QUÉBEC'S VENTURE CAPITAL RESULTS FOR Q1 2011 - 50 companies receive funding

MONTREAL, May 17 /CNW Telbec/ - Réseau Capital today published statistics on venture capital activity in Québec for the first quarter (Q1) of 2011, as compiled by Thomson Reuters.

The number of Québec companies that received venture capital (VC) increased in the first three months of 2011. Fifty companies received financing, up 16% from the 43 companies financed the year before. At the same time, dollar flows to Québec VC-backed firms were down, with $82 million invested in total between January and March, or 19% below the $102 million invested in Q1 2010. This decrease is due to smaller deal sizes, as amounts invested per Québec company averaged $1.6 million during the quarter.

The majority of VC-backed firms in Québec in Q1 2011 were involved in new deals. Twenty-six companies seeking financing for the first time obtained $43 million, or more than half of all disbursements in this period.

According to Geneviève Morin, Co-President of Réseau Capital, "The high proportion of new investments is a positive sign. It indicates a certain level of confidence in the market and a renewal of the pool of innovative companies supported by investment capital. It's an injection of new blood into the economy."

BREAKDOWN BY INVESTOR TYPE

Local investors played a key role in the first quarter, with Québec labour-sponsored and other retail funds deploying $28 million to 30 companies. They provided more than one-third of the dollar flows in Québec in Q1 2011 and contributed to the majority of VC-backed firms. In addition, private-independent VC funds put $20 million to work in 14 companies, for one-quarter of all disbursements, which improves on their usual Québec market share in recent years.

Fund raising

As compared to the first quarter of 2010, Canadian VC fund-raising activity lagged this time, with new commitments totalling $217 million, or 44% below the $386 million committed previously. VC fund managers headquartered in Québec again netted by far the largest share of the total raised in this period, namely 60%.

According to Geneviève Morin, Co-President of Réseau Capital, "Even though Québec was less affected, the general downward trend for fund raising in Canada is a concern. A variety of well-capitalized funds is an essential component of a modern, vibrant economy."

ACTIVITY BY SECTOR

VC activity in Québec IT sectors again drove trends in Q1 2011, with 10 companies obtaining $40 million from January to March, or slightly less than half (49%) of total dollars invested. Activity was up substantially from Q1 2010, when IT companies received $17 million.

VC activity in Québec's non-technology sectors showed particular growth between January and March. Deals involving 32 companies contributed to $24 million invested in total, or 29% more than the $18 million invested the year before.  As a result, traditional activity accounted for 29% of all disbursements in Q1 2011.

ACTIVITY BY STAGE

Late-stage deals, especially expansions, involved a total of $54 million going to 32 firms, or a two-thirds market share. Investments in early-stage deals were up, representing 32% of VC invested in Q1 2011.  Fifteen Québec companies in seed, startup or other early stages of development attracted $26 million during the quarter, up 58% from the previous $16 million.

About Réseau Capital

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

SOURCE Réseau Capital

For further information:

Source:
Réseau Capital
Geneviève Morin
Co-President of Réseau Capital 
Chief Financial and Corporate
Development Officer
Fondaction CSN
Robert Pierre Venne
Media Relations for Réseau Capital
Direct line: (514) 993-6260
rpv@sympatico.ca



Shahir Guindi
Co-President of Réseau Capital
Managing Partner
Osler, Hoskin & Harcourt LLP


 

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