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CONCLUSION
A ngel investing continued to recover throughout 2021, following a drop in investment activity in Q2 and Q3 of 2020 that resulted from the onset of the COVID-19 pandemic. This reflects both the recovery of the Canadian economy and the adjustment of angels to investing online. But emerging trends in venture capi- tal investing raise concerns whether angel investing will continue at a high level throughout 2022. Both the amount invested in Canadian businesses by venture capital funds and the number of deals has de- clined in Q2 2022 compared with Q1 2022 and Q1 2021. Venture capital investment in Canadian companies was less than half its value a year earlier. This reflects a wid- er global trend. It arises from the economic slowdown and associated downturn in public markets for tech and
life science companies. Although this downturn is most pronounced at the later stage, with a fall in the propor- tion of funding accounted for by mega deals, both ear- ly-stage and seed stage investing have also fallen. And there has been an increase in the median deal size from $3 million to $4 million USD. Nevertheless, although down from its 2021 peak venture capital is still at a high level by historical standards and venture capital funds still have plenty of ‘dry powder’ available for investing but there is less pressure for them to invest. 28,29,30 What effect this downturn in venture capital investing might have on angel investment is currently unclear. But given the connections between the two markets it is inevitable that it will impact angel investing. The seed stage is least affected by current market conditions as
28 The Logic. FOMO has gone out of the market’: Q2 venture funding in Canada plunges by more than half from last year. 12th July 2022. https://thelogic.co/news/special-report/fomo-has-gone-out-of-the-market-q2-venture-funding-in-canada-plunges-by-more-than-half-from-last-year/ 29 Crunchbase. Q2 VC Funding Globally Falls Significantly As Startup Investors Pull Back, July 6, 2022. https://news.crunchbase.com/venture/global-vc-funding-falls-q2- 2022-monthly-recap/ 30 Crunchbase. North American Startup Funding Fell Further In Q2, July 7, 2022. https://news.crunchbase.com/quarterly-and-annual-reports/na-startup-funding-de clines-q2-2022-monthly-recap/
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