Venture capital activity in Québec slows in the first quarter of 2014 but fundraising hits a new peak

MONTRÉAL, May 20, 2014 /CNW Telbec/ - After posting substantial year-over-year growth in 2013 with the highest level of dollars invested since 2007, Québec venture capital (VC) activity slowed in the first three months of 2014, posting a 63% decline from the same period of the previous year. A total of $65 million was invested at the start of this year, which is nevertheless higher than the $59 million invested in the final quarter of 2013. Meanwhile, Canada-wide VC fundraising picked up, reaching its highest level in nearly two years with new capital commitments totalling $531 million, 42% of it from Québec. All of these observations are contained in the 2014 first-quarter report on activity in the VC industry, compiled by Thomson Reuters and published today by Réseau Capital.

"The first quarter this year has been fairly quiet in terms of investments, which focused mainly on the life sciences and information technology sectors," notes Jack Chadirdjian, President and Chief Executive Officer of Réseau Capital. "We're expecting, though, to see greater activity by the end of the year, due among other factors to the volume of new capital raised. This augurs well for Québec companies that rely on this type of investment to drive their growth and support the development of innovative projects."

Across Canada, the VC market showed a slight 2% increase over Q1 2013, with $378 million invested, while the United States recorded a significantly higher jump of 57%, with investments totalling $9.5 billion. Small financing rounds dominated during the latest quarter, with the amounts invested averaging $2 million, compared with $4.2 million for the same period the previous year. It should be noted, however, that the $22.5 million in financing provided to Dorval-based Clementia Pharmaceuticals represented the third-largest transaction in Canada.

Transactions in the life sciences sector led Québec market activity in the first quarter of 2014, accounting for $31 million, or nearly half of all investments. Non-technology sectors ranked second, with 30% of all dollars invested, while information technology sectors saw strong growth compared to Q1 2013, attracting $15 million, or 23% of total VC activity in Q1 2014.

Québec-based VC fund managers accounted for the lion's share of new capital committed in the Canadian market in the first quarter of 2014, garnering $226 million, or 42% of the $531 million raised. Among these new capital commitments was the first close of the third Real Ventures partnership.

About Réseau Capital
Réseau Capital, founded in 1989, 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. Réseau Capital is the only private-equity association that brings together all stakeholders in the Québec investment chain. Its mission 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.

SOURCE: Réseau Capital

Source: Jack Chadirdjian, President and CEO, Réseau Capital; For information: Josée Massicotte, 514 388.0169, [email protected]; Valérie Gonzalo, 514 626.6976, [email protected]