Growth capital is reaching historic highs in Quebec, while venture capital is experiencing a decline. This polarization reflects current geopolitical challenges and is reshaping the corporate financing landscape.<\/p>\n
An analysis by R\u00e9seau Capital on investment flows shows that Quebec is leading the Canadian growth capital market, with\u00a0$18.3 billion\u00a0invested in the first half of 2025 across\u00a0192 transactions\u2014the province\u2019s best performance for a first half-year since 2013.<\/p>\n
This spectacular growth is largely driven by a few mega-deals, notably\u00a0Garda World Security Corp ($14B), which alone accounts for\u00a077%\u00a0of the total invested.\u00a0H\u00e9roux-Devtek ($1.4B)\u00a0and\u00a0Telus Health ($488M)\u00a0round out the top three.<\/p>\n
At the other end of the spectrum,\u00a061% of transactions are under $5M, revealing a two-speed configuration: a large number of small deals and a handful of very large ones capturing most of the capital.<\/p>\n
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Seed Stage Stands Out<\/strong><\/p>\n Venture capital, on the other hand, is following an opposite trajectory. Only\u00a0$524M\u00a0has been invested in Quebec so far this year in this segment, a\u00a057% drop\u00a0compared to the same period in 2024. The number of transactions remains stable (60), but the average deal size is shrinking.<\/p>\n Only\u00a0seed-stage investments\u00a0are bucking the trend, with a\u00a031% increase\u00a0in capital invested ($79M across 29 transactions), representing nearly half of all recorded deals.<\/p>\n Quebec now ranks\u00a0fifth in Canada\u00a0for average venture capital deal size, which stands at\u00a0$8.73M.<\/p>\n <\/p>\n A Changing Transactional Environment<\/strong><\/p>\n These trends are part of a broader transformation in the M&A market, as explained by\u00a0Angelo Noce, partner at\u00a0Blake, Cassels & Graydon LLP, in one of our podcasts on M&A trends.<\/p>\n According to Noce, the threat of a tariff war is already having tangible effects: \u201cSome transactions have been suspended out of caution,\u201d he says. Deals involving Canadian companies reliant on U.S. exports are particularly affected.<\/p>\n Nevertheless, he foresees a rebound in activity, driven by\u00a0more stable interest rates,\u00a0controlled inflation, and especially\u00a0an abundance of capital waiting to be deployed. Companies focused on the domestic market continue to attract interest, encouraging consolidation among Canadian players. \u201cRecord levels of available capital will need to be deployed soon,\u201d Noce anticipates, predicting a possible catch-up by\u00a0late 2025\u00a0in Canada.<\/p>\n <\/p>\n Contractual Tools Gaining Popularity<\/strong><\/p>\n In a market that has become more favorable to buyers, they are now able to negotiate terms that were previously hard to obtain.\u00a0Earn-out clauses, tied to future company performance and nearly nonexistent in 2019, have become common since the pandemic, now representing\u00a020% to 30%\u00a0of the purchase price over\u00a0two to three years, according to the expert.<\/p>\n Another notable development is the rise of\u00a0representation and warranty insurance. Once marginal, this practice has become standard in transactions involving private equity funds, drastically reducing the amounts held in escrow. In a\u00a0$50M transaction, for example, the holdback drops from\u00a0$5M to just $250,000\u00a0thanks to insurance\u2014a change that frees up capital for sellers and eases relations with minority investors.<\/p>\n <\/p>\n Sectoral Outlook<\/strong><\/p>\n Sectoral diversification, with sustained activity in\u00a0manufacturing,\u00a0retail, and\u00a0financial services, offers encouraging prospects for the rest of the year, according to R\u00e9seau Capital\u2019s report.<\/p>\n Agri-food\u00a0stands out as particularly resilient, says Angelo Noce, who even anticipates \u201ca significant increase in 2025\u201d in this sector, driven by\u00a0supply chain reorganization.<\/p>\n Defense and nuclear energy\u00a0are other promising sectors, according to an analysis by\u00a0PwC Canada. Benefiting from relatively favorable tariffs, several Canadian exporters are \u201cbetter positioned than their competitors\u201d to increase their market share in the U.S., the authors note.<\/p>\n Considering a transaction or seeking financing for your business?\u00a0The expert team at\u00a0EC2 has the experience to guide you through this evolving market and help you seize the right business opportunities.\u00a0Contact our specialists today\u00a0to discuss your projects and receive personalized advice.<\/p>\n","protected":false},"excerpt":{"rendered":" Growth capital is reaching historic highs in Quebec, while venture capital is experiencing a decline. This polarization reflects current geopolitical challenges and is reshaping the corporate financing landscape. An analysis by R\u00e9seau Capital on investment flows shows that Quebec is leading the Canadian growth capital market, with\u00a0$18.3 billion\u00a0invested in the first half of 2025 across\u00a0192 […]<\/p>\n","protected":false},"author":12,"featured_media":8282,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[28],"tags":[],"class_list":["post-8284","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"acf":[],"yoast_head":"\n