Venture Financing Report

In 2022, Canadian venture capital was largely defined by corrective effects in the market following record levels of activity in the year prior.

Canadian venture-backed companies were hardly alone in this phenomenon, as businesses across the world responded to increased interest rates, rising inflation, supply chain issues and global unrest. Companies were faced with the choice to cut costs or accept financing in smaller amounts or on less favourable terms than in the recent past. Consequently, we saw fewer financings and at lower valuations than in the previous two years.

While the movement in deal terms was not dramatic, there was a clear directional trend towards more investor-friendly provisions and deals, including a significant increase in the number of down rounds compared to the previous two years. In our work with clients, we are seeing companies raise money via bridge and insider rounds containing investor-favourable terms on non-preferred