Ten years ago, Montreal’s only entrepreneurial success story was Microsoft’s purchase of Softimages, a company known for the 3D animation software used to create special effects in the films Jurassic Park and The Fifth Element. Since then, the Montreal tech ecosystem has evolved at an incredible pace, led by a vibrant grassroots startup community hosting increasingly frequent events, such as the free Montreal New Tech demo nights and Startup Drinks, which are organized by an intricate network of 100+ community organizations.
Leading conferences like C2-MTL and the International Startup Festival have also helped to showcase the city’s young entrepreneurs to international visitors. New event concepts are emerging, such as the Elevator World Tour and Startup Open House. Another positive development for the community is that successful entrepreneurs are increasingly paving the way forward through mentoring and angel investing, triggering a cycle of growth.
Montreal is also producing more fast-growth companies, especially in the e-commerce space. The private shopping club Beyond The Rack has raised more than $88.6M in the past five years, with much of its funding coming from local venture capital. Also, the villa rental website Luxury Retreats processes $100M in annual rentals as a high-end alternative to AirBnb or HomeAway. Lightspeed’s point-of-sale retail solution raised $30M from Accel Partners. Finally, security management startup Password Box got acquired by Intel in winter 2014. Overall, Montreal counts 800 registered companies averaging a valuation of $3.2M, according to Angellist.
Financial capital is another draw to Montreal. Startup community insiders say money is more plentiful than in other parts of Canada and that venture capitalists here are more willing to take risks. Financial capital is another draw to Montreal. Startup community insiders say money is more plentiful than in other parts of Canada and that venture capitalists here are more willing to take risks. Investment activity in Québec’s VC market achieved growth in 2014 due primarily to stronger deal-making in the year’s third and fourth quarters. Dollars invested by VC funds totalled $604 million as of December 31st, edging past the $599 million invested in 2013. As a result, disbursements in 2014 were at their highest level since 2007, the peak year of the previous market cycle.
Why Montreal ?
It’s clear that Montreal is a great place to start a business — but so far it hasn’t been the best place to finish one. Montreal hasn’t got a blockbuster like Facebook, Google or Twitter to call its own. “What’s missing from where we are in our cycle, compared to other startup ecosystems, is that we are now at a stage where we need more exits, IPOs or acquisitions,” said Sylvain Carle ( FounderFuel). “There needs to be an anchor of the ecosystem,” LP Maurice (Busbud) said. However, to achieve this, Montreal startups need a better connection to other major ecosystems such as the Silicon Valley, Europe and Asia. But first, there is a need for more tools to help the growing number of international entrepreneurs to settle down and quickly build a network within the local community to start and grow their business, something that could be a major obstacle, as Vincent Lachance (founder of Montreal Frais) had to experience the hard way.