Venture capital (VC) investment in the Americas was very strong in Q4’21, driven by a record-breaking quarter in the US. Following 3 very strong quarters of VC investment, Canada saw a significant drop-off in VC funding in Q4’21; despite the quarter-over-quarter decline, total VC investment in Canada during Q4’21 was the highest the country has seen in a Q4. Following a remarkable high in Q3’21, VC investment in Brazil dropped slightly in Q4’21 – although it was still the country’s second-best quarter of VC investment on record.

While megadeals remain big ticket, first-time financings see record growth

Megadeals continued to drive a significant proportion of VC investment in the Americas during Q4’21 — particularly in the US, which saw a $1.8 billion investment in Commonwealth Fusion, a $1.5 billion investment in Gopuff, a $1.4 billion raise by Sierra Space, a $1.3 billion raise by Lacework, and a $1 billion raise by Thrasio, in addition to $500 million+ funding rounds by a breadth of companies including DriveWealth, Hinge Health, Nuro, Uber Freight, and others. While the presence of large megadeals has been a consistent trend throughout 2021, the Americas also saw the number of first-time financings and their associated deal value reach new records during the year.

VC investments in Canada taking more time; interest from investors stays high

Following 3 very robust quarters of investment, VC investors in Canada took a bit of a pause in Q4’21, taking more time to assess and complete due diligence on potential deals. This, combined with a typical lull in deal activity over the winter holiday period likely accounted for the drop in VC investment during the quarter. Increasing concerns around the Omicron variant, supply chain issues, and inflation may also have also caused some distraction in the Canadian VC market.

AI remained a very hot sector for investment in Canada, helped by the country’s strong AI ecosystem including its talent base, education institutions, and array of startups. The broad applicability of AI solutions across sectors will likely keep AI-focused investment in Canada strong headed into 2022. Healthtech and fintech also remained strong areas of investment in Canada during Q4’21.

VC market in Latin America maturing quickly

The VC market in Latin America is evolving rapidly, with a growing number of startups raising larger funding rounds. The maturation of companies is readily apparent in the number of companies reaching unicorn status and the speed at which some are doing so. During Q4’21, Latin America accounted for four new unicorns: logistics company CargoX and SMB e-commerce enabler Olist in Brazil and e-commerce aggregator Merama and corporate credit focused fintech Clara in Mexico. 

Trends to watch for in 2022

The Americas is expected to see robust VC investment heading into Q1’22. While the US is expected to remain the dominant VC market in the region, other jurisdictions within the Americas — particularly in Latin America — will increasingly see strong and globally competitive companies emerge.

Q4’21 Venture Pulse Report - Americas

IPOs exits in Canada are incredibly strong right now. Although, the surge really started in 2020 when company valuations started to go through the roof and a lot of companies that wouldn’t have thought about going public before all of a sudden realized it was an option. As long as money continues to be out there and valuations remain relatively robust, we’ll probably keep seeing good exits here into Q1 and Q2’22.

Sunil Mistry
Partner, KPMG Private Enterprise Techniology
KPMG in Canada

  • New record high of $95.2 billion invested across 3946 deals

  • Annual median deal size for D+ rounds hits $110 million

  • Q4 caps a historic year for Canadian startups

  • Historic year for Brazil — with 22 companies raising $100 M or more

  • Brazil sees over $2.5 billion invested with mega deals including Nubank

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