Many community members were surprised to learn that one of Québec’s few government-run pre-seed and seed-stage investment programs had been paused, seemingly overnight.
As first reported by Les Affaires, the Investissement Québec (IQ) website displayed new messages as of Nov. 12 stating that Impulsion PME, an investment-matching program for early-stage companies, has been suspended until further notice. No additional statement has been released as of publication time.
“It’s a drop of water in the ocean, but we’re in a drought.”
Louis-Félix Binette, executive director of MAIN
Two other support programs for small businesses were also put on hold without explanation: Programme développement économique pour l’aide à la redynamisation des territoires (DÉPART), which serves businesses in remote regions, and Biomed Propulsion, a program for life sciences companies. Both of these programs provide government grants.
Variations of the same statement are visible on each of the program’s websites. In English, the Impulsion PME statement reads: “The Ministry of Economy, Innovation and Energy (MEIE) is suspending the Impulsion PME program as of November 12, 2024. As the program issuer, Investissement Québec must suspend the receipt of new applications until further notice.”
Neither the updated statement nor the information pages of the three programs are posted in English.
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Louis-Félix Binette, executive director of Mouvement des accélérateurs d’innovation du Québec (MAIN), said he received no formal notice of the program’s suspension, despite MAIN having helped consult on the program in its infancy.
The opportunity to have private funding matched through Impulsion PME, he said, could make or break a startup’s success.
“Direct help to startups is a key ingredient in the toolbox of government intervention, especially at the very early stage,” Binette said in an interview with BetaKit.
The Impulsion PME program “aims to help young innovative companies with high growth potential gain access to investment capital at the seed stage.” Launched in 2021 under former Minister Pierre Fitzgibbon, the program was given an additional $120 million from the province in 2023 as part of the MEIE’s five-year innovation strategy.
Binette explained that the program was launched to entice investors to jump to make riskier bets at the seed stage, before a company has had the chance to prove itself on the market. The opportunity to have the government match this money incentivizes investment, he said.
Impulsion PME is one of the few public programs targeted at pre-seed and seed-stage funding in the province. It accepted applications from startups looking to raise seed capital and provided direct funding to match private investment.
“You’re talking about real young people with real lives. They went in playing a game based on the rules, and then they changed the rules.”
The program was created and financially supported by the MEIE, but Investissement Quebec employees managed and delivered the program. The disconnect between these entities was made apparent today as Les Affaires reported that a team of representatives from IQ gave an informative presentation on the now-suspended program to a room of young entrepreneurs at Université Laval on Tuesday—the very day the program was cut.
The program suspension comes on the heels of a joint Réseau Capital and Canadian Venture Capital Association report marking Q3 2024 as a particularly poor quarter for seed investing in the province.
“It’s a drop of water in the ocean, but we’re in a drought,” Binette said of Impulsion PME.
Incubator programs and coaching for entrepreneurs are important, Binette explained, “but they need money to hire people to travel, to go and sell. And that money is non-existent.”
David Dufresne, a partner at Montréal-based CMD Capital, which focuses on early-stage investment, told BetaKit that he doesn’t believe programs like Impulsion PME should have to exist in a healthy VC ecosystem.
“Having pre-seed rounds filled by a government program is convenient, but it would be better if the investment came from a value-adding investor who can be hands-on, help, advise, coach, and contribute to the governance of a young startup.”
Nicholas Routhier, co-founder and CEO of Technologies CubicSpace, also based in Montréal, is a mentor and coach to early-career entrepreneurs. He explained in an interview with BetaKit that while the other two programs are grant-based, the suspension of Impulsion PME is especially shocking because it was investment-based.
“For startups, it’s life or death,” Routhier said. “This is like creating or killing a company.”
He said that as a coach to young entrepreneurs, some of whom were in the process of putting together application materials, it was frustrating to see the program shut down with no heads-up.
“You’re playing with people’s lives. It’s not a joke,” Routhier said. “You’re talking about real young people with real lives. They went in playing a game based on the rules, and then they changed the rules.”
Neither MEIE nor IQ has clarified whether the funds allocated to the Impulsion PME program have been used up or redirected. The following disclaimer is available on IQ’s website:
“The MEIE and Investissement Québec reserve the right to suspend the submission and analysis of applications to the program without prior notice, in order to ensure the availability of budgeted amounts.”
BetaKit has reached out to MEIE and IQ for comment.
Feature image courtesy Investissement Québec.
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