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Venture Capital & Private Equity Q3 2019 Québec Market Overview

November 2019

Quebec Captures A Third of All Venture Capital Deals and Secures more than 60% of All Private Equity Deals in Canada.

 

In venture capital, there was CAD $516M invested over 32 deals in the third quarter, bringing the year to date total for 2019 to CAD $1.1B over 114 deals. There have been six mega-deals (CAD $50M+) so far in 2019, including:

  • Montreal-based Element AI Inc.’s $200M series B round by an investor syndicate that included Caisse de dépôt et placement du Québec (CDPQ), BDC Capital Co-Investments, Investissement Québec and Real Ventures;
  • Bas-Saint-Laurent-based Repare Therapeutics Inc.’s $109M financing from investors that included BDC Healthcare Venture Fund, Fonds de solidarité FTQ and Versant Venture Management, LLC; and
  • Montreal-based Enerkem’s $76M round from a syndicate of investors including Cycle Capital Management/Ecofuel, Fondaction CSN, Fonds de solidarité FTQ, Investissement Québec and National Bank of Canada.

“The VC industry in Québec has kept up the pace in the third quarter and is on track for another great year. Québec’s economy is doing well, thanks in part to the innovative capacity of businesses, including startups” said Daniel Charron, President and CEO of Réseau Capital.

Private Equity in Quebec: $ 3.1 Billion invested since January 1

In private equity, CAD $1.3B was invested over 60 deals in the third quarter, bringing the year to date total for 2019 to CAD $3.1B over 233 deals. The largest disclosed private equity deals included:

  • The $653M financing of Montérégie-based McInnis Cement Inc. from Caisse de dépôt et placement du Québec (CDPQ);
  • The $385M financing of Montréal-based Quebec Iron Ore by Caisse de dépôt et placement du Québec (CDPQ); and
  • The $103M financing of Laval-based JLD-Group from an investor syndicate that included BDC Capital Inc., Fondaction CSN and Fonds de solidarité FTQ.

So far in 2019, there have been 11 exits involving VC-backed companies. Of the 11, there were two IPOs involving Montreal-based companies. Lightspeed POS Inc. was listed on TMX with a market cap of $1.1B. with involvement from investors including Caisse de dépôt et placement du Québec (CDPQ), inovia Capital, Investissement Québec and Teralys Capital. Milestone Pharmaceuticals Inc. also closed its IPO this year on NASDAQ with a market cap of $468M.

“Québec can count on a strong, diversified and sophisticated financing chain to support its current and future economic champions. This is a key factor in promoting the growth and internationalization of companies, innovation and diversification of our economic fabric,” added Daniel Charron.

 


Quebec Venture Capital Highlights

Q3 2019 Highlights

  • The average VC deal size ($16.1M) doubled compared to last year ($8.1M) and 2.5 times greater than the average for the 5-year period 2014-2018 ($6.5M)
  • There were 4 $50M+ mega-deals that closed in the third quarter

YTD Q3 2019 Highlights

  • The average YTD VC deal size was $9.4M, up 16% from last year ($8.1M) and 45% higher than the average for the 5-year period 2014-2018 ($6.5M)
  • Quebec captured almost a third of the number of VC deals (114 out of 387) and 23% of dollars invested ($1.1B out of $4.6B)
  • Just over a third of deals were between $1M-$5M, followed by deals between $5M-$20M capturing a 17% share (19 out of 114 deals)
  • Quebec-based ICT companies received the largest share (45% of $479M) of total investment; the life sciences sector was second, garnering $373M, a 35% share
  • Montréal-based companies received $793M over 88 deals second only to Toronto-based companies that received $1.4B over 119 deals
  • Within the province, Montréal-based companies received 77% (88 out of 114 deals) of VC deal flow followed by Québec City with a 7% share (8 out of 114 deals)
  • 54 early stage deals captured 46% ($494M) of total dollars and 21 later stage deals 41% ($434M); there were 32 seed stage deals that totaled $48M
  • Quebec captured the largest share of VC Debt deals ($45M over 40 deals)

Quebec Private Equity Highlights

Q3 2019 PE Highlights

  • The average deal size increased 150% from $8.4M in Q2 2018 to $21.1M
  • The largest deal that closed in Q3 was the $653M financing of Montérégie-based McInnis Cement Inc. from Caisse de dépôt et placement du Québec (CDPQ)

YTD Q3 2019 PE Highlights

  • The average deal size this year dropped a third from $19.6M in 2018 to $13.4M
  • Québec captured 6 out of 10 of all Canadian PE deals (233 out of 385)
  • 4 out of every 10 deals were between $1M-$5M, with deals between $5M-$25M capturing a 22% share of the province’s deal flow
  • 30% of deals (70 deals) went to companies in the Industrial and Manufacturing sector, with a 14% share (32 deals) going to Agri-forestry companies and the ICT sector receiving 13% (30 deals)
  • So far in 2019, Quebec saw seven private equity-backed exits which totalled CAD $21M.