The following is a sponsored article written by Daniel Brennan of I.T. Contact
Quebec has a strong VC force made up of both institutional and a new generation of young forward-thinking VC companies with more than $12 billion under management in total. Quebec VC companies were stung less than their American counterparts by the Internet bubble and have their pick of the deals, since entrepreneur demand for capital substantially exceeds supply in the region. There is no dot-com hangover in Quebec City.
In fact, in a January 2002 study by KPMG, Quebec City was ranked the second best investment city in the world and first among the 16 cities surveyed in the Northeast of the United States and Canada.
The province of Quebec also accounted for more financings and investments than any other Canadian province, according to the Canadian Venture Capital Association. As for the Quebec City and Montreal economies, they grew faster than any other province in Canada in 2002, with 4.4% and 4.3% increases in real gross domestic product respectively, according to The Conference Board of Canada.
The local VC players taking advantage of this burgeoning environment include GTI Capital, Business Development Bank of Canada (Venture Capital), Desjardins Venture Capital Group, the Fonds de Solidarite FTQ, TechnoCap, Innovatech Quebec, FondAction CSN, MSBI Capital, Emergence Entrepreneur, TechnoFonds, Navilon Network and Accel Ventures. With a new generation of VCs hitting the street, Quebec is more ready than ever to do the grunt work for American VCs looking for exciting opportunities in the province and recognized exit know-how.
An example of Quebec’s VC growth is Boston’s Venture Investment Management Co. (VIMAC), a private equity investor with more than $100 million under management, which recently opened an office in Montreal. Entrepia Ventures, which closed two funds designed to bring technology from around the world to Japan, also set up shop in Montreal with Le Fonds Entrepia Nord S.E.C. In addition, The Boeing Company’s research and venture capital unit, Phantom Works, recently made a $10 million investment in TechnoCap, its first investment in Canada.
There are many reasons why the Quebec VC market is growing and why American firms should consider investing in Quebec-based companies. Quebec offers low burn rates (one third less than US burn rates) and lower valuations. Quebec also boasts a world-class talent pool, with nineteen universities in the province. High quality deal flow, a history of successful exits, including Softimage, MetroWerks, TelWeb, and Discreet Logic, and up to 40% in R&D tax refunds continue to make Quebec an attractive place to invest.
R&D is in fact less expensive in Quebec City than any other North American city. The region has over 6,000 researchers and associates employed in an elaborate network of 100 research centres serving as sources of technological support for developing companies.
An initiative of SPEQM, the Quebec City Economic Development Corporation, I.T. Contact has grown to become an international rendez-vous bringing together a unique mix of technology visionaries, entrepreneurs and leading North American investment firms. In the same way that hockey has grown beyond the Canadian border to become a major North American sport, I.T. Contact is no longer a well kept secret, confined within the historic walls of Quebec City. I.T. Contact 2003, which will focus on innovation and American venture capital, will be on the agendas of many technology leaders wishing to share in the vision of major keynote speakers and leading investors, while enjoying a city with a Bostonian air.
The major ambassadors of this year’s event, which will be held October 8-10 at the Chateau Frontenac in Quebec City, include the event’s Chairman, Bernard Hamel, Co-Chairman and Senior Partner of GTI Capital; the event’s Co-Chairman Louis Ttu, CEO of Recruitsoft; and I.T. Contact’s US ambassador-at-large, Frank Brochin, Partner of Warburg Pincus (New York City).
“Our mission is to generate above-average returns by providing financing, strategic and networking support to high-performance businesses,” said Bernard Hamel, Chairman and Senior Partner of GTI Capital. “I.T. Contact is an outstanding networking event, profiling some of the most innovative companies and entrepreneurs Quebec has to offer. It’s a great place to get the overall picture of the Quebec VC market.”
The Bright Lights of Quebec
The Quebec technology sector remains innovative and dynamic. Quebec attracts many young companies because of the low cost of living, the high-quality talent pool, low labour and operating costs, R&D tax rebates and a great number of loans offered by the Quebec government. The Quebec government also offers a five-year provincial tax holiday to individuals with key technical or business skills who move to Quebec from outside of Canada to work for a Quebec-based company.
The Quebec region remains a choice location to establish and develop a business. The combination of science, human capital and financial capital make the region a focal point for economic and technological creativity.
These young Quebec companies, however, all face similar challenges, including access to qualified resources, financing, cutting-edge technology, business and market intelligence, and leading decision-makers.
Some of the exciting technology names in Quebec include Hexago and Inspeck.
Hexago provides migration strategies and inter-operability solutions to facilitate the transition to the IPv6 based Internet, which was designed as an evolutionary set of improvements to the current IPv4 Internet.
“Hexago aims to maintain its leadership role in the worldwide deployment of IPv6, the next generation of the Internet Protocol,” said Stephen M. Oronte, CEO of Hexago. “At Hexago we believe IPv6 will result in another wave of business and revenue opportunities for governments and corporations and we want to explore these opportunities at I.T. Contact, while identifying potential partners and alliances.”
Founded in 1994, InSpeck is a world-renowned leader in providing 3D technology solutions. InSpeck is the reference in 3D optical measurement digitizing using non-laser technology. InSpeck specializes in digitizing free form objects, in particular, humans. Common applications of these solutions are in medical-based 3D modeling as well as in computer-assisted modeling and animation, multimedia applications and electronic games.
Networking and Enlightenment
At I.T. Contact 2003, US investors will not only meet the brightest young companies of Quebec’s technology world, but also major Quebec financial players all in one place. The event represents a unique opportunity for investors to meet dynamic entrepreneurs and establish profitable business ties with technological, industrial, financial and institutional partners.
I.T. Contact is also an opportunity to hear from visionaries, such as Lawrence Lessig, one of Scientific America’s Top 50 Visionaries and author of The Future of Ideas and Code and Other Laws of Cyberspace, and investment specialists like Guy Kawasaki, CEO of Garage Technology Ventures and author of seven books including Rules for Revolutionaries, How to Drive Your Competition Crazy, Selling the Dream, and The Macintosh Way. These renowned speakers will help businesses look at their sector and the future of information technology and communications in a very different way.
The event will also present two panels of capital risk companies from outside of Quebec, one of which is made up entirely of top-tier American venture capital firms.
While at the event, participants will also enjoy a unique atmosphere: one of North America’s most historic cities, which is also evolving into an innovative technological pole like Boston.
Cited by UNESCO as a world heritage city, Quebec City and the surrounding area is a place where ancient walls, office towers, narrow streets, huge boulevards, nature parks and technology parks come together in harmony. The region offers the modern conveniences of North American cities combined with European charm.
Quebec City is also renowned for its “joie de vivre” and the diversity of cultural events of all kinds. Quebec City boasts many theatres, musicals, operas, museums and art galleries, as well as a full array of sports facilities. Quebec City has also entered into partnerships and alliances with other international cities, in order to promote its economic, cultural and social development, and has hosted major international events such as BioContact.
With five star restaurants some of the best in North America and accessible by plane from New York and Boston in only 90 minutes, investors and entrepreneurs will take pleasure in the finer things in life while they search to uncover those rare jewels that the city’s information technology and communications sectors produce.
Why attend I.T. Contact?
“I.T. Contact 2002 was a tremendous success,” said Richard Prytula, President of TechnoCap. “The event is an excellent platform for emerging high-growth information technology companies and we use the event to demonstrate to these companies our desire to help them build their businesses brick-by-brick and to bring outside investors and strategic partners to the table. I.T. Contact brings all the VC elements together in one place.”
I.T. Contact 2003 (www.ticontact.com) will build on the success of the 2002 event to deliver a unique experience combining major keynote speakers with venture capitalists. I.T. Contact 2003 remains an excellent opportunity to access sources of capital, negotiate technological partnerships, stay abreast of the latest technological innovations, establish effective business networks and identify new business opportunities.