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Blakes upRound™: June 2024

June 20, 2024

In this Edition

  • How the Ontario Securities Commission (OSC) is improving access to capital for early-stage businesses
  • New policies for foreign investments in the gaming, VR and digital media sector, workplace policies across Canadian jurisdictions, the 2024 federal budget, and other need-to-know topics
  • Artificial Intelligence (AI) investment deals are trending; Bank of Canada cuts interest rates

Market Insights

OSC Introduces Initiatives to Support Capital Raising for Early-Stage Businesses in Ontario — As part of its mandate to foster capital formation and competitive capital markets, the OSC has recently introduced certain time-limited initiatives to improve access to capital for early-stage businesses in Ontario. These initiatives include creating new dealer registration exemptions for early-stage businesses and not-for-profit angel investor groups and extending the self-certified investor prospectus exemption pilot program. The OSC is implementing these initiatives through its TestLab program, which it uses to evaluate capital market innovations and new approaches to regulation in Ontario’s capital markets. Read more in our new Blakes Bulletin: OSC Introduces Initiatives to Support Capital Raising for Early-Stage Businesses in Ontario.  

Legal Update

Founders and investors may find the following insights from our Blakes colleagues helpful and instructive:

Deal Monitor

Data sourced from PitchBook.

  • IT investments continue to be the most active industry, making up nearly half of the top 20 deals in 2024 YTD based on value, with a primary focus on SaaS and Artificial Intelligence (AI), the latter of which has been a trending topic in the space. Financial Services investments are on the rise, already surpassing its 2023 year-end total in deal value and count. 
  • Among the largest transactions was Ontario-based QuadroCore’s strategic partnership with Sustainable Development Technology Canada, including US$66-million funding to manufacture their mass spectrometer offering high-performance tools with rapid throughput, cost-effective process and modular design, enabling security, healthcare, and other industries to accurately quantify analyte of interest.
  • Other large SaaS and AI transactions in 2024 include Brim Financial’s US$63-million Series C led by Export Development Canada, Reactiv’s US$59-million funding from Unbound Capital, Thentia Cloud’s US$53-million Series B1 led by Spring Mountain Capital, BDC Capital and First Ascent Ventures, and Dcbel’s US$52-million grant funding from California Energy Commission.

YoY Sector Investment Activity (Deal value and count), 2018 to 2024 YTD

  • While 2024 to date has remained relatively slow, we may see a spike in deals as we approach the end of Q2. The Healthcare industry has been slow to start 2024, but if past trends continue, we should see it jump to one of the leading industries by year’s end.
  • With the Bank of Canada cutting key interest rates to 4.75% (the bank’s first rate cut since March 2020), businesses should hopefully start to see an increase in investment activity and a turn in the venture and growth equity market.

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