Montreal in 2012:

10Jan12

Posted on January 10, 2012 by Chris Arsenault at iNovia Capital

A Hotbed of Seed Funding, VC and Growth

Below is my short response to the nextMontreal request for “2012 Predictions for Montreal“. I think 2012 is Montreal best year yet, because many key success factors will further be put in place to help build a stronger tech and startup ecosystem here. Montreal’s entrepreneurial DNA is spreading to more than just the few. And I expect to see an increase in the number of new startups being launched and the emergence of new as well as (finally) recurring entrepreneurs. This new momentum is due in part to initiatives such as: StartupFest, C100, Notman House, AccelerateMTL, FounderFuel, CIX, more venture capital funding flowing into Montreal, and because mass media is now taking notice and has started providing more visibility to our tech startups.

1. Hotbed:

This year, Montreal will likely be recognized as a North American hotbed for promising tech startups alongside New York & the Valley. Out hottest sectors will be in: mobile, ecommerce, and consumer & enterprise web services. It is critical that we continue to strengthen our cross-border and cross-Canadian relationships, and that we solidify those that enable true value creation for our tech startups.

2. More seed funding:

Year 2011 was a pivotal year for Montreal. We had more tech companies (in number) attract financing than any other year over the last decade. And in 2012, we will likely see an even larger number of companies attract financing at the seed and early stage level. Yet, I expect that we will witness an “adjustment” and only a fraction of those seed funded companies over the last 2 years will be successful in attracting Series A or follow-on rounds. This phenomenon isn’t a bad thing, as we will also have leaders emerge with stronger potential of building larger valuable companies.

3. More VC & PE:

Venture Capital and Private Equity funds are getting better organized (new private funds will be announced), and are ready and willing to help build larger local companies (aka: not sell short, but instead build for growth). We can expect larger financing rounds to be announced as well as more activity in the later stage funding rounds (Series B, C).

4. Some M&A:

We are likely going to see a $100M+ acquisition at play this year again. Montreal used to only see one or two of these larger tech acquisitions every other two-three years, but we seem to be picking up the pace. Many “non-visible” tech companies that grew to multi-million dollars in annual revenue without any VC funding will emerge and attract substantial capital, again alerting our friends from south of the border that large tech companies can be built here in our own backyard. It’s all about scale, and now that the capital will be there we need to make sure that the ambition and talent will be there to drive it forward.

5. General frothiness:

And finally, we will likely continue to hear about the generalized “frothiness” in the startup community across North America, yet I sense that the impact will be more positive for Montreal (more awareness), then elsewhere such as in California (which will see a decrease in overall seed and early stage funding).

2012 is starting at the same fast pace as 2011 ended, and 

Montreal is right in the center of our attention. 

We hope to announce a new deal shortly.



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