January 31, 2022
_______________________________
2021 was an extraordinary year for venture capital in Toronto. According to a report published by briefed.in, in 2021 Toronto start-ups have collectively raised $5.5 billion in venture capital funding—an increase of $4.4 billion from the $1.1 billion in venture funding raised in 2020.
The city saw over $1 billion raised in every quarter of 2021, with a record-setting $1.7 billion third quarter. This exponential and consistent growth demonstrates an incredibly hot venture capital market showing no signs of slowing down.
A total of 276 deals were closed in Toronto in 2021. Investments have grown in size and volume across all stages of the start-up cycle, ranging from pre-seed to Series E. Briefed.in says this demonstrates a heathy balance in the venture capital ecosystem.
Jamie Rosenblatt, partner at Toronto-based Golden Ventures, states that this aggressive growth mirrors a “macro trend” in venture capital worldwide. “A rising tide lifts all boats,” said Rosenblatt. “The global market for venture capital has exploded over the last year, and our ecosystem is no exception. Investment rounds, particularly post-seed, have become enormous, with round sizes and valuations effectively doubling in the last 18 months.”
According to a Crunchbase report, global venture capital funding in 2021 totalled US $642 billion, a 92-percent increase from 2020. Although venture funding has increased worldwide, Toronto has seen disproportional growth in venture funding raised.
Ameet Shah, partner at Golden Ventures, states that three factors are contributing to the increase in venture funding. “First, we have more company builders than ever before,” Shah said. “Second, there is more capital than ever before. Third, global investors are becoming comfortable with the idea of supporting companies that build primarily for the Canadian market.”
It remains to be seen whether this trend will continue. However, the venture capital market is not showing signs of deceleration. Notably, last week Toronto-based 1Password announced a $744 million Series C funding round—this deal alone bringing Toronto’s Q1 venture capital funding to nearly three quarters of a billion dollars.
By: Eran Rubman