Technology Funding | Montreal warmed up Toronto

It has long been considered the undisputed capital of Get started in Canada, Toronto could lose its crown over Montreal, at least in financing. According to a recent report, Montreal technology companies will get $ 1.15 billion in total funding in 2020, far behind other Canadian hubs such as Calgary, Vancouver and the Waterloo region.

Posted on May 12, 2021

Karim Benessaieh

Karim Benessaieh
The Press

Toronto still leads in this chapter, according to the BDO-Hockeystick 2020 Montreal report, but its lead in the Quebec metropolis is only 4%, or $ 46 million. “However, some recent transactions in Montreal, such as Hopper’s Series F totaling $ 213 million, could match or even exceed activity in Toronto in 2021.”

Ang Get started from the larger part of Montreal was involved in 110 funding transactions in 2020, with a total of 84 investors.

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PHOTO FRANÇOIS ROY, LA PRESSE ARCHIVES

Martin Picard, co-founder of the company Sonder, who “raised” 230.4 million in financing in 2020.

What is driving Montreal into 2020? First, two major fundraisers, the AppDirect (250.7 million) and Sonder (230.4 million). It should be noted that these two companies, founded in Montreal, have moved their headquarters to San Francisco. They are still considered part of the Montreal ecosystem, their funding coming from specific Quebec sources such as Inovia Capital and the Caisse de depot et placement du Quebec.

During this pandemic, start-ups that specialize in e-commerce attracted the most investors, with 281 million. According to a survey by the Canadian Federation of Independent Business (CFIB), the number of Quebec SMEs selling online has more than doubled since March 2020, rising from 20% to 46%.


For Matt Harrison, national head of emerging technologies at BDO Canada, there is another very motivating figure for Montreal: nearly 52% of financing obtained in 2020 will be for very young companies, in the start-up phase or in Series A rounds. , generally less than 5 million.

“That’s my sandbox,” Mr. Harrison said. These are the companies that had their first aid from investors, which was very important. They rent, they grow, they represent new blood. If only half of these companies manage the next step, a Series B round of funding in the tens of millions of dollars, “that’s overwhelming,” he said.

We will reap what we plant

Montreal venture capital fund Real Ventures, one of the first and largest investors in technology, believes that Montreal’s strong performance in 2020 reflects the maturity of its ecosystem. “We weren’t surprised, but we were very happy,” said Katy Yam, CEO of FounderFuel, an incubator linked to Real Ventures. “Everyone in the sector has been rowing for almost 15 years. In Montreal, Sherbrooke, Trois-Rivières, Quebec, we are beginning to see a well-nourished ecosystem, with a second generation after the founders. »


PHOTO IVANOH DEMERS, LA PRESSE ARCHIVES

At FounderFuel, an incubator linked to Real Ventures, we were not surprised by the conclusions of the BDO-Hockeystick report. “Everyone in the industry has been rowing for almost 15 years,” said general manager Katy Yam.

In the greater Montreal area, he summarizes, “many companies are starting to reap what they have sown”.

Like all observers, he noted that the year 2020 took place in two stages: first a major slowdown due to incarceration, followed by a spectacular recovery, especially in technology. “With Zoom and Google Meet, we no longer have to travel around the world. Entrepreneurs can have six, seven or eight meetings a day. Roundraising rounds targeting $ 500,000 raised $ 1 million. »

The BDO-Hockeystick report painted a flattering picture of the education system, featuring the large number of colleges and universities in Montreal, which have about 248,000 students. “The talent pool is one of the factors that allows companies like Sonder to grow,” it said. On LinkedIn, we can read, over 14,000 positions have been posted in the technology sector in Montreal.

First examination

According to Matt Harrison, there’s one particular aspect where the Quebec metropolis can do better: ensuring businesses have access to talent. “You have to find ways for them to get the talent they need to succeed, not just in technology, in marketing, in operations, in finance, anywhere. It won’t help them if they can raise 10 million but can’t find the talent to grow. »

This is the first review specifically focused on Montreal written by Hockeystick, a Toronto -based review firm that specializes in funding young technology companies, which partnered for the occasion with accounting firm BDO. Therefore, the data are not comparable to previous years. The other authoritative review of venture capital in Canada, that of the Canadian Venture Capital & Private Equity Association (CVCA), uses a different methodology. In its 2020 report, Toronto consolidated its first position in Canada with 1.3 billion in venture capital, ahead of Montreal, in second place with 856 million.

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