Canada venture capital stagnated in first quarter

Tue May 18, 2010 5:01am EDT
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TORONTO (Reuters) - Venture capital, the class of investment that gave birth to such Canadian technologies as the BlackBerry smartphone, languished in the first quarter as investors favored safer places to put their money.

According to data compiled by the Canadian Venture Capital and Private Equity Association (CVCA) and Thomson Reuters, a total of C$276 million ($267 million) was invested in the sector in the first three months of the year.

The figure is lower even than the C$279 million invested last year, when venture capital investing was at its lowest since 1996.

"While the rate of decline in Canada's venture industry seems to have declined, it is still very concerning," said CVCA President Gregory Smith, a managing partner with Brookfield Financial.

Venture capital is financing for small, high-risk businesses with growth potential, most typically in the technology sector.

The sector is credited with funding the birth of Research In Motion, the company that created the BlackBerry, the now-ubiquitous smartphone that hooked a generation of executives on secure wireless e-mailing.

These days, IT continues to guide most venture capital investing. Bets on the IT sector, most of them out of the French-speaking province of Quebec, dominated what investment there was in the first quarter.

IT accounted for 37 percent of all disbursements, and investment from Quebec-based venture capitalists accounted for 37 percent of all VC activity.