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Venture capital (VC) investment in Canada is off to a strong start in 2018, topping $800 million in the first quarter (Q1) of the year.

KPMG Enterprise’s Venture Pulse Q1 2018 report, a global analysis of venture funding, noted the Canadian market saw a number of higher value deals this quarter, accounting for the second-highest quarter ever for total capital invested, although total deals edged down to 72 in the quarter.

According to the report, Q1 2018 was the second best on record for Canada, with more than $800 million (in deal activity, even as the number of deals declined a bit.

The report points to a large deal by a biofuels company, and seven other financings of more than $20 million, as the main drivers of the strong performance in Q1.

Looking ahead, KPMG is anticipating continued strong VC activity for Canada in 2018.

“In the U.S. and Canada, AI, blockchain and healthtech are expected to remain very high on the investor radar,” the report says.

On the heels of a strong Q1, the report notes that the federal government is “committed to further developing the country’s VC market and innovation ecosystems”.

For example, the report highlights the launch introduction of the government’s $1.2-billion Venture Capital Catalyst Initiative, and the pledge of $125 million in funding for a Pan-Canadian Artificial Intelligence Strategy, as positive forces.

“These initiatives should help spur additional VC investment through the remainder of 2018 and help cement Canada’s position as a global leader in AI,” says Sunil Mistry, partner in the enterprise and technology, media and telecommunications practices at KPMG in Canada, in a statement.

Additionally, the U.S. decision to exclude Canada from tariffs that it imposed on other countries in the first quarter is being taken, “as a positive sign by investors — with most taking a ‘business as usual’ approach to their activities” when it comes to investing in Canada, the report says.

Indeed, a Chinese firm was one of the primary funders of one of Q1 2018’s big deals, and “other Chinese VC investors have also taken note of Canada’s attractiveness — with AI, biotech, and clean energy all seen as targets for investors,” the report says.

“VC money is increasingly drawn to Canada because of the country’s stable economy, its highly skilled and diverse workforce, and growing technology ecosystems in Toronto-Waterloo, Vancouver and Montreal,” adds Mistry.