MONTREAL, May 17, 2012 /CNW Telbec/ - Canadian fundraising more than doubled in the first quarter (Q1) of 2012, reaching $742 million, with Québec accounting for 41% of overall new commitments in this period, or $305 million. Meanwhile, venture capital (VC) deal-making fell compared to 2011, which had been exceptionally active. These observations are drawn from a report on the venture capital industry in the first quarter of 2012 compiled by Thomson Reuters and issued today by Réseau Capital.
Fundraising in Canada sees robust growth
In sharp contrast to deal-making, fundraising in Canada rose to $742 million in Q1 2012 from $306 million in Q1 2011, an outstanding performance linked to various closings by limited partnerships. These private funds injected a total of $554 million in new capital into the market, exceeding the amounts they had raised during the entire year in 2011 and 2010. Labour-sponsored and other tax-advantaged funds drew an additional $181 million, also up from the previous year.
"Québec played a central role in the much higher levels of funds raised in the first quarter, garnering nearly half of all the new money invested in Canada," stated Geneviève Morin, Co-President of Réseau Capital. Québec in fact accounted for 41% of funds raised, for a total of $305 million.
Fund formations contributing to the Q1 2012 trend included the $100-million first close of Lumira Capital II Fund and the $43-million first close of Merck Lumira Biosciences Fund, both managed by Lumira Capital, as well as the initial $85 million committed to Cycle Capital Fund III LP, managed by Cycle Capital Management.
VC activity slows in Québec in Q1
In 2011, Québec had one of its busiest years in terms of deals, recording North America's fastest growth with a 53% increase in dollars invested in the VC market. The first quarter of 2012 shows far more modest results. Altogether, $54 million was invested by VC funds during this period, down 63% from the $147 million invested in the same period last year. The number of companies financed in Q1 2012 is also down, totalling 40, or 36% fewer than the 62 companies in the previous year. The amounts invested per company averaged $1.3 million, down from the $2.4-million average in the same period in 2011.
"VC market trends are down across North America, and Québec is no exception, as this early 2012 drop in activity shows," Ms. Morin added. "This situation is a cause of concern for Québec companies that require fund injections of this type to pursue their innovation and growth efforts. Fortunately, the news on fundraising leads us to anticipate a recovery."
In Canada, VC funds invested $263 million in the quarter, 34% less than in Q1 2011. Meanwhile, U.S. market activity totalled $5.7 billion, down 14%. Québec accounted for a comparatively smaller share of the Canadian market, 21% in the first quarter, down from 37% for 2011 as a whole. As regards the number of VC-financed companies in Canada, Québec (35%) is almost nose-to-nose with Ontario (38%).
Québec deal-making led by local investors
Local VC funds and other Canadian funds played a primary role in the first quarter. Québec investments totalled $45 million in 39 companies, accounting for 84% of total dollars invested. Labour-sponsored and other tax-advantaged funds again came in on top, with $23 million invested in 23 companies in Q1 2012. Foreign VC funds were much less active in the Québec market in Q1 2012, bringing $9 million to deals, or a 16% share of the total.
Activity by sector in Québec
Non-technology sectors led VC activity in Québec. Traditional firms garnered $34 million, or 63% of all disbursements, despite a 22% drop in activity compared to Q1 2011. Technology sectors saw much sharper declines. Life sciences companies received $9 million, compared to $55 million in investments in Q1 2011, while the "cleantech" (clean technologies) and information technologies (IT) sectors each account for $5 million in investments in Q1 2012.
Among the most noteworthy transactions in Québec were those involving Maetta Sciences in manufacturing and processing, Myca Health in life sciences, Extenway Solutions in the software, electronics and other IT sector, and Innoventé in cleantech.
Late-stage deals in the forefront
Companies in the late stage of development, some 27 of them, dominated the Québec VC market in Q1 2012, absorbing 95% of all investments, or $51 million. Seed, start-up and other early-stage VC activity declined significantly, to $3 million paid to 13 companies. This compares to $41 million invested in the same period in 2011.
About Réseau Capital
Réseau Capital, founded in 1989, is the only private-equity association that brings together all stakeholders involved in the Québec investment chain. The mission of Réseau Capital is to contribute to the development and efficient operation of the private-equity industry, which plays a major role in the development and financing of businesses in Québec. Réseau Capital has more than 425 members representing private-equity, tax-advantaged and public investment companies, as well as banks and insurance companies, accounting and law firms, angel investors, and many professionals working in the field.
Source:
Réseau Capital
Geneviève Morin
Co-President, Réseau Capital
Head of Investment
Fondaction CSN
Shahir Guindi
Co-President, Réseau Capital
Managing Partner
Osler, Hoskin & Harcourt LLP
Information:
Josée Massicotte
514 388-0169
[email protected]
Valérie Gonzalo
514 626-6976
gonzalo@videotron.ca
Share this article