Activity in venture capital fundraising in Québec reached a 10-year peak in 2012 at CAD924m, representing to 52 per cent of the activity in the entire Canadian market.
Activity in venture capital fundraising in Québec reached a 10-year peak in 2012 at CAD924m, representing to 52 per cent of the activity in the entire Canadian market.
Moreover, a new trend appears to be emerging: the great majority of companies financed last year – 58 per cent of the total – were involved in VC transactions for the first time, drawing in CAD214m, or more than half the dollars invested.
These observations are contained in the annual report on activity in the investment capital industry, compiled by Thomson Reuters and issued by Réseau Capital.
"New funds committed to partnerships and to other funds literally exploded in the past year," says Jack Chadirdjian (pictured), president and chief executive officer of Réseau Capital. "This is excellent news for companies seeking this type of financing. With support from the federal government and its action plan aimed at new investments in venture capital funds, this record injection of funds raised by the private sector will further vitalize our industry."
Across Canada, VC funds raised in 2012 amounted to CAD1.8bn, up 73 per cent from the CAD1.0bn committed in 2011 and more than in any year since 2002, when commitments totalled CAD2.5bn. In Québec, VC fundraising activity totalled CAD924m in 2012, a 67 per cent increase from the CAD552m committed in 2011 and more than in any year since 2001, when the VC funds raised came to CAD1.5bn, representing 39 per cent of the Canadian market as a whole.
The initial decline in VC investments seen in 2012 occurred in the first half of the year, but activity in Québec rose seven per cent between July and December and intensified further in the fourth quarter, rising 15 per cent. Some CAD409m was invested in 2012, with CAD142m of this in the fourth quarter. Several major transactions contributed to this increase, in particular Montréal-based MethylGene (CAD26.1m), Québec City-based Coveo Solutions (CAD18m) and Montréal-based Vantrix (CAD13.3m).
Québec attracted 28 per cent of all VC funds invested in Canada last year, down from its 32 per cent share in 2011. But in line with the trend toward intensification of investment as the year advanced, Québec’s market share rose to 37 per cent between July and December.
Québec companies seeking VC financing for the first time were dominant targets in the market in 2012, drawing in CAD214m, more than half the total dollars invested during the year. New investments also increased 43 per cent compared to the previous year.
Transactions at the seed and startup stages also made a strong comeback in Québec in 2012. They saw a 24 per cent improvement in total VC invested, with CAD97m invested in 45 seed-startup companies, more than double the CAD47m that was drawn in during the previous year.
With a 60 per cent jump over 2011, non-technology sectors gained ground with CAD151m in investments (37 per cent of the total). Information technology sectors ranked second, at CAD124m, while life sciences saw a sudden surge in the second half, bringing in CAD114m for the year. However, activity in clean technologies was disappointing, with CAD19m (five per cent of total investment).
