Venture capital: supporting and preparing Quebec startups for strategic fund-raising

On November 12, in partnership with Espace CDPQ, we organized a training session on venture capital, designed to equip support professionals in the Quebec startup ecosystem. The event brought together six experts to share their experience and practical advice on how to understand venture capital financing and better prepare startups for successful fund-raising.

Venture capital is an essential source of funding for fast-growing startups. Gabriel Dannenbaum, COO of Front Row Ventures, kicked off the training by explaining the types of financing available, from gas pedals and pre-seed investment funds to institutional venture capital. He highlighted the key stages in the investment cycle and the criteria investors evaluate before funding a company.

Here are the main points to remember:

1. Early-stage funding sources: Even before soliciting venture capital funds, 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 business ownership.
2. Rapid growth at the heart of venture capital: Venture capital funds only invest in companies with rapid, ambitious growth potential, aiming for an exit within 10 years or so. For this reason, not all startups are candidates 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 phase of a startup 's growth - from seed to maturity - requires specific types of financing, and investors expect higher and higher returns as the company develops.

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

Olivier Quenneville, President and CEO of Réseau CapitalOlivier Quenneville, then presented a current portrait of the venture capital industry in Quebec. Despite a slowdown in startup financing since 2022, several positive points demonstrate the strength of the Quebec ecosystem:

1. A diversified, integrated investment chain: As the investor map shows, Quebec has numerous venture capital funds present at all stages of company development, facilitating the growth of local startups. In addition, several new seed funds have been created in recent years, offering young companies more early-stage financing options.
2. Competitive rates of return: Although the industry is going through a more cautious cycle due to rising interest rates, returns remain attractive, with competitive internal rates of return (IRR). These results testify to the resilience of Quebec companies in a difficult environment.
3. Exit challenges: A major challenge remains the lack of exits, or exit opportunities, that enable investors to recoup their investment. To alleviate this problem, our expert spoke of the importance of coaching startups to ensure their growth and lead them to successful exit stages.

Sylvain Carle, an experienced investor and mentor, co-founder and director of CIVIC, shared practical advice for coaching professionals, reminding us that the financing 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 looking for investors, a startup needs to know how to manage its revenues, expenses and, above all, anticipate cash flow needs. Good management is essential to convince potential investors of the project's viability.
2. Preparing the data room: Before starting to raise funds, coaches should support entrepreneurs in preparing a "data room", a virtual space containing all the essential documents for investors: financial projections, legal documents, growth strategy, etc. This preparation avoids delays and shows the company's seriousness. This preparation helps avoid delays and demonstrates the seriousness of the company.
3. Finding the right "fit" with investors: a venture capitalist is more than just a financier; he's a strategic partner. It's crucial to target the right investors, know their investment thesis and make sure they share the company's vision. A good partnership can make all the difference in the long term.

Carmen Zanfirescu, Business Delegate - Transportation and Venture Capital - attached to theQuebec Antenna in Silicon Valley, provided an international perspective, highlighting the specific expectations of American investors and the importance of a strategic approach to penetrating this market.

1. The importance of English content: To attract the attention of American investors, it's vital to simplify their access to essential startup information: documents and a website in English, financial data converted into US dollars. Many investors don't have the reflex to consult French-language resources, which can hinder collaboration opportunities.
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 prove its originality and relevance to the American market.
3. Take advantage of support networks: several Quebec initiatives facilitate connections between startups and international investors, such as the coaching programs and contact databases available to help Quebec companies position themselves effectively.

The training session concluded with an inspiring exchange between Andréa Gomez, CEO of Omy Laboratoires, and Annick Charbonneau, co-founder and managing partner ofAccelia Capital. This exchange provided a better understanding of how Omy Laboratoires managed to raise $11 million to grow its personalized cosmetics business. Their story highlighted several key points for entrepreneurs seeking financing:

1. The importance of a good network: Andréa emphasized how much her connections within the Quebec ecosystem, as well as Accelia Capital's support, played a decisive role in her fund-raising. 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. Meticulous preparation: As several speakers noted, fund-raising requires careful preparation. Andréa shared how she adjusted her "pitch deck" according to each investor she met, and put in place a solid financing plan before soliciting investors. For example, when she obtained a financial grant, she used it as leverage to raise more financing.
3. A clear, ambitious vision: Andréa also mentioned the importance of having a clear vision to attract investors. Her desire to revolutionize the personalized cosmetics market and stand out internationally was one of the elements that attracted investor interest.

In conclusion, this event provided a wealth of indispensable advice and tools for entrepreneurial coaches, offering an in-depth understanding of venture capital needs and challenges specific to the Quebec industry.

main and Espace CDPQ encourage support professionals and entrepreneurs to continue developing their knowledge of venture capital.

1. review this event: contact us for the full recording
2. complete the advanced training on venture capital LIF x main x Espace CDPQ - get 50% off!
3. finally, take part in an exclusive masterclass with the CDPQ space at Sommet des accélérateurs from February 12 to 14. A unique opportunity to deepen discussions around startup financing and collaborate for the success of Quebec companies.

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