The Montreal firm Inovia Capital announced Wednesday morning that it had raised $420 million to launch its fifth venture capital fund in 15 years. This new fund will target technology companies seeking pre-seed funding or Series A funding that will enable them to develop on-demand solutions capable of transforming industries that are slow to go digital.
The context in which the iNovia V Venture Capital Fund was born is reminiscent of the company’s first months of activity. If the Montreal firm is today the largest investor in start-ups in Canada, it is because it was able to reap the rewards of helping start-ups that emerged during the prolonged period of growth after the 2008 financial crisis, the worst of its kind since the Great Depression of 1929.
Magaly Charbonneau, partner at Inovia, hopes to reproduce with her new fund, and despite the current context of economic uncertainty, the success experienced over the past fifteen years. “There is still a lot of capital available for start-upbut we see how the public markets have evolved in recent months and we expect that to affect private investment, ”she fears.
US$1 billion in 18 months
The Montreal leader nevertheless puts this impact into perspective, adding that companies that are well capitalized – even those that do not currently generate substantial income – will have the means to get through “the next two or three years” without too much difficulty.
Certainly, there is no shortage of investable capital at Inovia, which has raised just over US$1 billion in three separate funds since the start of 2021. Inovia thus targets three stages in the life of new technology companies, where capital is critical to ensure the continuation of things: pre-seed, seed and business continuity.
Magaly Charbonneau is also pleased that a quarter of the investors involved in the iNovia V fund are new partners of her firm, which demonstrates both the appeal of the Montreal and Canadian technology scene and the notoriety acquired by her team of managers. . “It took three weeks to complete this new round,” she says.
Inovia has already started to use the money deposited in its most recent envelope by providing assistance to two companies that are experiencing strong growth in their respective niches. The Montreal fund led a $13 million fundraising round for the start-up Toronto-based Signal 1, which specializes in artificial intelligence applications to help healthcare professionals, among other things, prioritize patients. Inovia also participated in a $9.5 million investment in Flare, a Montreal-based cybersecurity company that caters to the corporate sector.
A good time to get started
With all this capital in hand, Inovia could be worried that the pipeline of tech start-ups will dry up over the next few months, given the fears linked to the global economy caused by high inflation and a particularly volatile geopolitical situation. But this is not the case, assures Magaly Charbonneau.
“It may even be the best time to launch your start-up “, she assures. The partner was not part of the Inovia Capital team when it was created in 2007, but she was already working in the technology sector. In fact, she not only experienced firsthand the effects on the techno scene of the 2008 financial crisis, but she also remembers the bursting of the techno bubble between 1999 and 2001.dot com‘” she recalls. All the same, it will have taken a few years after the arrival of the new millennium to regain a certain enthusiasm—in Quebec at least—for new technologies.
No one knows what the next few months will be made of. More skittish investors are already downgrading the paper value of the start-ups they fund and are starting to demand a little more eagerness that they generate income quickly, a sign that some clouds are hanging over the market. of the start-up.
There is still a lot of room for innovation in several industries, thinks Magaly Charbonneau. Especially in the niche where his firm operates: it continues to be looking for on-demand software solutions (what is called in English SaaS or ” software as a service “) capable of accelerating the digital transition in sectors where it promises to improve the bottom line of companies large and small.
The world is changing, but not at Inovia. Its strategy for the next fifteen years is likely to remain the same as for the past fifteen. “We are always looking for technologies ready to transform industries on a global scale. »