Despite seeing a decline in venture funding both quarter-over-quarter and year-over-year, Québec attracted more investment than any other Canadian region in the first quarter of 2023.

According to a new report from, Québec startups raised a cumulative $317.3 million through 12 deals in Q1 2023, which represents a 37 percent decrease in investment quarter-over-quarter and a 78 percent decline year-over-year (all dollar figures are in CAD).

Although venture funding has significantly decreased compared to the record-breaking quarters of the 2021 bull market, Québec has maintained a stable level of venture funding relative to other ecosystems in the past few quarters. In 2022, when most Canadian ecosystems experienced a considerable decline in venture funding, Québec stood out as a bright spot, tracking quarter-over-quarter growth in terms of dollars raised.

“The market is coming back to earth and creates the perfect conditions for early-stage investors to back sound venture businesses with real-world traction.”

In the first quarter of 2023, Québec recorded the highest amount of investment of any Canadian region tracked by—including Toronto, which has historically brought in the lion’s share of venture funding in Canada. This was thanks, in part, to support from the government of Québec. Of the three largest deals closed in the province during Q1, all of them received funding from Investissement Québec, the investment arm of the provincial government. Of the ten largest deals closed during Q1, half either received contributions from or were led by Investissement Québec.

The government-backed investments come at a time when the province has sought to deepen its commitment to its innovation sector. In its most recent budget, the province allocated $900 million to initiatives aimed at stimulating economic productivity and innovation, and committed to making investments in cleantech, AI, FinTech, and two “innovation zones” focused on quantum sciences and digital technologies.

Despite Québec’s ability to keep venture funding levels stable compared to other ecosystems, the region was not immune to the trend experienced by most Canadian ecosystems of a decline in deal-making after a series of disruptive events, from the continued tightening of the Canadian economy to the collapse of Silicon Valley Bank (SVB). Deal activity fell in Québec in Q1 2023 by 14 percent since Q4 2022 and 59 percent since the first quarter of 2022.

“All companies have been going through a recalibration in the last 18 months; finding the right balance between growth and profitability,” Hugues Lalancette, partner at Inovia Capital, told BetaKit.

Late-stage bouncing back

Québec’s relatively high funding can also be partially attributed to a few notably large, late-stage deals that closed during the first quarter, including NorthStar Earth and Space’s $47-million Series C funding round, and Airex Energy’s $38-million round of financing. The province even saw a megadeal during the quarter in Equisoft’s $125-million growth financing round, which included a $70-million investment from Investissement Québec and the government of Québec.

Lalancette said he has noticed the late-stage market is starting to bounce back as more high-quality companies come to market. “We are seeing a broader range of terms reflecting offensive or defensive situations, but in general great companies continue to be able to raise at compelling valuations,” he added.

Still, it certainly has not been all roses for all the province’s late-stage companies. This month, Montréal-based RenoRun, which had secured a $181-million Series B funding round in Q1 2022, closed down operations after failing to secure financing or hail mary acquisitions. Other sizeable Québec-based companies, such as Sonder and Lightspeed, have made staffing cuts amid a tougher economic backdrop.

David Charbonneau, managing partner of Montréal-based Boreal Ventures, told BetaKit he believes the current market uncertainty, fuelled by macroeconomic headwinds and the collapse of Silicon Valley Bank, is shifting the power from companies to investors, which is forcing companies to focus on profitability.

Early-stage deals drag

According to’s report, Québec saw three early-stage deals, including Haply Robotics’ $4.8-million seed funding round, Latys’ $3-million seed financing round, and AAVAA’s $2-million pre-seed round of funding. With only one Series A deal closed during Q1 2023, deal volume at this stage also remained low in Québec, relative to previous quarters. For reference, in the first quarter of 2022, eight Series A funding rounds closed.

Early-stage deal volume has fallen by a third in Québec since the first quarter of last year and follows a national trend of dwindling seed and pre-seed deal volume. Charbonneau said he has noticed rounds and diligence at the early stages taking longer to close and bridge rounds often failing to attract new investors.

Charbonneau expects Québec’s early-stage ventures to benefit from several early-stage initiatives in future quarters, including Investissement Québec’s renewed Impulsion PME program. In April, the Québec government announced a $120 million commitment to continue the program, which provides loans that are convertible into equity on a dollar-to-dollar matching ratio from private investors participating in local seed-stage deals.

“The province is indirectly giving some breathing room for the market to readjust,” Charbonneau added. “A round of $1.5 million to $2 million, 50 percent of which is backed by Impulsion PME, is usually enough to give most early-stage ventures enough runway for 24 months.”

A ‘generational opportunity’

There are other signs the Québec tech sector could see more investment in the next few quarters, including the province’s plans to launch a $100-million entrepreneurship hub in downtown Montréal and the relaunch of the FounderFuel accelerator program in February. Charbonneau believes these are signs that the province is still taking its tech sector very seriously.

“While uncertainty remains, the market is coming back to earth and creates the perfect conditions for early-stage investors to back sound venture businesses with real-world traction,” Charbonneau added.

On the investor side, a number of firms appear ready to deploy new capital, including Diagram Ventures, which recently closed $100 million, Innovobot, which has already raised $14 million for its new seed-stage fund; and Brightspark Ventures, which recently closed half of its targeted $120-million early-stage-focused fund.

Lalancette believes there is a generational opportunity to build and invest in Québec technology companies in 2023. “There has never been more clarity on how strategy connects with execution,” he added. “That level of focus is in itself an opportunity to build more enduring companies.”

The full reports on Québec can be found here. is owned and operated by Communitech. BetaKit receives data from as part of a media partnership with Communitech and retains full editorial control of all articles that reference the data produced by

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