MONTREAL, Nov. 18 /CNW Telbec/ - Réseau Capital today announced the
results for Québec's venture capital industry for the third quarter (Q3) of
2008, as compiled by Thomson Reuters. In the third quarter, deal activity in
Québec's venture capital (VC) market continued to reflect the slower pace
apparent since the start of the year, with $110 million invested, down 11%
from the $124 million invested one year ago. Still, the amount invested was
the highest so far in 2008, up 58% from the second quarter and up 28% from the
first quarter.
In addition, the number of Québec firms securing VC was greater on both a
year-over-year and a quarter-over-quarter basis. The companies financed
totalled 58 in Q3 2008, or 5% more than the 55 companies financed one year
ago. The average amount invested per firm was $1.9 million in Q3 2008, versus
an average of $2.2 million one year ago.
Despite several improved VC indicators, Québec activity continued to form
part of a broad pattern of cyclical downturn in North American and global
markets. The decline was evident across the Canadian market in the third
quarter, when $372 million was invested, down 26% from the $501 million of the
year before.
Breakdown by investor type
Québec-based labour-sponsored and other retail funds were key drivers of
activity in Q3 2008, increasing their dollars invested on a year-over-year
basis to $55 million. Private funds were second, investing $26 million.
U.S. venture capital funds and other foreign investors continued to
assume a smaller market presence in Québec in the third quarter, bringing $16
million to deals, or less than half of the $37 million they brought at the
same time last year. To date in 2008, cross-border activity has accounted for
$45 million invested in Québec, or 17% of disbursements. This figure is well
shy of the $144 million and 32% share that foreign investors accounted for in
the same nine-month period of 2007.
ACTIVITY BY STAGE
Since the beginning of 2008, early-stage VC activity has dropped sharply
in Québec. In the third quarter, however, activity at this end of the spectrum
rose 14% year-over-year, going from $35 million invested to $40 million
invested. Consequently, early-stage firms secured 36% of all disbursements,
which is the same share they had in 2007 over all.
Growth was particularly significant for company startups, which garnered
$14 million in Q3 2008, or 41% more than the $10 million received the year
before. In addition, other early-stage deals took $26 million, up 15% from the
previous $22 million. No seed activity was recorded in Q3.
According to Charles Cazabon, President of Réseau Capital and
Vice-President, BDC - Venture Capital, "Three things stand out in the third
quarter. First, the continuation of the cyclical slowdown is a phenomenon
affecting not only Québec but also North American and global markets. The
second is the sharp decrease in the amount invested by foreign investors;
fortunately, Québec's labour-sponsored and private funds took their place, so
that the decline was limited to 11%, which is equivalent to the decrease
recorded in the United States. Third, one positive sign is the increase in the
level of new investment in startup and early-stage companies."
Investment by sector
As was the case throughout 2008, VC activity preferred Québec IT sectors
in the third quarter. A total of $56 million was invested in 18 IT companies,
or just over half of all disbursements, which is consistent with trends in the
two prior quarters. But in comparison with the $63 million invested one year
ago, IT-related activity fell 11% in Q3.
Life sciences activity in Québec declined on a year-over-year basis. A
total of $29 million was invested in 10 companies in Q3 2008, or 39% below the
$47 million of one year ago. Consequently, life sciences garnered only 26% of
VC activity, which is considerably less than its 40% share for 2007 as a
whole.
In contrast with technology sectors, non-technology sectors in Québec
made appreciable gains between July and September. A total of 26 traditional
companies attracted $23 million, or nearly double the $12 million of Q3 2007.
As a result, the traditional share of total activity moved to 21% from a 16%
share for all of last year.
About Réseau Capital
Réseau Capital - the Québec Venture Capital and Private Equity
Association - was founded In 1989 and has more than 525 members who represent
public and private venture capital companies, as well as firms of
professionals serving the industry. Its mission is to foster the growth of the
industry and the professional development of its members.
For further information: Robert Pierre Venne, Media Relations for Réseau
Capital, Direct line: (514) 993-6260, rpv@sympatico.ca; Source: Charles
Cazabon, President, Réseau Capital, Vice-President, BDC - Venture Capital
