Réseau Capital today announced the results for Quebec’s venture capital industry for the first quarter of 2007, as compiled by Thomson Financial. In the first three months of 2007, venture capital (VC) activity in Quebec rose significantly, as $175 million was invested in total, or 51% more than the $116 million invested at the same time last year.

The number of Quebec-based companies financed with VC was largely unchanged on a year-over-year basis: 55 firms in Q1 2007 versus 57 firms in Q1 2006. It is important to note that the average amount invested per Quebec company went from $2.0 million a year ago to $3.2 million in Q1 2007. Quebec activity represents 29% of the Canadian total and 44% of the companies financed.

As was the case in 2006, activity in the life sciences sectors drove growth in Quebec. Indeed, between January and March, life sciences activity attracted an unusually large share of the total dollar amount with 62%, or $107 million disbursed to 12 companies, for a 43% increase over Q1 2006.

Despite several major deals, activity in information technology sectors in Quebec was comparatively quiet in Q1 2007, with $25 million going to 13 companies, though this is up 7% from the $23 million that went to 16 companies in Q1 2006.

Other technology sectors in Quebec also reflected year-over-year growth in the first quarter. This activity occurred mainly in the energy and environmental technology sector, with $20 million invested, or 10 times the $2 million disbursed in Q1 2006.

Quebec-based activity in non-technology sectors also increased as compared to one year ago. A total of $19 million was disbursed to 21 consumer-related, manufacturing and other traditionally focused companies in Q1 2007. This level of activity is 64% more than the $12 million that was previously disbursed to 17 companies.

According to Charles Cazabon, president of Réseau Capital and vp of venture capital at BDC, “The first-quarter results are encouraging because they demonstrate a significant level of investment and a continuation of the trend to investment rounds that are, on average, larger. Despite the advantages of attracting foreign investors, who often have access to substantial funds, it is essential to maintain solid local sources of funds, and in that respect Quebec stood out by attracting 70% of the new Canadian commitments, mainly as a result of the activities of the Solidarity Fund, Desjardins and Fondaction.”

Once again, U.S. and other foreign investors emerged as the leading source of cash in Quebec, accounting for 45% of all disbursements. In total, foreign investors brought $78 million to Quebec deals in the first quarter, or better than double the amount recorded in the same period of 2006. Quebec-based LSVCC and other retail funds also significantly increased their activity, with $52 million invested, while private-independent funds disbursed $18 million, an amount equivalent to that of Q1 2006. Institutional funds also increased their VC activity in Quebec in the first quarter, with $4 million invested. In contrast, the activity of corporate and government funds declined on year-over-year basis, with $12 million and $2 million invested, respectively.

Réseau Capital, the Quebec Venture Capital and Private Equity Association, was founded In 1989 and has more than 525 members who represent public and private venture capital companies, as well as firms of professionals serving the industry.