Canadian Venture Capital Activity: An Analysis of Trends and Gaps (1996–2002)

Note to Readers

About Macdonald & Associates Limited — Founded in 1985, Macdonald & Associates Limited has developed the most comprehensive database of venture capital (VC) and private equity activity in Canada. With more than 10 000 deals, 5500 companies, 350 funds and more than 8500 contacts fuelling the ever-growing pool of data, Macdonald & Associates Limited tracks and analyzes investment trends daily. With this extensive network of contacts, Macdonald & Associates Limited is the focal point for information on Canadian venture deals and dealmakers, and produced a data resource that covers virtually all of the players in Canada (and, increasingly, those from the United States that are now investing north of the border). Through Macdonald & Associates Limited's on-line product — the VC Reporter^TM — subscribers are able to customize in-depth research and analysis from a platform of current and comprehensive VC data.

Industry leaders, government and members of the risk capital community depend on the accuracy and reliability of Macdonald & Associates Limited data and, as a result, it is widely quoted in the national business press. In addition, Macdonald & Associates Limited is the exclusive provider of data and industry analysis for the Canada's Venture Capital and Private Equity Association, and Réseau Capital in Quebec.

Methodology — To stay abreast of trends in Canada's VC industry, Macdonald & Associates Limited continually updates all its company financing information. For this reason, current and historical aggregate data are subject to change. In 2002, Macdonald & Associates Limited revised its methodology and data to better capture and report on the increasing inflows and outflows of VC investments in Canada, particularly since 1999. The new methodology, which is now more consistent with that used by Venture Economics in the U.S., separates the investments made in Canada (by Canadian and foreign venture capitalists) from the investments made by Canadian venture capitalists outside Canada. In other words, the aggregate VC investments now reported for Canada no longer include VC investments made by Canadian venture capitalists (likely in partnership with foreign VCs) in firms located outside Canada. These are now reported in a separate report and through the new VC Analyst III, which is exclusively for VC investments made outside Canada. As a result of these revisions, Web site users should be alert to amendments to quarterly and annual statistics, in total and across specific categories.

Limits — Due to shortcomings in research and voluntary industry reporting, the existing data for the period covered in this report may not be exhaustive. However, over the last several years, Macdonald & Associates Limited has regularly refined its methodology and, as a result, a more complete picture of Canadian VC transactions is now available.

Terminology — Note that most terminology used in this report was sourced from the Macdonald & Associates Limited Web site at www.canadavc.com. Specialized or technical terms are defined in the glossary of terms, Appendix A.

Inquiries — For any inquiries or questions about this report, please contact Industry Canada's Small Business Policy Branch, at info@smefdi-prfpme.gc.ca