Have policy makers finally solved the puzzle to fixing Canada’s small and chronically underperforming venture capital sector? Based on 2015 performance and results from Q1/16, the results are certainly encouraging. Bolstered by public participation in private sector-led funds of funds, 2015 saw a very healthy investment of $2.3 billion, up 12% from 2014. And in Q1/16, a further $838 million was raised, double the same quarter last year.
With information and communications technology continuing to dominate fundraising, government support has increased the appetite for somewhat riskier investments as well as the capacity to provide larger follow-on financing. Some deals are getting quite creative. Even better, collaboration among VC firms (as opposed to syndication) is becoming increasingly common.
How else to explain the new Capital Intelligent Mtl fund which aims to make Montreal a world-leading smart city (see lead story). At the urging of the municipality, 23 financing companies banded together under the leadership of Teralys Capital president Jacques Bernier to establish a potential pool of at least $100 million. The funds will be used to make Montreal the most connected and advanced smart city in Canada and it’s being led by the private sector.
With the prospect of dozens of smart city investments spurring research and innovation, the chances of breakout success is greater than ever before. A healthy VC ecosystem is essential for spurring innovation and increasing productivity. Once again, Quebec’s VC sector is leading the way.
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