Québec's 2010 venture capital results - Québec leads in companies financed

MONTREAL, Feb. 16 /CNW Telbec/ - Réseau Capital today published annual statistics on venture capital activity (VC) in Québec for 2010, as compiled by Thomson Reuters.

Companies financed with VC totalled 174 last year, up 10% from the 158 companies financed in 2009. The amount invested per firm averaged $2.2 million, down from an average of $2.7 million in 2009. A total of $391 million was invested in 2010, or 9% less than the $429 million provided in 2009, despite comparatively high disbursement levels in the final quarter, when $109 million was invested.

Québec continued to account for a large share of the overall domestic VC market. It took 34% of all disbursements in 2010 and led in total companies financed in Canada, with a 49% share. Across Canada, $1.1 billion was invested in 2010, up 10% from the year before, whereas activity in the United States grew 19%.

According to Geneviève Morin, Co-President of Réseau Capital, "The decrease in the amounts invested in 2010 has to be placed in context. We must bear in mind that Québec succeeded in maintaining its level of investment in 2009 while the rest of Canada saw a sharp drop. Despite the country-wide slowdown, Québec in 2010 still represents almost half of the companies financed with VC in Canada, which testifies to the vibrancy of our local companies and investors." 

Breakdown by investor type

Labour-sponsored and other retail funds once again led VC activity in Québec, investing $135 million in 128 companies last year, or slightly more than one-third of the total amount.

Private-independent VC funds put $67 million to work in 30 companies in 2010, or 25% more than the $53 million they invested in 2009. As a result, private funds increased their share of total Québec-based activity to 17%.

U.S. venture capital funds and other foreign investors brought $107 million to Québec deals last year, down 14% from the $125 million they accounted for in 2009. Nonetheless, cross-border dollar flows into Québec were the highest in Canada in 2010 and reflected 27% of all disbursements.

Fund raising

In contrast with deal-making, Canadian VC fund-raising activity was especially tepid in 2010. New capital commitments to VC funds totalled $819 million last year, down 24% from the $1.1 billion committed the year before, and the lowest per annum level on the domestic market in 16 years.

Québec was less affected by this decrease in fund-raising. VC fund managers headquartered in Québec secured $347 million, or a 42% share of all commitments in Canada. Even so, this amount was down 10% from 2009.

According to Geneviève Morin, Co-President of Réseau Capital, "As a result of retail funds and various government initiatives supporting the creation of private funds, fund-raising in Québec is down less than elsewhere in Canada. Even so, it's important we continue our efforts to diversify the sources of new capital in order to maintain and improve our ability to finance innovative Québec companies at all stages of their development."

Activity by sector

VC transactions in clean-tech sectors, which have been rising in recent years, accounted for 16% of all disbursements in Québec, recording their best year ever. Eight companies received $61 million.

Québec's life sciences sectors were relatively stable and even managed a small gain, with $87 million invested in 13 companies, or 22 % of the market, up slightly from the $86 million invested in 2009.

Québec's IT sectors once again led VC activity last year, with 32 companies obtaining $121 million, or 31% of the total, though activity was down 40% from the year before, when $199 million was invested.

Québec's non-technology sectors saw $116 million go to 117 companies last year. Even though this amount is 10% below the $129 million invested in 2009, activity in consumer and business services, manufacturing and other traditional firms reflected an above-par 30% of total VC activity in 2010.

Activity by stage

In 2010, late-stage deals attracted more capital. In total, $267 million went to 137 companies in the later stages of development, or 68% of all disbursements, up 17% from the $229 million of 2009. Propelling this increase were expanding firms, 121 of which consumed $236 million last year, or 57% more than the $150 million invested in 2009.

Early-stage VC activity, by contrast, lost ground in Québec last year, as $123 million was invested in 37 companies, down 38% from the $200 million invested in 2009. The erosion took place entirely in seed-stage and startup deals, which accounted for $4 million and $38 million, respectively, in 2010.

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

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For information:
Réseau Capital Robert Pierre Venne
  Media Relations for Réseau capital
Geneviève Morin Direct line: (514) 993-6260
Co-President of Réseau Capital                           rpv@sympatico.ca
Chief Financial and Corporate
Development Officer
Fondaction CSN
Shahir Guindi
Co-President of Réseau Capital
Managing Partner
Osler, Hoskin & Harcourt LLP

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