TLDR:
- Québec’s venture capital ecosystem heavily relies on public and para-public funding.
- Private funding sources have decreased, leading to a more fragile industry.
A new report from Réseau Capital highlights the continued reliance of Québec’s venture capital ecosystem on public and para-public funding. While private sources accounted for 60% of venture capital fundraising leading up to 2022, this figure dropped to 52% in the 2022 to 2023 period, indicating a current funding downturn. Public entities like the BDC, Investissement Québec, Fonds de solidarité FTQ, and Fondaction play a crucial role in financing early-stage ventures, making Québec unique among Canadian provinces.
The report notes that the tech sector in Québec’s venture capital ecosystem has seen significant support from public funding, with an uptick in public or para-public funding share from 2022 to 2023. However, the sector remains fragile due to a lack of established local managers and a decline in average fund sizes in recent years. The report also mentions the importance of later-stage funds, which have seen a sharp decline in 2023, making it more challenging to secure private funding from sources outside the province.
Despite these challenges, there are signs of a turnaround in 2024, with private venture capital and private equity firms in Québec managing to close funds. However, the report underscores the fragility of the overall ecosystem and the continued dependence on public and semi-public funding to sustain momentum.
