cryptocurrency companies, the startup is setting its sights on larger FIs to help compliance teams get ahead of financial crime. After raising two funding rounds and bringing Equifax Canada on board as a partner, CEO Jennifer Arnold believes the startup is well on its way toward achieving that mission.

“By getting them to move more quickly to be able to understand their risk, something closer to real time, we actually have a real shot at disrupting this flow of [illicit] funds,” Arnold told BetaKit in an interview.

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Saskatchewan government doubles cap of startup investor tax credit to $7 million

The Saskatchewan Technology Startup Incentive (STSI) offers a 45 percent tax credit to individuals who invest in eligible tech startups in the province. Previously capped at $3.5 million, as of April 1 of this year, the program’s annual disbursement cap is now $7 million.

Saskatchewan tech ecosystem leaders lauded the province’s decision to double the program cap, with Jordan McFarlen, director of Conexus Venture Capital, telling BetaKit this decision “signals that the government believes in the tech sector.”

According to Tim Lynn, co-founder of Startup TNT—which drives investment into startups across the Canadian Prairies, including Saskatchewan—the previous cap of $3.5 million introduced “friction” regarding the amount investors should commit and the timing for receiving their tax credit.

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Majority owner Markus Frind named permanent CEO of Cymax Group

Burnaby, British Columbia-based Cymax Group Technologies has found its match in majority owner Markus Frind, who is taking over as its new permanent CEO.

Frind first invested in Cymax in leading its $30-million Series A round in October 2015, following which he joined the company’s board of directors. That investment came months after the sale of the online dating platform Plenty of Fish to Match.com in July 2015 for $575 million, which Frind founded in 2003.

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Funding, Acquisitions, and Layoffs

VIC – MarineLabs – $4.5M
VAN – Codezero – $3.5M
CGY – UCalgary receives $55M from Alberta for new tech hub
TOR – Joyride – $7M CAD
TOR – Noa Therapeutics – $2.2M CAD
OTT – TrueContext to be acquired by Battery Ventures in $150M go-private deal
MTL – BeatConnect – $2.25M CAD
MTL – Opalia – $2M CAD
MTL – MDF Commerce to be acquired by KKR in $255M go-private deal

The BetaKit Podcast

Float’s CEO on bridging the spending and software divide. Float CEO and co-founder Rob Khazzam discusses the frustrations Canadian businesses face in managing and executing their finances, the harmful effects of stalled financial innovation, and his company’s atypical approach to product roadmapping.

“The truth is we have a tremendous amount of comfort in the ambiguity of our vision.”

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