Last week, Martin Long—Alberta’s parliamentary secretary for small business and tourism—released a statement about venture capital investments in Alberta in the second quarter of 2022.
This statement was accompanied by this tweet from Jason Kenney, the current premier of Alberta.
Now, none of the information in the statement or the tweet is wrong, but there is some context, which when revealed makes both Long’s and Kenney’s comments far less impressive.
Their information is based on Canadian Venture Capital and Private Equity Association’s second quarter report for 2022, which you can find here.
Let’s go through Long’s comments and fill it the information he left out.
Alberta’s second quarter of 2022 saw 33 venture capital deals worth $70 million, building on our robust first quarter, which saw $411 million in investment. With 56 deals worth $481 million in venture capital investment in the first six months, we are on pace to shatter last year’s record of $561 million.
All of these numbers are true. There’s not much to add at this point.
Alberta’s 56 venture capital deals closed in the first half of the year puts us narrowly behind British Columbia’s 58 and gaining fast, with a 55 per cent increase in the number of deals closed quarter after quarter. This strong increase in early-stage deals sets the stage for Alberta-based start-ups to mature and attract greater investment.
Did you notice anything here? In the first paragraph, Long highlighted both the total number of deals and the total value of all deals for Alberta.
In the second paragraph, however, he pointed out only the number of deals when comparing Alberta to British Columbia. There’s a reason for that.
While Alberta is only 2 deals behind BC after the first half of year, BC’s total value of their deals is nearly double that of Alberta’s total value: $807 million vs. $481 million.
And while Alberta’s deals increased 26 in the first quarter to 56 in the first half, BC also increased, but from 25 to 58 during the same period.
BC increased their total venture capital deals by 33 in the second half. Alberta, meanwhile, saw an increase of only 30.
It’s weird to say that Alberta is gaining fast on BC when BC saw more deals than Alberta, and BC went from trailing Alberta in the first quarter to leading Alberta in the first half.
Canada, as a whole, saw $6.223 billion in venture capital investments in the first half of 2022, spread out among 371 deals.
That means that Alberta accounted for 7.73% of the total value and 15.09% of the total number of deals. At the end of the first quarter, Alberta accounted for 10.3% of the total value and 13.3% of the total number of deals.
So, Alberta’s share of the total number of deals has increased, but their share of the total value of the deals has decreased.
Here’s how all the provinces fared:
| Deals | Value | Avg per deal | |
|---|---|---|---|
| ON | 158 | $3,000 | $18.99 |
| QC | 64 | $1,700 | $26.56 |
| BC | 58 | $807 | $13.91 |
| AB | 56 | $481 | $8.59 |
| SK | 11 | $119 | $10.82 |
| NS | 11 | $78 | $7.09 |
| NB | 6 | $23 | $3.83 |
| NL | 4 | $11 | $2.75 |
| PEI | 1 | $3 | $3.00 |
| MB | 2 | $1 | $0.50 |
This table lists the provinces by total value, from highest to lowest. We see that Alberta had the 4th highest value of total venture capital investments in 2022. And that isn’t surprising. After all, it is the 4th most populous province.
What is surprising is that while their total value is the 4th highest, there’s a huge spread between Alberta and BC, the next highest. BC’s total value is nearly double that of Alberta. And Ontario, which has the greatest total value, is more than 6 times higher than Alberta.
Alberta, also, ranks 4th for total number of venture capital deals, finishing the first half with 56 deals, just 2 less than BC. Québec had 64 deals and Ontario had 158, which is nearly 3 times as many as Alberta had.
Even more striking than these gaps, however, is how Alberta ranks when we compare the average value per deal.
Last quarter, Alberta saw an average value of $8.59 million per deal. That puts them at 5th among the provinces. Saskatchewan was in 4th place, with a per deal average that was $2.23 million higher than Alberta’s, despite seeing fewer deals.
At the end of the first quarter, Alberta was in 4th place for average deal value, which means they’ve dropped a spot. Not only that, but at the end of the first quarter, Alberta’s was only $1.5 million behind the next highest province, which means the spread between the other provinces has increased.
And that province that was $1.5 million ahead of Alberta at the end of last quarter was BC, which is now $5.32 million per average deal ahead of Alberta.
Québec had the highest per deal average, at $26.56 million, which was more than $17.97 million higher than Alberta’s. At the end of the first quarter, their average deal value was only $10 million ahead of Alberta’s.
Ontario was in second place with a $26.7 million average.
Our continued increases in the amount of venture capital deals and investment send a strong signal to the rest of the country and the world that we are developing a robust innovation ecosystem. Alberta’s government has supported our emerging tech and innovation sector by increasing the number of incubators, accelerators, and organizations that support entrepreneurs to start, grow, and remain in Alberta.
I mean, I guess? But several other provinces are performing better than Alberta. Does that mean those provinces are sending stronger signals to the rest o the country and the world?
Long should be really careful about taking responsibility for the growth in venture capital investments. Because if he takes responsibility for the extra $30 million in investments, he has to take responsibility for the province dropping to 5th place for per deal average, too.
