Discover the process when investing in Quebec technological know-how at the seed capital level!
Supported by Centech, this $35M fund finances the growth of deeptech companies and aims to build bridges with local and international investors to become a partner of choice in the Canadian ecosystem.
With privileged access to Centech companies, Boréal Ventures sees the opportunity to play a leading role in the financing and support of innovative companies. By supporting businesses from the start, the fund fills the gap in the financing chain and participates in the creation of a prosperous ecosystem that will have an effect at both the technological and human level.
“I’ll start by mentioning; venture capital is private capital, not public capital. We engage with investors who have limited access to invest in private markets. What distinguishes venture capital from other types of financing is risk, of course. Typically, these are investors who are willing to take a bit more risk to get an even bigger return.
This implies expecting a business with the potential of growing very quickly that will have a liquidity event, such as an acquisition, an initial public offering, or a share buyback. Investors have this exit objective. They have to exit their positions, unlike other types of investments.
Then, there is this desire to reinvest and have share ownership in the company, unlike other types of financing, such as grants or debt, for example. Growth, speed and liquidity events are what distinguish venture capital. In exchange, investors take shares in the company, a bit like in the show Dragon’s Den.”
“Saying it’s the team is super cliché. Still, it is the most striking element, especially at the stage where we invest. In terms of venture capital, we invest in startups. Often, it is a team of 2 to 15 people, which generally has a business that generates less than a million a year. It is an evolving company that is in the process of identifying its product market. So, there are few robust elements to rely on. In these cases, what we are trying to understand is the extent of market appetite and how this team is better equipped than another to solve this problem.
Often, this will manifest itself in terms of the experience they have. For example, someone who has worked for 25 years in the field, who has experienced the problem for themselves, someone who has sold companies before starting another one, an operator who has shown that they are able to grow businesses. These are elements that prove the founders’ ability to propel a business.
There is also the complementarity of the team. We often think of the classic founder in technology and their founder in business. In deeptech, it is not as simple as that. Obviously, you will need an engineering, business, technological, scientific or even medical profile. These are elements that we want to see, and which will prove the adoption of the technology. We don’t only look at the team on its own, but also in the synergistic sense of the term.
In addition, there is the market appetite. We could have an interesting technology and we could suspect it is relevant for client XYZ. However, it can be a challenge to identify what these customers are looking for. This is called a market pull versus a tech push.
In a tech push, we have a solution that is looking for its market. Often, it lacks buy-in on the client side. What better market validation than a customer who has an appetite for a solution? At times like these, investors want to pay for the solution.
On the other hand, a market pull is when customers ask for a solution that is adapted to the market but, still, there is a certain difficulty in meeting customer demand. In those cases, it’s the type of indicator and signals we look for when investing in a business. We focus on the best-equipped team and the business model that seems to be the most scalable. “
“That’s a good question! A bit like the rest of the Centech team, we all have this curiosity to be exposed to innovation. Personally, I really like the early stages. When I say early stage, I mean innovations that are quite young. It is rewarding to work with entrepreneurs.
To give you a concrete example, we recently closed a transaction. Little by little, we have developed a certain expertise in the market, which leads us to opportunities like this. This particular company was looking for financing and was hitting walls, given that investors had little or no understanding of their sector.
When we met the team, we already knew and understood this field. Not only because we have seen and invested in a lot of business in this sector, but also because we have a network that is able to add value to our investment and to the entrepreneur. We were able to introduce advisors who helped them review their marketing strategy. It improved their pitch and their business model.
We also have investors in our fund who have joined the business of Boréal Ventures as private investors. We were therefore able to act with even more capital than that of Boréal. It created an advisory board that led to tremendous added value through the introductions that were made. The advisory board made it possible to review the business model in its entirety and we seem to have found a niche that is super interesting. Entrepreneurs are excited, just as we are excited about this opportunity that is bigger than we thought. In addition to acting as an investor, we had a round of financing with over-subscription, which means that we had twice as much commitment as we wanted to get. You can see the appetite is there.
Once all of that is tied together, that’s where I feel like I’m adding value and it’s reciprocated. We were able to make introductions to the right people, to the right advisors, to the right investors, and that’s what lays the groundwork for the next few months.
I would say the word “connection” is the right term to speak globally of what is rewarding in my work. Being able to mobilize a network around a common goal where everyone mutually enriches the network in question is very advantageous for everyone. Creating these connections adds value, and even if this term is overused, this is how we feel gratification in our work. ‘’
“I’m passionate about health technologies. I have the ultimate dream where all health platforms are connected. We see startup initiatives that try, but there is not one that succeeds in doing it completely. The scope of the health field leads to a number of incentives and people to be involved that are difficult to measure. This creates obstacles for connected health platform initiatives.
What I would like is to have a sort of assessment, a real-time state of health using all the biomarkers and parameters. Imagine, as an example, having access to our real-time insulin level and having access to proactive suggestions for a grocery list that follows those levels. I believe there is an enormous value in connecting existing applications optimizing our health (nutrition, sport, monitoring, advice, meteorology, etc.)..
With generative AI, we can create this interaction between solutions and humans.
It’s clearly a combination of my personal values and the startups we have encountered as investors. There is a direct link with our role as creators of value using connection.”
Communications – Centech
