H1 2021 Venture Capital and Private Equity Market Overview
2021 Promises to be a Record Year for Private Equity Activity in Quebec
Réseau Capital, Quebec’s venture capital and private equity association, and Canada’s Venture Capital and Private Equity Association (CVCA) today released their report on venture capital and private equity in Quebec for the first half of 2021. Sweeping aside the 2020 slowdown, Quebec has seen a rebound in its trajectory, continuing the trend of sustained growth seen since 2017.
As in the rest of Canada, venture capital investments in Québec have accelerated at all stages and in all sectors. On the private equity side, both the amounts and the number of transactions are also up significantly compared to the same period last year. “These results are further proof of the market’s dynamism, entrepreneurial spirit and long-term ambitions,” said Guillaume Caudron, CEO of Réseau Capital.
Quebec’s venture capital industry has maintained its strong start to the year, with the number of deals and total amount invested on track to exceed all records across all sectors and stages of investment. In the first half of this year, $1.3 billion was invested in 93 transactions, double the amount invested for the same period in 2020 and double the average of the last five years for the same periods. This is due in particular to two mega-deals that account for a third of the total invested, with a $225 million fundraising for Alayacare (through existing investors Inovia Capital, Caisse de dépôt et placement du Québec and Investissement Québec) as well as the $215 million round raised by Hopper in the previous quarter.
On the Private Equity side, Quebec remains the most active province, accounting for nearly half of all investments and nearly two-thirds of all transactions in Canada. In fact, $3.8 billion has been invested in 234 deals since the beginning of 2021, a 250% increase over the first quarter and three times the amount invested during the same period last year, which was hit hardest by the pandemic. Transaction volume exceeded the historical quarterly high set in Q4 2020 and is also well above the corresponding historical average on a semi-annual basis. In addition to the traditionally robust manufacturing sector, other sectors, such as retail, also stood out.
Venture Capital Highlights :
- The province saw notable acceleration across all major sectors and stages of investment in the second quarter, with total investment of $839 million across 54 transactions, a record for the amount invested in a three-month period and nearly double the amount invested in the previous three months as well as the second quarter of 2020.
- As in the rest of Canada, the ICT sector ($691 million invested in 52 deals) easily maintains its dominant position in the ecosystem, but life sciences ($431 million in 17 deals) and cleantech ($87 million in 7 deals) have already surpassed their total investment amounts for the year 2020.
- More than half of the investments were focused on post-seed stage companies ($692 million on 12 deals). Early-stage companies ($483 million on 34 deals) and seed-stage companies ($101 million on 44 deals) also exceeded their 2020 investment totals in the first half of this year.
Private Equity Highlights :
- The first half of the year saw 234 transactions representing investments of $3.8 billion across Quebec, a record number of transactions. The mixed performance of the first quarter ($1.1 billion on 107 transactions) was offset by the rebound in the second quarter ($2.7 billion and 127 transactions), which brought the number of transactions close to historical averages.
- The industrial and manufacturing sector maintained its strong presence ($979 million on 56 deals), but sectors such as information technology ($720 million on 38 deals), retail ($1.4 billion on 33 deals), and agribusiness ($660 million on 31 deals) saw significant increases on a quarterly basis.
- The growth has been consistent, with retail and agribusiness already surpassing their 2020 total investment amounts and on track to surpass their annual records for total deal value.