Québec's venture capital results for Q3 2010

Québec's VC activity slows in Q3 2010

MONTREAL, Nov. 16 /CNW Telbec/ - Réseau Capital today published the statistics on venture capital activity (VC) in Québec for the third quarter (Q3) of 2010, as compiled by Thomson Reuters.

Québec-based activity continues to represent an above-par share of the overall market in Canada. Since January, Québec has accounted for 31% of all disbursements in the country, and for 46% of all companies financed. After substantial growth in Q2 2010, Québec venture capital market activity slowed in the third quarter, with $76 million invested in total, or 22% less than the $97 million invested at the same time in 2009.

The 51 companies financed in Québec during that period represent a slight increase, however. In Q3 2010, the deal sizes tended to be smaller, given that a larger number of firms received capital. The average investment was $1.5 million per firm versus $2.0 million in Q3 2009.

According to François Chaurette, Co-President of Réseau Capital and Senior Partner at Novacap, "Even though the amount invested is down from 2009, it is important to point out that Québec accounts for almost half of all the companies financed in Canada."

ACTIVITY BY STAGE

Early-stage firms increased their market share to 52% during the quarter, with $40 million invested in total. This trend was driven by startups and other early-stage VC activity, with $15 million invested in five startups and $24 million in eight early-stage companies in Q3 2010. In the case of the latter, this amount is 56% more than the $15 million that went to other early-stage activity during the same period in 2009.  

IT LEADS THE WAY

VC activity in information technology (IT) led in Québec in the third quarter, with almost a dozen companies attracting a total of $39 million, or slightly more than half (51%) of all disbursements. Non-technology sectors also gained ground, absorbing $31 million, or 41% of the total.

In the second quarter of this year, Québec firms in the life sciences sector saw appreciable year-over-year growth in VC activity. But that was not the case in Q3, when $5 million, or 7%, was invested in four life sciences companies, a small fraction of the $35 million invested one year ago. 

BREAKDOWN BY INVESTOR TYPE

The energy behind the deals concluded in Québec in Q3 2010 came from local VC funds and other Canadian investors, who provided $54 million, or 16% more than in the previous year. Labour-sponsored and other retail funds were very much a part of this trend, as they invested $32 million. Foreign investors were less active, bringing $21 million to deals; their share of total activity, at 28%, was above-par, however.

According to François Chaurette, Co-President of Réseau Capital and Senior Partner at Novacap, "We're pleased to see a massive resumption of investment in startups and other early-stage companies as a result of the complementary nature of the capital invested by private funds, labour-sponsored funds and other retail funds, as well as by foreign funds. Our Association's success is based on our ability to bring together the complementary competencies of the various funds."

About Réseau Capital

Réseau Capital, the Québec Venture Capital and Private Equity Association, was founded in 1989. Its members represent public and private venture capital companies, as well as firms of professionals working in the industry, and its mission is to contribute to the development and smooth operation of the investment chain. Its preferred approaches are training, information, networking, advocacy and representation.

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