Investissement Québec has officially relaunched a popular early-stage investment program as a $200-million venture capital (VC) fund for the province’s tech startups.
“There are two clear objectives: to build the next generation of flagship technologies, and to fill the gaps in development stages that are a little underserved.”
The fund, known as Fonds Impulsion, was created with $150 million already dedicated to Impulsion PME, an early-stage investment matching program that briefly shut down last fall. An additional $50 million was allocated from the province’s research and innovation strategy.
The allocation was previously announced in the provincial budget in March, but IQ has now launched the fund and provided more details on how it will work.
The fund is targeting pre-seed and seed tech startups across sectors, according to IQ director of early-stage VC Claire Lelièvre and vice-president of VC Alex Laverdière. In a French-language interview BetaKit has translated into English, Laverdière said the fund plans to invest in roughly 70 unique companies over its lifetime. It’s expected to span roughly 10 years with the opportunity for a re-up from the provincial government.
The original initiative, Impulsion PME, launched in 2021 under former provincial minister Pierre Fitzgibbon. It was given an additional $120 million from the province in 2023 as part of Québec’s five-year innovation strategy. The program was created and financially supported by the ministry of the economy, but Investissement Quebec employees managed and delivered the program. In her own French-language interview, Lelièvre said it deployed roughly $65 million across 67 startups during its operations.
The program was abruptly shuttered in November 2024, leaving several entrepreneurs in the lurch. Some told BetaKit they had been counting on the program’s investment-matching mechanism to close their first rounds of financing. The program has now been fully sunsetted in favour of the new Fonds Impulsion fund.
Startups will have to apply and obtain a reference from an approved ecosystem partner to benefit from the new fund, much as they did with Impulsion PME. IQ still plans to act as a “complementary” investor, bringing in private and quasi-public investors in on rounds. The fund is still sector-agnostic and only open to Québec-headquartered companies, but will regularly evaluate which sectors align with the province’s strategic priorities.
“The fund’s objective is still the same, but it’s more ambitious,” Lelièvre told BetaKit. It plans to write cheques between $250,000 and $2 million, and can now complete multiple follow-on investments instead of just one.
Lelièvre, who will lead the fund’s management, said that IQ has relaxed some application criteria and simplified the reference process to make it more “entrepreneur-friendly.”
The initiative comes 10 years after the provincial agency made its first investment in Montréal-based e-commerce and point-of-sale firm Lightspeed in 2015. Over the past two years, Québec’s pre-seed and seed-stage VC investment landscape has become a source of concern, with experts worrying about a pipeline of companies drying up.
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In the spring, a report led by industry group Réseau Capital worried experts as it found that seed-stage venture deals in the province dropped by more than half year-over-year, while dollars invested had decreased by two-thirds. In August, early-stage investments had grown by 30 percent year-over-year, but broader VC activity in the province had slumped.
With its mandate of economic development, IQ has a significant foothold in the Québec VC landscape. VC and fund investments make up 17 percent of the agency’s portfolio and are worth $1.2 billion, according to its latest annual report.
IQ, and by extension the provincial government, has invested more recently in early-stage funds like Telegraph Ventures, which closed $35 million to back pre-seed artificial intelligence (AI) startups.
The agency recorded an annual loss of 4.9 percent in 2024 on direct VC and indirect fund investments as the broader agency just broke even. In its annual report, IQ attributed the middling performance to slowing private investment, worsening economic outlooks, and a stock market dip.
Laverdière said that IQ’s VC activities have notched 13-percent returns over 10 years, outperforming the Canadian VC market, which sits at around 10 percent for internal rate of return over the same time period.
“There are two clear objectives,” Laverdière said. “To build the next generation of flagship technologies, and to fill the gaps in development stages that are a little underserved.”
Feature image courtesy Investissement Québec.