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PwC Up front | Issue 5 | Harnessing technology

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Page 39 of 55

38 Up front Summer 2014 Nothing ventured, nothing gained Canada's venture capital renaissance: An opportunity for the corporate sector? By Peter van der Velden and Mike Woollatt Nearly six years after the 2008 global economic downturn, we're happy to be in a position to speak about venture capital (VC) re-emerging in Canada and around the world. Not long ago, limited partner investors were fleeing the sector in droves, and talk seemed to focus on whether the venture capital system was broken. In certain quarters such as life sciences, people were even asking whether the backbone of the VC industry – building world-class companies – was sound and if the model should shift to "assets," instead of businesses. Little of this angst strikes us as anything new. Like most, the VC business is a cyclical one. So today we're not surprised to see that social media has everyone's tongues wagging, mobile is everywhere and biotech has lit up the initial public offering (IPO) markets with a breadth and depth of promising offerings for better health and wellness that we haven't seen in a decade. VCs are returning substantial sums to limited partners, and the pace and magnitude of investment are at their highest levels since the late 1990s. Despite this great news, and the strong performance of seasoned veterans and a new generation of Canadian VCs with excellent teams and unique strategies, new fund formation in this country remains a big challenge. Regardless of the reasons for this funding gap, market dislocations such as these represent opportunities. All major suppliers of VC funding should take advantage but, perhaps, no single potential stakeholder stands out more than the Canadian corporate sector. 38 Up front Summer 2014 Insights | Growth

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