Canada's Venture Capital Industry in Q1 2006

							May 10, 2006                                                            FOR IMMEDIATE RELEASE

                       Canada’s Venture Capital Industry in Q1 2006

                        VC Investment Activity Up 13% from Q1 2005
                          as Fundraising into VC Funds Declines

Toronto, May 10 – First quarter investment in Canada’s venture capital industry showed seasonal
strength, according to market figures released today by Canada’s Venture Capital and Private
Equity Association and its research partner, Thomson Macdonald.

Total reported investments made by venture capital funds into Canadian companies amounted to
$390 million in 165 transactions, compared to $344 million in 179 transactions during Q1 2005.
Consistent with historical trends, first quarter activity declined from the levels of the traditionally
busier Q4 season, as $527 million was invested in 223 firms in Q4 2005.

“The 13% increase in Canadian investment numbers in Q1 2006 relative to Q1 2005 mirrors a
similar 12% increase in the U.S. over the same time period,” said Rick Nathan, President of the
CVCA and Managing Director of Goodmans Venture Group, “which suggests that broadly
comparable factors are shaping the venture investment climate in both countries. The continuing
growth in total investment in Canada, along with our alignment with the US market, is positive for
Canadian investors and entrepreneurs.”


Regional Trends in Investment

The first quarter data points to a continuing shift in regional investment levels across Canada. For
the third consecutive quarter, Québec surpassed Ontario in overall reported venture capital
disbursements as Ontario’s share continued to decline. Activity in British Columbia increased
significantly in Q1, more than doubling its traditional share of Canadian investment.

The CVCA has released data showing where the major Canadian markets rank in reported
venture capital investment relative to activity in individual U.S. states during Q1 2006. Québec
finished the quarter in 6th place, up from 9th place in the full year 2005. Ontario fell slightly to 8th
place, with British Columbia surging to 13th place from its 2005 level of 20th place.

Big Gains for Life Sciences

The first quarter saw a significant boost in investment into the biopharmaceutical and other life
sciences sectors in Canada, with notable transactions in Québec and British Columbia. Total life
science investment during Q1 2006 amounted to $139 million across Canada, more than triple the
$37 million invested in the same period last year.
Industry Fundraising Declines

Fundraising by the Canadian Venture Capital industry declined by more than 50% during Q1 2006
compared to the same period of 2005, with a total of $453 million of new capital committed into
VC funds, compared to $1,044 million last year.

“Its difficult to draw conclusions based on a single quarterly trend in our market,” said Mr. Nathan,
“however, if this trend continues, it would obviously reduce the industry’s ability to invest in new
emerging Canadian growth companies. The CVCA is presently undertaking a series of initiatives
designed to strengthen the Canadian venture capital market by improving the industry’s ability to
access additional sources of capital. This quarter’s numbers highlight the importance and the
urgency of those initiatives.”

CVCA
The CVCA - Canada’s Venture Capital & Private Equity Association, was founded in 1974 and is
the association that represents Canada’s venture capital and private equity industry. Its over 1100
members are firms and organizations which manage the majority of Canada’s pools of capital
designated to be committed to venture capital and private equity investments. The CVCA fosters
professional development, networking, communication, research and education within the venture
capital and private equity sector and represents the industry in public policy matters.

Thomson Macdonald
Thomson Macdonald (previously Macdonald & Associates) is recognized as the leading source of
data, analysis and strategic market intelligence on the venture capital and private equity markets
in Canada. Detailed transaction information is available in its online, proprietary database
VCReporter™.


To arrange an interview with Rick Nathan, President of the CVCA, please contact Lauren Linton
at 416.487.0519, llinton@cvca.ca