MONTRÉAL, Feb. 14, 2012 /CNW Telbec/ - Québec's venture capital (VC)
market is showing substantial growth, with investments in Québec totalling $549 million in 2011, up 48% from the
$370 million invested in 2010. This brings Québec back to the annual investment levels last seen
before the financial crisis, notes the annual report on activity in the
investment capital industry compiled by Thomson Reuters and published
today by Réseau Capital.
Strong growth in investments in Québec and across Canada
Activity in Québec by value of transactions show the fastest growth in
North America. VC investments in Canada stood at $1.5 billion, up 34%
from 2010 and the highest level since 2008, whereas our neighbours to
the south saw an increase of only 23%, with a total of US$28.5 billion
In 2011, Québec accounted for 36% of the dollars invested in Canada.
Québec's share rose slightly from the 33% obtained in 2010, putting
Québec neck-and-neck with Ontario. Québec remains in the lead in the
number of VC-backed companies, with a share reaching 58% of total
companies financed in Canada. Altogether, 256 Québec companies
benefited from VC financing in 2011, up from 176 in 2010, a 45% rise.
The average amount invested per company stood at $2.1 million,
unchanged from 2010.
"Québec has reason to be proud of this excellent performance in 2011,
especially since every type of investor contributed to this growth in
investment and every economic sector benefited," said Geneviève Morin,
Co-President of Réseau Capital.
A higher contribution from foreign investors
Local and foreign investors each contributed significantly to the annual growth in Québec's VC activity in 2011.
Labour funds and other tax-advantaged funds remain the most active among Québec investors, with $164 million spread
among 156 companies in 2011, a 21% increase compared to the previous
The amounts invested by independent private VC funds also rose considerably last year, with $114 million invested in 64
companies. This is $48 million more than in 2010, a 74% increase.
Dollars invested in Québec by private funds thus rose from the 12%
historical average to 21% in 2011.
American VC funds and other foreign investors also increased their presence in the Québec
market, injecting $126 million in transactions in 2011, up 45% from the
$87 million invested the previous year. Transborder activity ranks
second in amounts invested as VC, with 23% of the total.
Funds raised across Canada up just 2%
Compared to transactional activity, VC funds raised across Canada saw a
less vigorous increase. New capital intended for Canadian funds rose
only 2% between 2010 and 2011. It is worth noting, however, that
Québec-based VC fund managers accounted for the highest percentage of
new commitments in Canada in 2011. Québec funds drew $552 million, or
53% of the total of $1.0 billion raised.
"The low level of funds raised in Canada continues to be a matter of
concern," Ms. Morin added. "Even though Québec performed better, the
fact remains that the amounts that came in are barely sufficient to
maintain the level of activity, considering that companies'
requirements are growing."
Activity by sector in Québec
The information technologies sector again topped the list, for the
fourth year in a row. A total of 65 companies obtained $181 million in
2011, up 48% from 2010, a significant rise representing one-third of
the total invested. This trend benefited most areas of IT, with
activities focusing on the Internet, electronics and software standing
out most sharply.
The biopharmaceutical and life sciences sector did not experience as
strong an increase, with a 19% rise. The $104 million invested in 2011
now represent only one-fifth of all outlays.
VC activity in "cleantech" (clean technologies) sectors shot up to the
highest level ever recorded in this field in the Québec market. The $97
million that went into 13 cleantech companies last year represents 18%
of the total and more than double the $39 million invested in 2010. It
is also worth noting that the amounts invested, which went into 13
cleantech companies including Enerkem Inc., the recipient of Canada's
largest VC financing in 2011, were the highest ever recorded in the
Companies in non-technology sectors were not left out, with $148
invested in 155 companies, up 27%.
Late-stage development deals drive growth in Québec
Québec VC activity attributable to late-stage development deals
accounted for 79% of all amounts invested, a two-thirds rise compared
to 2010. Despite growth in start-up financings, overall early-stage
activity fell by 9% in the same period, with 69 companies obtaining
$113 million, down from $125 million the previous year.
"It is hardly a surprise that the amounts invested are concentrated in
late-stage development deals, since many independent private funds have
reached the point in their life cycles where they have to focus their
efforts on companies in their portfolios and bring them toward an
exit," Ms. Morin noted. "The fact that financings at the start-up stage
have increased and that 60% of the companies financed were receiving
venture capital financing for the first time shows a certain capacity
for renewal nevertheless."
About Réseau Capital
Réseau Capital, founded in 1989, is the only private-equity association
that brings together all stakeholders involved in the Québec investment
chain. The mission of Réseau Capital 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. Réseau Capital 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.
SOURCE Réseau Capital
For further information:
Co-President, Réseau Capital
Head of Investment
Co-President, Réseau Capital
Osler, Hoskin & Harcourt LLP