Investors, entrepreneurs and scientists all working together will help build Québec's economic prosperity.
The COVID-19 pandemic has underlined the essential role of the biotechnology sector. Québec has a wealth of talented researchers and entrepreneurs in several specialties, including neurology, oncology, rare diseases and cardiology. And investors in the province believe that the life sciences will play a major economic role in the post-coronavirus era.
"Science is very strong in Québec and Canada,” said Geneviève Guertin, Portfolio Manager, Life Sciences, Fonds de solidarité FTQ. “We have the tools to position ourselves as a global player. But the competition is fierce."
The Québec-based institution invests approximately $100 million in biotechnology each year, divided between direct equity in companies and investments in venture capital funds. Those are either located in Québec or bring economic benefits to the province.
"Of course, not all good opportunities come neatly packaged," adds Guertin. “Supporting innovation in life sciences requires coordination between the triumvirate of businesspeople, the scientific world and investors.”
The triangle of success
Indeed, if the next generation is going to smooth the way for entrepreneurs, they must keep current with promising discoveries and their applications, as well as the capital to finance them. But communication between the worlds of business, science and investment can be challenging.
"Everyone must take a step towards understanding the other two. Investors, like us, need to be interested in research and entrepreneurship, scientists need to be able to identify value-added commercial applications and entrepreneurs need access to innovation. They’re the three sides of an indivisible triangle," said Guertin.
This summer, the Government of Québec announced the merging of several agencies that commercialized public research into one entity, in order to maximize the economic and social impact of research results and build bridges between stakeholders.
"This new agency will make it easier for scientists and entrepreneurs to collaborate and it might even inspire more commercial pursuits in the academic world," said Didier Leconte, vice-president, investments – Life Sciences and Funds of funds, Fonds de solidarité FTQ.
As in any industrial sector, young entrepreneurs are crucial to future growth, but newcomers often have trouble finding financing. That’s why the triangle Guertin mentioned is so important.
"High-profile entrepreneurs obviously attract investors’ attention, but we must also make sure that the environment encourages scientists, for example, to go into business," she added.
Ideas are as important as money
Interest in the sector is stronger than ever. Despite the pandemic—or perhaps because of it—investments in health sciences in Canada totalled $722 million in the first half of 2020, compared to $586 million for the same period in 2019 (source: HVAC), and that doesn't include the many initial public offerings in Canada since the beginning of the year. The most noteworthy IPOs, Repare and Fusion, received a total injection of over $560 million.
"We often hear about a shortage of capital, but the system is well funded, except for some specific areas. There isn’t a liquidity crisis in the market. One of our priorities is to work better with entrepreneurs and researchers to gain access to science. If we don’t work together, we can’t optimize wealth creation from innovation," adds Guertin.
One possible solution, among others, is to get investors more involved in a company’s advisory board or in a commercialization agency. Don’t be afraid to take risks… they’re worth it.
"People understand the importance of biotechnology and we’re fortunate that researchers in Québec are working on COVID-19. A few years ago, Gary Kobinger at Université Laval helped develop the Ebola vaccine," added Leconte. "For us, it fits into the category of impact investing because we're helping to improve people's health.”