Quebec’s technology sector has a record first quarter of 2022 in terms of venture capital financing. But this level may not be seen again soon if fears associated with the global economic downturn and more difficult macroeconomic conditions are confirmed.
Quebec technology start-ups- Get started, as they are often referred to – saw their venture capital funding reach a record $ 1.46 billion in the first three months of the year. This represents a 630% increase in this type of financing compared to the previous quarter, and 440% compared to the same quarter last year, shows data published by the special directory Briefed.in.
In total, investors concluded 29 funding agreements from January to March 2022 in Quebec, compared to 23 in the first quarter of 2021. And these are major agreements signed at a more advanced stage of growth by several companies that have allowed the Quebec ecosystem to reach such levels.
Montreal-based Paper, which has developed a particularly popular online education solution in the U.S. school system, has notably raised $ 343 million in an advanced round of Series D funding. to construction professionals RenoRun on its part raised 181 million, two years after raising 22.5 million US dollars in its first round of financing. Molecular medicine company Ventus Therapeutics, of Saint-Laurent, meanwhile, closed Series C financing of US $ 140 million in February.
“This reflects the very good health of venture capital in Quebec,” summarized Guillaume Caudron, CEO of Réseau Capital, the leading Quebec group of investors in the area. “The year 2021 is, overall, very good everywhere [en Amérique du Nord]. The first quarter indicates that this good momentum may continue, as activity levels remain high. »
“In the longer term that outlook is starting to worry,” he said.
Refinance and recapitalize
The big boss of Réseau Capital is not necessarily afraid for financing Quebec’s new technology companies, despite the average cost of the financing stages provided in Get started since last November in the United States has fallen 25%, according to expert site Carla.
More hesitant, some American investors have begun to shift down the amount they give to companies that have not yet proven themselves and are having a hard time making a profit, because it is more difficult — and therefore, more risky — to establish the value of a introduction. -up that its technology has not yet been commercialized.
This reflects the very good health of venture capital in Quebec. The year 2021, in general, is very beautiful everywhere [en Amérique du Nord]. The first quarter indicates that this good momentum may continue, as activity levels remain high.
However, this wind has not yet been felt in Quebec, where it is largely the reunification of investment funds that could prove difficult, Réseau Capital believes. The global economy is in danger of collapsing due to runaway inflation and the effects of Russia’s invasion of Ukraine, making it difficult to find new financing.
“There is a little short-term concern on the part of investors, but this has not yet translated into a reduction in their investment”, Mr Caudron assured. “The Get started with good plans should not worry in the short term. This could change over a longer period of time if funds struggle to recapitalize. »
Venture capital funds are often funded by large institutions that see this type of investment as higher profit potential than other sectors. This is especially true in a context where central bank interest rates have remained very low for several years. The accelerated increase in these rates due to inflation may, however, encourage these institutions to look elsewhere.
Réseau Capital therefore recalls the important role that public investments can play in mitigating the risks associated with economic health elsewhere in the world.
Together with the Canadian Venture Capital and Private Equity Association, the group also requested earlier this year that Ottawa continue with its Venture Capital Catalyst Initiative, set for 2021 to help young businesses emerge from the COVID crisis- 19. “This program is already important and, there, its implementation has suddenly become more urgent”, said Guillaume Caudron.