Despite a strong start to 2022, the head of the Canadian Venture Capital & Private Equity Association sees “clouds on the horizon” amid ongoing economic uncertainty.

The first three months of the year were “another great quarter,” CEO Kim Furlong said in the CVCA’s quarterly venture capital investment report, released Tuesday. Still, “there are several variables at play that we are closely watching,” including geopolitics and inflation.

Here’s what you need to know.

$4.5B: The total venture capital dollars invested in Canadian companies during the quarter, up 49 per cent from the fourth quarter of last year. It’s the second-highest quarterly amount ever recorded, shy of the nearly $5.2-billion record set in the second quarter of 2021.

196: The number of deals over the period, down slightly from 198 in the fourth quarter of 2021. That marks the third consecutive quarterly decline.

$28.3M: The average disclosed deal size for the quarter, outpacing by 124 per cent the five-year average of $12.7 million.

17: The number of so-called megadeals—those valued at more than $50 million—during the quarter. These megadeals made up nearly 75 per cent of the $4.5 billion invested. Four deals surpassed $200 million: Montreal’s Paper closed a $344-million Series D in February; Toronto’s Hydrostor announced a US$250-million round in January; Toronto’s Koho raised a $210-million Series D in February; and Toronto’s 1Password raised a US$620-million Series C in January, setting a Canadian record for deal size.

ICT leads the charge: With $3.1 billion across 112 deals, companies in the information, communications and technology sector received the most money. Investment in the sector was up 68 per cent quarter over quarter. E-commerce, an ICT subsector, hit an all-time high, with 10 companies receiving $213 million in total.

$82M: The total amount of venture debt accumulated by 27 companies in the first quarter. B.C. and Ontario each saw eight companies take on venture capital debt.

Fewer exits: The quarter experienced “a significant decline” in exits, with just 12, totalling $186 million. There were no initial public offerings. The previous quarter had 52 exits through mergers and acquisitions, totalling nearly $5.3 billion, and eight IPOs.

Private equity: While the first quarter saw the second-highest number of PE deals ever—its 212 was bested only by Q4 2021’s 215—they represented just $1.4 billion in capital, down from roughly $4.9 billion the previous quarter and about $3.4 billion in the same period last year. The drop came from a lack of PE megadeals—which, for PE, mean those over $500 million—and a greater than average number of deals of undisclosed value.

What to expect: Many of the quarter’s venture capital investment highlights were “residual” activity from 2021.

The report predicts that venture capital investment activity “will likely see a delayed reaction to the public-market slowdown” this year, calling it “a trend to watch closely.” VCs who spoke with The Logic this month described how the uncertain economy was changing the pace and nature of investments.

More companies may turn to venture-backed debt. As the remainder of last year’s deal activity dries up and valuations lower, the CVCA said it anticipates more founders will look to “non-equity backed investments” in 2022.

Real estate technology, including ICT, proptech and hardware, is a sector to watch. Investments into real estate tech reached $34.3 million across four deals in the first quarter, marking a rebound to pre-pandemic levels. It’s “a sector to watch closely in the coming quarter as interest rates rise,” according to the report.