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In fact, in 2022 Alberta surpassed Venture Capital investment records set in 2019, 2020 and 2021, with $729 million invested into 85 companies - marking the fourth consecutive year that Alberta achieved a record high in VC activity.3
This performance signals the strength of the Alberta’s technology industry and the important role it will have in building the future economy of the province.
The additional $175 million investment capital allocated
to AEC in 2020 continued to have a direct impact on the growth of Alberta companies – by creating critical access to Venture Capital funding. This year we added several new fund investments with a keen focus on creating access to smart capital for Alberta entrepreneurs. We made more investments in 2022 than in any other year in our history, and we deepened our commitment to growing a thriving local VC industry by investing in homegrown local fund managers PillarFour Capital and Sprout Fund.
Unpredictable economic conditions and the loss of consumer confidence following the collapse of technology industry financial institutions like SVB, and Signature Bank have caused investors to refocus toward capital-efficient businesses with strong fundamentals. This shift presents both challenges and opportunities for Alberta companies and highlights the increasing need for risk capital to support Alberta innovators now and in the future.
Our model of investing in VC funds rather than directly into companies allows us to amplify the government investment with private capital, which can then be accessed by Alberta-based technology startups. All
of this is achieved with relatively limited government involvement. In 2022/23 we saw some incredible financing activities in our portfolio with Future Fields, Summit Nanotech, Helcim, Mercator.ai, PulseMedica, OneVest, Truffle, Woveo, and GRAFTA Nanotech to mention a few. With more than $128 million invested by our funds and their partners this year, we have built upon last year’s milestone of $1 billion invested in Alberta technology startups – which now exceeds $1.13 billion. Every $1 invested by AEC has resulted in more than $5.43 of investments back into Alberta companies.
A global cohort of investors are noticing the perseverance and resilience of Alberta entrepreneurs who are creating world-class companies. Our model enables us to attract smart capital (in the form of Venture Capital) to bring their skills and their networks here. Through our investments
in funds that support Alberta tech ventures, and our industry development activities, we provide Alberta technology companies with more than just money.
We provide them with critical access to markets, mentorship and management expertise. We continue to focus on attracting investment into Alberta companies with StartAlberta.com serving as a connection point between investors and entrepreneurs, leveraging our industry partners to connect investors with close to 2,000 startups on the platform.
Our investment model is unique, as we are generating economic development in Alberta while also creating long-term financial returns for the Province on its original investment. Though the VC industry has seen a drop in fair values and a lack of exits in 2022, impacting our short- term results, on a long-term basis we are still achieving solid financial returns. Every $1 invested by AEC is currently worth $1.35, a value that will increase even further as our funds mature. By adding a large number of new funds this year, we expect the financial return to temporarily decline; however, this is part of the natural cycle of the VC industry called the “J-curve.” Our investments that are in the latter part of the J-curve are performing very well.
As stewards of public funds, we are committed to delivering on our mandate in a cost-effective way. Distributions from our investments have far outpaced our operating costs since inception by a ratio of nearly four to one.4 We are proud of the efforts of our small, uniquely diverse team of professionals who are dedicated to creating an outsized impact on the economy in our province.
As a province, we have taken great strides in creating the conditions that foster world-class technology companies right here at home. This is allowing Alberta entrepreneurs to compete globally, while maintaining strong operational ties to their home province. The Alberta technology sector has proven itself to be powerful, while demonstrating what a strategic, focused VC model can make possible!
As the theme for this year’s report “Future Now” illustrates, the importance of the actions we take today to lay
the foundation for a successful future. Just as a seed investment nurtures a burgeoning venture, our long-term strategy of growing Alberta’s technology and Venture Capital industry is firmly rooted in our mission, mandate and proven model.
[Original Signed by Ted Redmond]
Ted Redmond
Board of Directors Chair
[Original Signed by Kristina Williams]
Kristina Williams
President and CEO
4 Alberta Enterprise’s distributions to date divided by Alberta Enterprises operating costs to date. Source: internal AEC. 7
3 2022 Year in Review Canadian Venture Capital Market Overview, CVCA
2022 2023