QUéBEC′S VENTURE CAPITAL MARKET IN Q1 2009 AN OVERVIEW Despite.pdfVIP

May 2009 Not to be copied or reproduced without permission. QUÉBEC’S VENTURE CAPITAL MARKET IN Q1 2009: AN OVERVIEW Despite continuing decline in global venture capital (VC) activity, activity in the Québec market actually grew in the first quarter of 2009. A total of $156 million was invested in Québec, up 33% from $118 million invested in Q1 2008. The number of Québec VC-backed firms, totaling 50, was unchanged. Québec-based trends contrasted with Canada-wide VC activity, which experienced a year-over- year drop of 25%, with $275 million invested between January and March. Activity in the United States fell even further, with US$3.0 billion invested this time around, down 61% from the year before. Consequently, Québec accounted for 57% of all disbursements across the country in the first three months, which significantly improves on its 28% share in the whole of 2008. Québec also continued to reflect the largest proportion of VC-backed firms, or 49% of the Canadian number. A key variable in Québec’s Q1 2009 results was larger deal sizes, supported in part by enhanced cross-border activity. Due to a handful of major transactions, amounts invested per company averaged $3.1 million, as compared to an average of $2.3 million one year ago. Increased levels of Québec VC activity in the first quarter were located primarily in communications and other IT sectors, which saw $82 million invested, up 82% from the year before, and reflecting over half of total activity. Traditional sectors also made gains, attracting $60 million, which is up 52%. In contrast, life sciences activity was down in both real and relative terms, given a mere $5 million invested. After being substantially reduced in 2008, American and other foreign VC activity in Québec