More on the $1.35B initiatives from Quebec for the Venture Capital industry
It feels good to hear more about these type of initiatives.
In addition to the $825M fund of fund and the $500M later stage fund initiatives, announced earlier this week by the Quebec government (read more here) Quebec will be put in place 3 new seed funds for an additional aggregate amount of $125M… or more. Managers of these funds are still to be confirmed, via a committee put in place by the MDEIE.
We NEED seed funds, as they take-on different level of risks and they provide different level of value-add to promising entrepreneurs. And yes, I believe that no private fund should be financing technology or research! Private funds should only be financing innovation within the hands of committed, new and recurring, entrepreneurs. By seed funding too many start-ups we end up breaking the ecosystem and flooding it with too much noise. But, as a society, we do need to provide capital to entrepreneurs that have the ability to grasp what needs to be done to launch a successful and further fundable company.
Key success factors for profitable seed funds include: its capability to link itself up to one or many follow-on funds and to develop a strong network of partners and collaborators (which isn’t obvious due to the limited amount of management fees a seed fund has).A seed fund should never look at a deal alone, it can close a deal alone, but it should always be looking into opportunities in conjunction with other investors and partners, in order to initiate relationships early on.Within the High Technology & Venture Capital ecosystem, we find many parties playing critical roles such as: tech transfer offices, seed funds, coaching and incubators, early stage funds, later stage funds, buyout & PE, bankers…(and I personally believe its important not to “wear” too many hats). Failing to feed the ecosystem adequately is a big problem, and I’ve witnessed it many times in the past, either we see players trying to hold multiple roles and do more than what is expected from them and thus, they put themselves into direct conflict of interest with other players; or better yet, are the players (by fear of not getting the best deal possible in the world and potentially losing out on a huge return) try to limit the exposure of their deal flow to other parties in order to close the deal by themselves and to then only open up the gate of collaboration once the company is in desperate need of cash!
Coming back to the new Quebec initiatives to bolster venture capital across Canada, note that the $825M fund is a fund of funds, and once the management of this fund of fund is identified (soon enough I presume), it will be investing in top tier venture capital fund managers focused on different industries as well as different stages of investment. This is really good news for entrepreneurs!
In my view, Minister Raymond Bachand did an amazing job because if consulted (over a reasonable period of time) with practically every player of the food chain in Quebec, many others across Canada as well as going out and discussing models with foreign collaborators. He is smart – he did his due-diligence. The next few years will be interesting and I expect Quebec to show strong leadership in reviving the venture capital industry across Canada, thus reviving available funding of our best entrepreneurs!
Read more: “A new $825M Fund for Venture Capital to be put in place by Quebec Government – Chris’s posterous” –http://chrisarsenault.posterous.com/a-new-825m-fund-for-venture-ca#ixzz0AONvm5DF
Added April 1st To read: $5 billion to end up in the hands of Canadian entrepreneurs, nothing less!
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Tags: Canada, Entrepreneur, Seed, VC, venture capital