MONTREAL, Nov. 14, 2013 /CNW Telbec/ - Activity in the Québec venture capital (VC) market has reached a peak unmatched since 2007, with investments totalling $541 million as at September 30, 2013. This exceeds the annual totals for every year from 2008 to 2012. For the first nine months of 2013, VC investments are already 35% higher than the $400 million invested in all of 2012. As in the first two quarters of 2013, larger financing rounds continued to dominate the market, reflecting a current trend. These observations are taken from report on the venture capital market for the third quarter of 2013 compiled by Thomson Reuters and issued today by Réseau Capital.
"After experiencing an outstanding year in 2012 in terms of VC funds raised, this investment surge since the start of the year was both expected and desired," says Jack Chadirdjian, President and Chief Executive Officer of Réseau Capital. "It goes without saying that this performance gives our industry a big boost, but what's important now is to maintain fundraising efforts so as to sustain the pace of investments."
An industry driven to new peaks
With $122 million invested in the third quarter of 2013, the VC market in Québec grew by 20% compared to the $102 million invested in the same period in 2012. The number of financing rounds recorded during the quarter was slightly lower, at 22, down from 27 in the corresponding period of 2012, showing just how much the size of transactions has risen in recent years, averaging $5.5 million in the third quarter of 2013 compared to $3.8 million a year earlier and $2.9 million in the same quarter of 2011.
Momentum in the VC market is holding up across the North American market. The historic $171-million transaction in Vancouver-based HootSuite, the biggest in the annals of the Canadian market, clearly boosted countrywide results, with $1.4 billion invested since the start of the year. A continuing rise can also be seen among our southern neighbours, though to a lesser extent, with $20.7 billion invested up to now, though this, too, exceeds the 2012 total. In the third quarter, Québec accounted for 23% of total Canadian investments but has taken the lion's share since the start of the year, with 39% of investments.
The non-technology and life sciences sectors dominate the third quarter of 2013
During the third quarter, the non-technology and life sciences sectors surged forward, pulling in 47% and 28% of investments respectively. Despite the low number of financing transactions involving information technology companies, this sector climbed into third place, with 25% of investments, due in particular to the $29.9 million invested in iBwave Solutions. At the Canadian level, with the HootSuite transaction, the IT sectors accounted for 60% of all investments.
Foreign VC funds account for nearly 50% of investments in Québec
Foreign investors injected $60 million in the third quarter of 2013, representing 49% of total investments, a considerably higher level than in the same period in 2012, when they contributed $25 million, a share equal to 28%.
"Foreign funds, whether from the U.S. or elsewhere, undoubtedly played a key role in investment activity over the last quarter," Mr. Chadirdjian adds. "This augurs well since it clearly shows the attraction exerted by Québec companies seeking financing."
Finally, Canadian VC fundraising activity showed a major increase in the third quarter, with $308 million in new capital, compared to $42 million committed last year in the same period. Because of a relatively modest performance in the first two quarters, fundraising lags by 34% in the year to date in comparison with 2012, with a total of $990 million against $1.5 billion in 2012. Québec can boast of having garnered 46% of new commitments in the latest quarter.
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. Its mission 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
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