Very popular during the pandemic, investments in venture capital are significantly slowing down in 2023 in Canada. And the impact is even more obvious in Quebec, which sees its share of the Canadian pie drop from 30% in 2019 to 22%. Indication, it is estimated at the Business Development Bank of Canada (BDC), that the province needs “a strong entrepreneurial infrastructure” like those developed in Ontario.
The results of the first three quarters of 2023 in investment in venture capital, published this week by the Canadian Venture Capital Association (CVCA), indicate “a significant slowdown” in Canada, like the overall economy. With a total of 5.4 billion so far, “we will end up at 7 or 8 billion,” estimates Jérôme Nycz, executive vice-president of BDC Capital, the largest venture capital investor in Canada and the third in importance in Quebec.
This is almost half as much as in 2021, a record year. This pace, says the CVCA, marks “a return to normalcy, reflecting the pre-pandemic era of 2019.”
Mr. Nycz is far from sounding the alarm. “When we look over a 10-year horizon, 2023 remains within standards in Canada, I would even say within high standards. When I started the profession about ten years ago, it was 1 billion per year that was invested […]. We have more institutional investors, we have more investment funds, we have more companies that are supported by the venture capital industry. »
However, he notes an element that has complicated the life of technology companies over the past 18 months: the unfavorable market for IPOs and public offerings. These “IPOs”, to use the English acronym, allow companies to obtain the tens, even hundreds, of millions in investments necessary for the development and marketing of their products. Only one company, Turnstone Biologics, founded in Ottawa and which moved its headquarters to California, has completed such an operation, raising US$80 million last July.
The downward trend, however, seems much more marked in Quebec, where 101 investments totaling 1.2 billion are reported for the first nine months of 2023. Furthermore, Quebec’s share of the Canadian total has been decreasing since 2019, passing from 30% that year to 22% so far in 2023.
The amount of 1.2 billion for the first three quarters in Quebec still compares to what businesses in the province collected in 2019.
Even if the statistics show a more obvious slowdown in Quebec, the vice-president at the BDC notes that investments are concentrated in very promising areas, notably life sciences and clean technologies.
That said, Mr. Nycz believes that “an element is missing from Quebec’s kit”: a strong entrepreneurial hub like what Toronto has developed with its MaRS Discovery District, which brings together some 120 organizations.
Notman House, Centech, Mila, among others, “have done a lot for the ecosystem […] But at the moment, there are a lot of small pieces that are not very well attached.” He has high hopes for the announced opening in the fall of 2024 of Espace Ax-C, for which Quebec and Ottawa have granted financial aid totaling 48 million to the École de Technologie Supérieure.
“We need a “hub”, an infrastructure to bring everyone together. »