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Resources Cross Border Activity

Cross Border Activity - June 2009 There were no cross border financings this month as US VCs continued to shy away from investing north of the border. Over the last three months there has only been one instance of a Canadian company receiving backing from a US-based VC fund. On the bright side, we did see a couple of US-based companies coming to Canada to make strategic acquisitions in the technology space.
Cross Border Activity - May 2009 There were four cross-border transactions in May, one financing and three M&A deals. All of the acquisitions were made by big players, as smaller companies continued to sit on the sidelines.
Cross Border Activity - April 2009 April was a very quiet month in terms of cross-border activity. The only US player spending money on a Canadian company was Disney Online. For the first time in a long time we did not see any US-based private equity funds or venture capital firms investing north of the border. We hope to see these figures rebound over the next couple of months but that may be a little bit much to ask going into the summer, which is usually the quietest time of the year in the VC space.
Reforming Section 116 – Key to Opening Canadian Borders to Foreign Venture Capital Canada’s venture capital industry is in trouble. That industry is seriously underfunded, while Canada’s emerging technology and life sciences companies are so capital-starved they risk being uncompetitive in the North American market. At the same time, much needed and sought after US capital that could richly fund that industry and those companies is being blocked by Canada’s cross-border tax laws.
Cross Border Activity - March 2009 There were four cross-border transactions in March involving acquirers or venture capitalists based out of the US. Three of the four transactions involved US investments in Canadian technology companies. All of the money was allocated to companies operating in Ottawa or Quebec, with two reported deals in each region. As usual, US VCs making the trek north of the border participated in larger, later-stage financings – helping to raise $30 million for Zoom Media and $19.5 million for OneChip Photonics.
Cross Border Activity - February 2009 February was a very quiet month in terms of cross-border activity. There were two US-based venture capital firms injecting capital into Canadian technology companies. However, both of these VCs were making follow-on investments into existing portfolio companies as opposed to identifying new investment targets north of the border. There was only one non-public cross-border M&A transaction – it involved a strategic acquisition in the technology space.
Cross Border Activity - January 2009 During the month two US funds made investments in Canadian companies. This was an improvement over December where there was a complete absence of reported cross border financings. Things also remained rather quiet on the M&A front where both US-led acquisitions were made by public companies, as private equity buyers sat on the sidelines.
Cross Border Activity - December 2008 December 2008 was an uneventful month in terms of US investment in Canada. There was only one transaction reported involving a US player allocating capital to a Canadian company. The numbers appear even weaker in comparison to December 2007, during which there were two VC deals and 4 M&A transactions that involved US-based entities acquiring stock in privately-owned Canadian businesses.
Cross Border Activity - November 2008 Kodiak Venture Partners, Lucent Venture Partners, ATP Capital and CSFB Private Equity were the only US players announcing investments north of the border in November. As usual, these US VCs gravitated toward larger late-round financings. Meanwhile, ONCAP and Borealis Infrastructure Management were the large Canadian players behind November’s two cross-border M&A deals.
Cross Border Activity - October 2008 In October there were two financings and two acquisitions involving US-based firms. Four transactions is weak deal flow but at least it does illustrate that, in spite of what has transpired in the markets over the last couple of months, US-based VC firms and PE shops are still looking at Canadian companies. Going forward, favorable exchange rates and depressed valuations should continue to generate some measure of sustained interest from foreign investors.

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