Montreal’s tech ecosystem continued to benefit from significant venture capital funding in the third quarter of 2021, raising a total of $ 408.7 million, according to the latest BDO-Hockeystick report, with data briefed. in.
“We have seen a significant increase in the size of late stage rounds, which is a sign of the maturation of the Canadian tech ecosystem.”
– Janet Bannister
The $ 408.7 million raised in the third quarter is a 43% drop from Montreal’s record second quarter and a 14% year-over-year increase. Thanks in large part to the second quarter, total investment in Montreal in 2021 reached $ 1.4 billion, already exceeding the total investment raised in 2020 by 15%.
Hopper’s $ 175 million Series G fundraising round represented about 40 percent of all dollars raised in Montreal during the third quarter. In previous quarters, the city has shown a tendency to rely on a singular mega-deal to support overall investment.
Janet Bannister, Managing Partner of Real Ventures, said the large size of late-stage investment rounds is causing the “shock” seen in quarter-to-quarter results.
“Over the past 18 months, we have seen a significant increase in the size of subsequent stages, which is a sign of the maturation of the Canadian tech ecosystem,” added Bannister. “It can also cause the numbers to fluctuate more sharply from quarter to quarter if more than one large transaction occurs in the same quarter.”
According to Hockeystick and briefed.in, all of Canada’s major tech ecosystems experienced quarter-over-quarter decline in transaction volume in the third quarter, and Montreal was no exception. A total of 21 deals were tracked in the city in the third quarter, down 9% from the second quarter of 2021 and down 32% year-on-year.
At the end of the third quarter, Montreal startups had concluded a total of 63 transactions in 2021, only 52% of their transaction volume in 2020. Geneviève Tanguay, CEO of Anges Québec, believes it is too early to tell , COVID-19 could play a role in the decline in transaction volume this year.
“Montreal has been hit hard by COVID over the past year,” Tanguay said. “It’s no surprise to me to see some impacts even in the number of deals closed.”
Strong growth in seed funding
A total of 13 start-up transactions were concluded in Montreal, including 10 in the start-up phase and three in the pre-seed phase. Seed funding, in particular, has grown steadily in the region since Q4 2020, with notable seed deals in Q3 including the $ 7.2 million funding round from FIX4 Capital and the funding round. $ 6.6 million from Angel Host.
“It has never been a more exciting time to be a part of Montreal’s startup tech ecosystem,” commented Bannister. “We anticipate continued strong growth in the number of start-ups in Montreal given the growing pool of entrepreneurial and engineering talent and the prevalence of ambitious and motivated founders. “
Two Series A transactions were completed in Montreal during the third quarter, representing 6.6% of all funds raised in the region. According to Hockeystick and briefed.in, 44% of companies in the city have not increased their Series A rounds within 18 months of their seed deals.
There were two major deals closed in the third quarter of 2021 that did not fall under a specific milestone. These include the acquisition of a controlling stake of $ 103 million by Flinks from National Bank and the raising of growth funds of $ 35 million from WorkJam. Together, these deals represent about a third of all dollars raised in the region.
Talent should be a key challenge for Montreal startups
A recent CBRE report found that Montreal’s tech labor pool of nearly 161,000 puts Quebec City almost on par with much more populous cities like Chicago. With this increase in talent, several large international firms have sought to expand their presence in Montreal over the past year.
Other companies that were founded in the city before expanding to the United States have also focused on expanding their teams in Montreal, with Sonder and AppDirect being notable examples. Tanguay said recruiting and retaining talent will remain a key challenge for Montreal startups looking to find new growth.
“One of the perks of Montreal was its lower salaries for IT professionals, but now with remote working, it’s something foreign companies are taking advantage of by providing conditions that are hard for startups to match. local, ”said Tanguay.
Montreal’s strong pool of technological talent can be attributed in part to the city’s network of post-secondary education and research hubs, particularly those focused on engineering, artificial intelligence, and deep technology. Bannister said these institutions, along with the city’s growing number of recurring founders, could help drive more activity in the coming quarters.
“We expect the number and quality of investment opportunities, both in the early and later stages, to continue to grow very rapidly over the next several years,” added Bannister.
BetaKit is a media partner of Hockeystick Tech Report.