Opportunity for corporate venturing in Canada, with very few domestic companies actively investing today, report reveals

Toronto, May 14, 2024 – A new report released today highlights that few Canadian corporates are capitalizing on the significant opportunity that venture capital investing presents. Only 6 per cent of Canadian public companies generating over $1 billion CAD in annual revenue are investing and disclosing their venture capital investments into companies, compared to approximately 40 per cent of their counterparts in the United States. Moreover, report data shows that Canadian corporates actively engaged in venture investing are directing the majority of their investments abroad, and that most Corporate Venture Capital (CVC) participation in Canadian startups originated from international corporates.

In this report, Deloitte Ventures, - Deloitte Canada’s $150 million venture capital initiative - in collaboration with BDC Capital, provides insights into the evolving landscape of Corporate Venture Capital (CVC) – minority venture investments by public or private companies into early or growth-stage companies – in Canada. This inaugural report covers the period from 2019 to 2023, offering a detailed analysis of trends, opportunities, and challenges in the Canadian CVC market.

"More engagement from Canadian corporates in venture capital can yield a ‘triple-win’ for Canada, benefiting corporations, start-ups, and the Canadian economy at large,” says Talia Abramowitz, Managing Partner, Deloitte Ventures. “Corporates can benefit financially as well as through strategic insight and exposure to new technologies, markets, and customers. Start-ups gain access to the resources, market expertise, and brand power of large corporations and simultaneously, the economy prospers as tech clusters generate job opportunities, enhance productivity, and foster more innovative solutions at competitive prices."

As highlighted in the report, corporate venture investing is an integral part of a dynamic and maturing VC ecosystem. It has the potential to foster and expedite the development of disruptive technologies essential for business competitiveness, such as artificial intelligence and advanced robotics, and can serve as a strategic tool both for corporates and technology startups. Harnessing VC to foster collaboration between technology start-ups and the corporate sector will not only accelerate the development of cutting-edge innovation, but also reinforce Canada’s technological advantage and propel the country’s entire economy forward.

This missed opportunity to use corporate venturing as a strategic tool appears even more stark in specific sectors within Canada, including those in which the country has a competitive advantage. The report found that the majority of active Canadian CVC funds over the past five years have a parent company in the finance and insurance, media and telecom, or technology sectors, while corporates in the energy, as well as the industrial and manufacturing sectors, have been largely absent from the CVC space.

At the core of this new report lies a profound belief that striving for higher CVC participation by Canadian corporates would positively impact and grow Canada’s domestic technology ecosystem and catalyze growth in the country’s economy.

"CVC's impact goes beyond just boosting profits,” adds Talia Abramowitz. “It can also bring invaluable innovations to its parent companies. By fostering new ideas and technologies, a robust CVC unit strengthens the core business, ensuring long-term resilience and prosperity."

To read more, including testimonials from CVCs and recommendations for Canadian corporations to consider the untapped potential of CVC investments, download the full report here.