Whew! What a month September has been for the Montreal startup ecosystem!
First there was the record $80M round for our friends at Lightspeed led by La Caisse de dépôt et placement du Québec (CDPQ), iNovia Capital and Investissement Québec (IQ), the huge $20M US-led B round for Breather, without forgetting Frank & Oak’s decision to launch a flagship store in downtown Montreal, perhaps best symbolizing how Montreal startups are going from the alleys to the mainstream.
In August, Montreal was added to the list of the 20 best start-up ecosystems in the world for the very first time. The list, created by the Compass organization, ranks Montreal just behind Toronto (#17), and Vancouver (#18). While Montreal still has a long way to compare to Silicon Valley (#1) or New York (#2), this showed admirable progress. If anyone believed last month that Montreal didn’t belong on the list, this month’s news may likely forever squash those doubts.
Montreal’s ranking on the global list is the result of many recent developments. Over the past five years, interest in entrepreneurship in Quebec has seen huge growth. During this time, the number of start-ups, investors, accelerators, spaces, resources and events in the city has exploded.
More Start-Ups
Even if the exact number of start-ups remains a mystery (much to the community’s chagrin, who is now seeking to quantify it more precisely), it is believed that this number is very rapidly increasing. Some estimate it to be around 500–1000. Among them, some start-ups have raised significant investment, like Lightspeed, Luxury Retreats, Frank & Oak, Breather, Crew, Busbud and OMSignal, for example. Many of our local young start-ups also have the wind in their sails, like Flatbook, Heddoko and MakerBloks. In addition, we must also consider the hundreds of start-ups being launched in basements, apartments and garages all over the city. If one thing is obvious, it’s that the number of Montreal-based start-ups will climb rapidly in coming years. The Table d’Action en Entrepreneuriat (TAE) has set an objective to increase the number of entrepreneurs in Montreal to 10,000 before 2020.
More Financing
Fortunately, investors are also ready for the challenge. According to Réseau Capital, in 2014 venture capital in Quebec saw “its highest level of outlays since 2007”, with $604 million invested by capital funds in Québec. Activity in the first quarter of 2015 did not slow down at $135M, almost twice that when compared to the same quarter last year! Montreal venture capital funds like Real Ventures and iNovia Capital continue to actively invest from their significant recent funds between $100 and $150 million. Rho Ventures and BDC also continue to make mainly Series A investments in Montreal startups. Meanwhile, the Novacap growth fund announced a new fund of $375 million last year. These are very positive developments for our ecosystem, ensuring that there will be ongoing financing options for our local entrepreneurs’ growth. The Anges Québec (Quebec Angels) network continues to expand its activities, and many new capital funds have emerged, some with specific focuses, like Edo Capital (food), and Interaction Ventures (e-commerce). Two dragons continue to be very active on the investment side with their funds XPND Capital and MLA Ventures. There are also some institutional and corporate investors with a growing willingness to make venture capital investments in local entrepreneurs.
More Accelerators
Founder Fuel, the largest and main accelerator of Montreal start-ups sponsored by the Real Ventures Fund, now has more than 50 graduated companies. Subsequently, a local chapter of the largest entrepreneur accelerator in the world, The Founder Institute, launched in Montreal as its first Canadian city in addition to its now 100+ cities worldwide. There are also social project accelerators, including Impact 8 (led by Toronto’s MaRS Centre for Impact Investing) and À Go, on change le monde (sponsored by the Institut du Nouveau Monde). There are university accelerators like Start-Up Campus and the IEBN Accelerator (Université de Montréal), District 3 (Concordia) and now X-1/Dobson (McGill). Even the City of Montreal is participating with the recent launch of an accelerator focused on smart city development called InnoCitéMTL! There are also many specialized accelerators, like EcoFuel (green technology), Execution Labs (video games), Hacking Health (medical) and Tandem Launch (university partnerships). Several law firms, including Fasken Martineau and Lavery, now offer acceleration and support programs for start-ups!
More Spaces
Without exception, the main space is the Notman House, the true hub of the Montreal start-up community located on Sherbrooke, near St-Laurent. That said, new spaces dedicated to start-ups are springing up everywhere. Today, there are more than a dozen co-working spaces in all areas of the city, like La Gare (Mile-End), Ecto (the Plateau) and Griffincamp (Griffintown). There is a wonderful new space dedicated to social entrepreneurs called the Esplanade in Mile-Ex. The Fondation Montreal Inc. has just opened the Zone Montreal Inc. incubation space in their offices, which is sponsored by Desjardins. In the academic landscape, Concordia’s District 3 is an undisputed pioneer and the most active space but the other universities are also increasingly dedicating more space to entrepreneurs on their campuses. Companies are also opening their doors to start-ups, including Cossette with its Cossette Lab. The Caisse de dépôt et placement du Québec (CDPQ) recently announced that it would be opening its Espace CDPQ in Place Ville-Marie as part of its 50th anniversary. The Quartier de l’Innovation announced that the old Dow Planetarium would be transformed into creative space for start-ups. Also, the Salon 1861 will soon open its doors in the old St-Joseph de Griffintown church in collaboration with ETS.
More Resources
When I created my first company 15 years ago, there were very limited sources of assistance for entrepreneurs in the community, but I was recently able to identify at least 100+ organizations helping Quebec entrepreneurs today. Among the veteran organizations promoting entrepreneurship, there are, among others, the Fondation Montreal Inc., SAJE, CLD and CEIM. The Jeune Chambre de Commerce de Montréal (JCCM) now also provides more and more resources for entrepreneurs. Furthermore, there is growing support from our large public organizations and our large companies.
More Events
Last month, the 5th edition of the International Start-up Festival, our community’s most important focal event of the year, was sold out with close to 3000 participants from Montreal, the rest of Canada and abroad. It was a great success for Montreal! The volume of start-up events like this in the city has increased. Last spring, it wasn’t unusual to see two or three hackathons organized on the same weekend! The other essential components for the ecosystem continue to be the organic events lead by members of the community. This includes events such as Startup Weekend, MTL New Tech, Startup Drinks, DynamicMTL and La Tournée des Entrepreneurs. There are now even organized summer soccer and basketball leagues for the start-up community! This fall, the annual Start-Up Open House event gives the public a chance to discover this sometimes “invisible” ecosystem. Last year, more than 5000 participants were able to go behind the scenes in the offices of our best local start-ups.
To Infinity and Beyond
Our start-up ecosystem includes more planets and stars than ever. We see an increasingly expanding and decentralized network of change agents coming to life, which is great for the future. It should be noted, however, that “more” doesn’t always mean “better”, as the quality of these initiatives obviously varies. However, over time, the best projects and organizations will continue to grow while others will cease to exist. This applies as much to the start-ups as to the initiatives supporting them. Such is the law of the market.
Even if innovation is everywhere, a few trends seem to be emerging about our ecosystem. First of all, innovation doesn’t always occur within the structures created to foster it. It happens organically, wherever the entrepreneurs are and want to be, like in a garage, in an inexpensive loft in the Mile-End, or during “demo evenings” in the back of downtown bar. Secondly, collaboration will be the key skill during the next decade, both to complete/harmonize their efforts and to avoid duplication or politics. Organizations should seek to be part of clusters rather than working independently. Lastly, we must continue to support those people who carry the entrepreneurial torch, wherever they are. These are the leaders of our ecosystem who are generating this organic growth, and who are today, in my opinion, giving the Montreal ecosystem its strength.
With a lot of willpower and a little luck, we will continue to climb this list of the best cities in the world to start a business. Can we break into the “Top 10” in 3 years? As far as I’m concerned, we now already have many of the basic ingredients in place to get us there.