Québec's venture capital results for Q3 2007 - Expansion deals take lion's share of Québec dollars



    MONTREAL, Nov. 13 /CNW Telbec/ - Réseau Capital today announced the
results for Québec's venture capital industry for the third quarter (Q3) of
2007, as compiled by Thomson Financial. Activity in Québec's venture capital
(VC) market exhibited year-over-year growth in the third quarter of 2007, as
disbursements totalled $128 million, or 21% more than the $106 million
recorded the year before. Dollars went to financings of slightly more
companies in Québec as well, with 56 in total in Q3 2007 versus 50 in Q3 2006.
    In addition, Québec VC activity to date in 2007 continues to run ahead of
activity in 2006. Between January and September, a total of $455 million was
invested in 153 firms, up 27% from the $357 million invested during the same
nine-month period last year. This time, Québec captured one-quarter of total
capital invested across the country, as well as 40% of total companies
financed.

    INVESTMENT BY STAGE

    Québec-based companies in expansion mode were the central focus of VC
activity in the third quarter. Deals involving 37 development-stage firms took
the lion's share of the disbursements, with $100 million, up 47% from the
$68 million taken at the same time last year, and reflected more than
three-quarters of total capital invested.
    In contrast, seed, startup and other early-stage activity in Québec for
the most part lost ground on a year-over-year basis. A total of 19 early-stage
company financings attracted $28 million, or 26% less than the $38 million
attracted in Q3 2006. Consequently, early-stage activity reflected only 22% of
total capital invested in Québec this time, which contrasts sharply with its
44% share during 2006 overall.

    Breakdown by investor type

    American VC funds and other foreign investors were the leading source of
capital that went to Québec-based activity in the third quarter. Foreign
investors brought a total of $39 million to deals, up 75% from the same period
in 2006. Not far behind were Québec-based LSVCC and other retail funds, as
well as private-independent funds, which both disbursed $32 million in Q3
2007. New commitments going to Québec-based VC fund managers accounted for
more than three-quarters of the Canada-wide number after nine months of
activity. The $660 million raised in total by these fund managers was still
shy of the $855 million raised one year ago, however.
    According to Denis Labrèche, Chairman of Réseau Capital's Statistics
Committee and a Partner at Ernst & Young LLP, "It is very encouraging to see
that Québec companies are attracting more foreign investors and
private-independent funds. The vitality and entrepreneurship of Québec's
businesses play a key role."

    Investment by sector

    For the second quarter in a row, IT sectors were at the centre of
Québec-based VC activity in Q3 2007, with a total of $63 million going to 22
companies, or 49% of all disbursements, a 43% increase from the year before.
Telecommunications led IT-related activity in Québec this time, as three firms
attracted $25 million, or better than double the $11 million attracted by four
firms in Q3 2006. Computer software took second spot with $12 million,
although this amount is down from the $23 million invested the year before.
All other IT sectors in Québec also posted year-over-year gains in the third
quarter. Activity in the other technology and non-technology sectors was down,
however.
    Deals involving nine biopharmaceutical firms based in Québec provided
most of the impetus behind disbursements to life sciences activity totalling
$51 million in the third quarter. This amount is more than twice the
$25 million that went to life sciences sectors the year before. Consequently,
life sciences activity reflected 40% of all disbursements in Québec this time,
which is not far short of its 45% share during 2006 overall.
    In the third quarter of 2007, fund-raising activity in the Canadian VC
market continued its comparatively slow pace, with new capital commitments
totalling only $113 million. At the end of September this year, new
commitments totalled $852 million, down 37% from $1.3 billion committed during
the same nine-month period in 2006.
    For more information, we invite you to consult the document "3rd Quarter
Statistics 2007" in the Press Room section of our website at
www.reseaucapital.com

    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:

For further information: Robert Pierre Venne, Director, Public
Relations, Réseau Capital, (514) 993-6260, robert-pierre@reseaucapital.com;
Spokesman: Denis Labrèche, Chairman, Réseau Capital Statistics Committee,
Partner, Ernst & Young LLP; Source: Charles Cazabon, President Réseau Capital,
Vice-President, Venture Capital, BDC

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