Venture capital in Quebec: why, for whom, how?

Supporting venture capital in 2023 is a daily challenge. To help navigate this landscape, we have partnered with Espace CDPQ to organize a virtual event on venture capital in 2023, aimed at the network of individuals who support Quebec startups.

The event in four key points:
💼 Challenges and prospects for venture capital investment in Quebec and Canada, discussion between Nicolas Rubbo(Espace CDPQ),Olivier Quenneville(Réseau Capital),Kalthoum Bouacida(AQC Capital), andSarah Pisonero(BDC)

📈 Presentation of Espace CDPQ and funds by sector and area of activity, by Marie-Laurence BoivinandNaomie Bourduas-Mailhot(Espace CDPQ)

💡 Tips for successful collaboration between investors and entrepreneurs, discussion between Charles-Olivier Roy(MAIN),Emmanuel Glen(AWL-E), andAntoine Bellemare(i4 Capital).

🗓 Upcoming launch of a venture capital training program for support providers by Front Row Ventures, in collaboration with MAIN and Espace CDPQ (don't miss the launch!)

a nuanced portrait of the state of venture capital in 2023

As we now know, in Quebec as in Canada (and among our neighbors to the south), the number of investments has been declining over the past few years, and investment rounds are much longer than what we experienced during the pandemic years. Three key quotes from experts invited to give their views on the state of venture capital summarize the first session well:

"We often tend to compare ourselves to 2021 and early 2022, which were exceptional periods, but which do not necessarily follow historical trends. It is much more difficult to raise funds at the moment. Not just for startups, but for management firms as well. It's important to understand that venture capital funds also need to raise funds. Large capital allocators are much more cautious." — Olivier Quenneville, Réseau Capital

"We are seeing the same trends in Canada. We are also noticing that institutional investors are more cautious, revising their asset allocation strategies slightly downward and adopting more conservative strategies. Until now, we have relied heavily on US capital, but as transaction activity has slowed in the United States, we are seeing the impact on this side of the border." — Sarah Pisonero, BDC

"The job of funds is to deploy money. We have four to five years to deploy the funds we have. What I see on the ground is less alarming than the trends observed. We (the funds) are always on the lookout for a good pipeline of good companies. It's our job to find good companies. It is true, however, that investors are more cautious and require even more exhaustive due diligence." — Kalthoum Bouacida, AQC Capital.

And, according to our experts, what makes a company attractive to a venture capital fund?

• A company with the potential to create value quickly and capture market share. #Velocity
• the quality of the people behind it. Its vision, its potential. The entrepreneurial experience of the founders. #ThePeople
• A startupthat adopts a "global market" approach from day one. #GlobalFirst
• A startupthat has a solid understanding of the market in which it operates and its competitors. #KnowYourMarket
• A startupthat knows its numbers inside out and can speak financial jargon. #Runway #BurnRate

The good news is that, despite the overall decline in transactions, certain sectors are standing out and even continuing to grow. For example, Quebec has developed significant expertise in the fields of artificial intelligence and clean energy, which continues to attract investor interest.

Furthermore, our guest experts tell us that resource optimization and data management are now key factors in the venture capital sector. Finally, impact investors, although not in the majority, seem less sensitive to changes in investment strategies.

how can incubators and accelerators pave the way for their startups?

Our experts reminded us of best practices for improving our support of startupsto make them moreVC-backable.

1. Venture capital funds expect to build relationships with Quebec's ecosystem of accelerators, and the fact of having been accompanied by a accelerator, is a seal of confidence for an investing fund.
2. Supportingstartupsin conducting their own due diligence on funds, in particular by reviewing investment theses to guide them toward the best investors.
3. Invite funds to your events so they can meetstartups
4. Staying on the lookout for a pipeline of goodstartupsfor funds
5. Becomea member of Réseau Capitaland attend their events.

Finally, it is important to understand that funds in Quebec are highly interconnected. They communicate with each other and share files. They are also the ones who will consider co-investing when they see that a company meets their respective criteria.

Also remember that getting burned by one VC has the potential to become known to all VCs.

The relationship between startups and entrepreneurs goes beyond spreadsheets: you have to be on the same wavelength!

We also enjoyed a frank and open discussion betweenEmmanuel Glen, founder of thestartupAWL-E, adeep techcompany working in wireless electricity transfer, andAntoine Bellemare of i4Capital, an investment fund that won Quebec's aid fund competition and focuses on business projects with sustainable intellectual property aimed at solving persistent and significant problems in various industries.

At AWL-E, as in the relationship that entrepreneurs build with their investors, it is essential that there is a good rapport!

Interaction between investors and entrepreneurs is essential to the success ofstartups. Emmanuel talks about the importance of collaboration between the two parties in order to bring great ideas to fruition. He also highlights the positive impact of investors such as Front Row Ventures and support organizations such asCentechon his entrepreneurial journey.

It is with great passion in his voice that Emmanuel recounts his personal journey from inventor with a passion for electricity to ambitious entrepreneur at the helm (alongside four other co-founders) of the AWL-Estartup, which is now the envy of investors.

no "BS"

Emmanuel also opened up about being autistic and said he perceives social interactions differently, which translates into great transparency in his exchanges with i4 Capital from the outset. This authenticity is appreciated by his investors. No "BS!"

Both partners also emphasize the importance of a good fit between the profiles of a fund's partners and the investment sectors. For i4 Capital, it is crucial to have a deep understanding of a technology's potential and the markets in which it operates. Without this, it would not have been able to identify the long-term potential of AWL-E's technology.

beyond the check!

In conclusion, the relationship between a startupand an investment fund continues long after the check has been cashed!

The relationship between entrepreneurs and investors is a partnership based on transparency, alignment of objectives, and teamwork. Entrepreneurs must be authentic and open about their limitations, while investors must be attentive and ready to provide advice and support.

When there is a good fit between the two parties, it allows them to achieve big dreams and build successful startups.