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YTD Q3 2018 VC & PE Québec Market Overview

December 2018

 

Québec Home To Canada’s Largest VC Deal YTD 2018
The Province Captures Three Quarters Of All Canadian PE Deals

November 22, 2018 – Montréal, QC –Québec venture capital saw $237M invested over 34 deals in Q3; 11% more than H1 but 57% lower compared to Q3 2017. The largest Canadian deal YTD 2018 took place in the province; the $129M series D round in Hopper Incorporated was led by OMERS Ventures and included participation from Caisse de dépôt et placement du Québec (CDPQ), Investissement Québec and BDC IT Venture Fund.

In private equity, the province saw $1B invested over 73 deals, 50% lower than H1 2018 and 76% lower than Q3 2017. There was a 2% increase in deal flow in the first three quarters of 2018; 255 compared to the 249 deals that occurred over the same period in 2017.

“Hopper is currently experiencing tremendous growth, particularly on the international stage,” ,” says Réseau Capital CEO, Jack Chadirdjian. This Quebec company, founded in Montreal, uses artificial intelligence to predict fluctuations in airline ticket prices and now plans to do the same with accommodation.”

There were seven VC-backed exits involving Québec-based companies YTD 2018 which included the $141M corporate acquisition of TVM Life Science Management’s portfolio company AurKa Pharma by Eli Lilly.

Quebec City-based Coveo Solutions Incorporated secured a $100 milion dollars investment, led by a U.S.-based PE firm and an additional $20 milion dollars investment from Fonds de solidarité FTQ, Investissement Québec and National Bank of Canada.

The largest PE backed exits YTD 2018 were the $3B corporate buyout of Atrium Innovations Incorporated by Nestlé – the selling investors included Fonds de solidarité FTQ and CDPQ; and, the $1.9B Camso acquisition by Michelin; another sale involving CDPQ.

 

Q3 2018 VC Highlights

  • $237M was invested over 34 deals in Q3 in Quebec, 11% more than the previous quarter ($213M), but 57% lower than the same quarter last year ($547M).
  • The average VC deal size almost doubled this quarter from $3.6M in Q2 to $7M.

YTD Q3 2018 VC Highlights

  • The largest deal was the $129M series D round in Hopper Inc. led by OMERS Ventures and included Caisse de dépôt et placement du Québec (CDPQ), Investissement Québec and BDC IT Venture Fund.
  • Quebec captured 29% of the total number of VC deals (127 out of 438) and 23% of dollars invested ($558M out of $2.4B).
  • Just over one third of VC activity (43 out of 127 deals) was in deal sizes between $1M-$5M, followed by deals between $100K-$500K capturing a 24% share (31 out of 127 deals).
  • ICT companies garnered $337M, a 60% share of total dollars, up 6% from its 2017 share.
  • Agribusiness companies received $57M or 10% of total dollars, a significant spike from its 4% share in 2017.
  • Montréal-based companies received 69% (87 out of 127 deals) of VC deal flow followed by Québec with a 6% share (8 out of 127 deals).
  • There were an equal number of seed and later stage deals that captured 6% ($35M) and 58% ($324M) respectively of total dollars; 37 deals were closed in early stage companies representing a 35% ($197M) share of total dollars.

 

Q3 2018 PE Highlights

  • $1B was invested over 73 deals, 50% lower than the previous quarter and 76% lower than Q3 2017.
  • The average deal size dropped 35% from $21.4M the previous quarter to $14M.

YTD Q3 2018 PE Highlights

  • There was a 2% increase in the number of deals in the first three quarters of 2018 (255) compared to the 249 deals in the same period last year. However, total PE dollars dropped 49% from $8.5B to $4.4B.
  • Québec captured 61% of all Canadian PE deals (255 out of 415), more than three times greater than Ontario’s 18% share.
  • Just over a third (39%) of all deals were between $1M-$5M, with deals between $5M-$25M capturing a 21% share of the provinces deal flow.
  • 29% of deals (74 deals) went to companies in the industrial and manufacturing sector with 12% going to the ICT sector (31 deals).
  • The $509M follow-on investment into Stingray Digital Group Inc. was the largest deal this year; Caisse de dépôt et placement du Québec (CDPQ), Investissement Québec and Fonds de solidarité FTQ were joint investors.
  • The largest exit was the $3B corporate buyout of Atrium Innovations Inc. by Nestlé; selling investors included Fonds de solidarité FTQ and Caisse de dépôt et placement du Québec (CDPQ). This was followed by the $1.9B Camso acquisition by Michelin; selling investors included Caisse de dépôt et placement du Québec (CDPQ).

About Réseau Capital
Réseau Capital, the Québec Venture Capital and Private Equity Association, 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.

Founded in 1989, Réseau Capital represents private equity, tax-advantaged and public investment companies as well as banks, accounting and law firms, along with many professionals working in the field. Please visit: http://www.reseaucapital.com

For more information or to arrange an interview, please contact:
Catherine Berbery
Direct: 514-880-2372

About the CVCA
We’re how collaboration happens and how innovation and growth thrive.

The CVCA is Canada’s professional association for the venture capital and private equity industry. Our services and support establish a favourable and competitive ecosystem and lay the foundation for greater collaboration, innovation, growth and market intelligence. We strongly advocate for fair and competitive policy to keep our industry energized and future-ready.

From coast to coast, we bring members together; connecting private capital professionals to each other generating meaningful partnerships, enabling connections to foster and knowledge to prosper.

We’re also the nation’s ultimate resource for data on Canadian private capital investments. Please visit: http://www.cvca.ca.

For more information or to arrange an interview, please contact:
Jon Jackson
jjackson@cvca.ca
Manager, Content and Media
Direct:  416-487-0519, ext. 201