Venture Capital: Supporting and Preparing Quebec Startups for Strategic Fundraising Rounds

On November 12, in partnership with Espace CDPQ, we organized a training session focused on venture capital, designed to equip support professionals in Quebec’s startup ecosystem with the necessary tools. The event brought together six experts who shared their experience and practical advice to help participants gain a thorough understanding of venture capital financing and better prepare startups to successfully raise funds.

Venture capital is an essential source of funding for fast-growing startups. Gabriel Dannenbaum, Chief Operating Officer at Front Row Ventures, began the training session by explaining the types of funding available, ranging from accelerators and pre-seed investment funds to institutional venture capital. He highlighted the key stages of the investment cycle and the criteria investors evaluate before funding a company.

Here are the key points to remember:

1. Early-Stage Funding Sources: Even before seeking venture capital, startups often need to explore alternative funding options, such as grants, loans, or funding from friends and family (often referred to as FFF funding: “Friends, Family, and Fools”). These sources provide support without diluting ownership of the company.
2. Rapid Growth at the Heart of Venture Capital: Venture capital funds invest exclusively in companies with ambitious potential for rapid growth, aiming for an exit within approximately 10 years. For this reason, not all startups are eligible for venture capital. The company must have strong growth prospects and be willing to share control with its investors.
3. The startup life cycle: Each stage of a startup’s growth—from seed to maturity—requires specific types of financing, and investors expect increasingly higher returns as the company grows.

In short, fully understanding how venture capital fits into the entrepreneurial journey is essential for choosing the right time to seek this type of financing.

Olivier Quenneville, President and CEO of Réseau Capital, then presented an overview of the current state of the venture capital industry in Quebec. Despite a slowdown in startup funding since 2022, several positive indicators demonstrate the strength of Quebec’s ecosystem:

1. A Diversified and Integrated Investment Network: As shown in the investor map, Quebec has numerous venture capital funds active at all stages of business development, which facilitates the growth of local startups. In addition, several new seed funds have been created in recent years, offering young companies more financing options in the early stages.
2. Competitive Rates of Return: Although the industry is going through a period of greater caution due to rising interest rates, returns remain attractive, with competitive internal rates of return (IRR). These results demonstrate the resilience of Quebec companies in a challenging environment.
3. Exit Challenges: One major challenge, however, remains the lack of exits—or exit opportunities—that allow investors to recoup their investment. To address this issue, our expert highlighted the importance of supporting startups to ensure their growth and guide them toward successful exits.

Sylvain Carle, an experienced investor and mentor, co-founder and director of CIVIC, shared practical advice for business coaches, noting that the funding process is a complex undertaking that requires preparation, patience, and resilience.

1. Implement rigorous financial management: First and foremost, startups need to understand the basics of financial management. Even before seeking investors, a startup must know how to manage its revenue and expenses—and, above all, anticipate its cash flow needs. Sound financial management is essential to convincing potential investors of the project’s viability.
2. Preparing the “data room”: Before beginning a fundraising round, mentors should help entrepreneurs prepare a “data room”—a virtual space containing all the essential documents for investors, such as financial projections, legal documents, and growth strategies. This preparation helps avoid delays and demonstrates the company’s professionalism.
3. Finding the right “fit” with investors: A venture capitalist isn’t just a financier; they’re a strategic partner. It’s crucial to carefully target investors, understand their investment theses, and ensure they share the company’s vision. A strong partnership can make all the difference in the long run.

Carmen Zanfirescu, Trade Commissioner—Transportation and Venture Capital—atthe Quebec Office in Silicon Valley, provided an international perspective by highlighting the specific expectations of U.S. investors and the importance of a strategic approach to entering this market.

1. The Importance of English-Language Content: To successfully attract the attention of American investors, it is essential to make it easy for them to access key information about startups: documents and a website in English, and financial data converted to U.S. dollars. Many investors do not automatically look for resources in French, which can hinder opportunities for collaboration.
2. Standing Out in a Highly Competitive Market: Silicon Valley attracts companies from all over the world. To succeed, a Quebec startup must not only be well prepared, but also demonstrate its originality and relevance in the U.S. market.
3. Take advantage of support networks: Several initiatives in Quebec facilitate connections between startups and international investors, such as mentoring programs and contact databases designed to help Quebec companies position themselves effectively.

The training session concluded with an inspiring discussion between Andréa Gomez, CEO of Omy Laboratoires, and Annick Charbonneau, co-founder and managing partnerof Accelia Capital. This discussion provided insight into how Omy Laboratoires succeeded in raising $11 million to grow its personalized cosmetics business. Their story highlighted several key points for entrepreneurs seeking funding:

1. The Importance of a Strong Network: Andréa emphasized how crucial her connections within the Quebec ecosystem—as well as the support from Accelia Capital—were to her fundraising efforts. By connecting with the right people and benefiting from strategic advice, she was able to navigate the complex world of venture capital more easily.
2. Thorough Preparation: As several speakers noted, fundraising requires careful preparation. Andréa shared how she tailored her “pitch deck” to each investor she met and put together a solid financing plan before approaching investors. For example, when she secured a grant, she used it as leverage to raise additional funding.
3. An ambitious and clear vision: Andréa also mentioned the importance of having a clear vision to attract investors. Her determination to revolutionize the personalized cosmetics market and stand out on the international stage was one of the factors that sparked investors’ interest.

In conclusion, this event was a veritable treasure trove of advice and essential tools for those who support entrepreneurs, offering an in-depth understanding of venture capital needs and the challenges specific to the Quebec industry.

main and Espace CDPQ encourage business advisors and entrepreneurs to continue expanding their knowledge of venture capital.

1. Watch this event again: Contact us for the full recording
2. Complete the FRV x main x Espace CDPQ advanced training course on venture capital —and get 50% off!
3. Finally, join an exclusive masterclass hosted by CDPQ at Sommet des accélérateurs February 12 to 14. This is a unique opportunity to delve deeper into discussions about startup financing and to collaborate on the success of Quebec businesses.

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