Venture capital in the Canadian life science industry

Venture Capital (VC) is essential to the Canadian economy and has been a critical success factor for many now-thriving Canadian companies. According to the Canadian Venture Capital & Private Equity Association (CVCA), new VC investment in Canada rose 41% to $3.2 billion in 2016, the highest on record since 2001. In the life sciences sector in Canada, VC investments grew to $1 billion in 2016 with three of the top ten deals attributable to the life science sector.

As part of a global trend, pharmaceutical multi-national establishments (MNEs) are increasing their participation in the Canadian VC markets to access R&D opportunities in Canada. Since 2011, pharmaceutical MNEs, alone or in partnerships, invested in four new Canadian Life Sciences VC funds.

Business Development Bank of Canada (BDC) provides VC to Canadian life sciences firms and leverages risk capital. BDC Healthcare Venture fund is focused on Early and Seed Stage Life Science companies, with initial investments from $500,000 to $5 million, and up to $20 million over the life of the investment. As of 2012, BDC VC investments in in the Life Sciences sector accounted for the greatest share of BDC's VC investment in any sector.

The federal government plays a significant role in VC through investments in Canadian innovative firms, by leveraging private sector investment, and through policies and programs that facilitate financing of business innovation. The Venture Capital Action Plan (VCAP), announced in January 2013, deployed $390 million in new capital that attracted $1.4 billion in new capital. In budget 2017, the government announced the Venture Capital Catalyst Initiative which proposes to invest a further $400 million through the Business development Bank of Canada (BDC).

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