There is an interesting trend shift in investment activity happening globally: Is Silicon Valley becoming less relevant?
There may be a warning sign emerging in the data. It is not all bad news. In fact, the shift will be welcomed by many. Canada has seen more investment activity in the last four months than in all of 2015. That’s stunning! The effect will have long term effects on many communities. The shift should be noted by business people, venture capitalists and entrepreneurs everywhere.
Every Friday we publish and activity report on the prior week’s global investment activity. The amount of data we are gathering is impressive. We publish the posts to share the information, because keeping up on all of it is challenging, but necessary for anyone involved in the market. Now that we have a meaningful sample of data, we can begin to share some insights.
We will be publishing more extensive data in the near future. We decided to examine market activity data in uncommon ways, and were struck by some unexpected trends.
First off, the good news for Canada… In the last four months (April – July), more investment capital went into Canadian companies than all of 2015! In the period April – July 31, we tracked 71 investments for a total of $1.6B. During 2015, Canadian economic data recorded 197 deals for a total of $1.5B, for the entire year!
The last months 2015 were marked by a slowdown in investment activity, and Canadian 2015 activity was down from the prior years. The market has come roaring back in Canada since Q1 of 2016. There has been a marked shift in investment patterns, and we expect it to continue. The shift is great news for the Canadian economy. Investment is followed by spending; companies raise money, and then they spend it hiring staff and buying supporting products and services. Staff spend more in restaurants, and products and services. The shift may be an early signal of good things to come for the Canadian economy.
As Canadian entrepreneurs, we welcome the increase in investment activity in Canada. It mean Canadian innovation can continue to develop locally, which only has long-term benefits to us all.
In the U.S., investment activity is also picking up, and strong. While the last part of 2015 was noted for a slowdown in investment activity, 2015 activity in the overall was the second strongest in the last twenty years! But, there is a shift happening in the US too. In the years leading up to 2015, California’s share of the US investment activity grew to 57%. We’ve broken out California and the SF Bay area, but notice the trend:
More strikingly, as a percentage of deals:
Currently, based on reported financings, there’s been a huge shift since 2015. When we break down the data by funding round and sector, the fundamental changes become more obvious.
There are worldwide financing trends that indicate interesting market shifts worth watching, and we will be developing these trends over the next weeks.