Canada’s Growing Tech Sector: Canadian Seed Stage Private Equity Opportunity

Untapped potential, the huge surge of Canadian start-ups offer unique opportunities for diversification outside of the United States.

While most of the venture capital in the United States continues to be focused in major cities such as New York and Silicon Valley, in recent years, Canada has begun to draw the attention of investors and VC firms. With an entire universe of untapped potential, the huge surge of Canadian start-ups offers unique opportunities for diversification outside of the United States. To gain insight, we spoke with Panache Ventures, Canada’s most active seed-stage venture capital fund, to learn more about what we believe is the next market to experience extreme growth.

Why Canada? The Opportunity

The US’ friendly neighbor from the North has a population of 37 million, which, if it was a US state, would make it the second-largest just behind California’s 39 million, and its GDP of $1.8 trillion makes it the 10th largest economy in the World (2017 IMF estimate).

However, when it comes to venture capital, Canada has historically lagged behind the U.S. In 2016, while U.S. GDP was 11.6x larger than Canada’s, the total venture capital invested in U.S. tech companies was a whopping 35.8x more than in Canada ($49 billion vs. $1.4 billion. Source: www.sampfordadvisors.com/blog/canadian-vc-vs-usa).

We are seeing many signs that this is in the process of changing, that the gap will narrow significantly in the next years, and that Canadian VC is emerging and maturing quickly. For patient investors, this could lead to years and maybe decades of growth and exceptional returns. Many US-based firms have started to pay attention and Canadian start-ups have been attracting a record amount of US investments in recent years (accordin