Investment projections don’t always come true, especially when markets are this uncertain.
Driving the news: The BDC reported a $220 million loss in value of its venture capital portfolio in the 2024 fiscal year, a far cry from the projected $33 million increase. It cited broader market uncertainty as the chief reason for the unexpected dip in investment values.
Why it matters: As Canada’s largest and most active VC investor, the BDC valuation affirms the gloomy atmosphere hanging over the nation’s VC landscape since last year. In 2023, the estimated 10-year rate of return from Canadian VC investments was down 11.7% annually.
- The BDC saw the drop in value as normalization following a record 2021, but 2024 struggles potentially signal larger vulnerabilities in Canada’s tech funding ecosystem.
Big picture: Uncertainty around returns appears to have subdued appetites for Canadian VC funding. A new report found that total funding last quarter declined 14% year-over-year. Companies in the earliest funding stages have been hit hardest by this funding downturn.
Yes, but: The slump isn’t a total funding apocalypse for promising startups. As RBCx director of capital, John Rikhtegar, told Peak Tech in July, “Less capital allocated inherently means that capital will go to the best investors who will find the best founders.”—QH