Univalor finds new ways to spur Québec’s startup ecosystem

When it comes to funding innovation, Québec has been long recognized as a wellspring of good ideas.

So it may come as no surprise that Québec’s leading commercialization hubs, MSBiV, SOVAR, Univalor and Valeo, have recently advanced some new strategies for leveraging the market potential of home-grown R&D and technological change.

For example, the four organizations in October entered into a new partnership with Anges Québec, a network of 135 angel investors founded in 2008 to finance and coach early-stage companies. The goal is to expand the range of expertise, resources and networks available to budding entrepreneurs in local post-secondary institutions.

For Univalor president and CEO Jacques Simoneau, it also promises to put some of the most marketable Québec academic research in front of a large body of savvy and successful venture capitalists.

“University research creates numerous untapped business opportunities,” said Simoneau. The new partnership with Anges Québec will help forge “profitable links” between researchers and the business community. This will, in turn, “stimulate the emergence of new technology companies in Quebec,” he said.

For Simoneau – whose many past roles as scientist and VC professional include serving as executive vice-president for investments at the Business Development Bank of Canada – it’s a good time for Univalor and its partners to be launching more start-ups.

“There is new money out there,” he said. “And we have become smarter about how to build new enterprises, and how to prepare them for investment.”

Founded in 2001, Univalor was tasked by the Québec government with promoting commercialization and technology transfer on behalf of researchers and labs at the Université de Montréal (UdeM), HECPolytechnique Montréal and other local innovation centres. The UdeM file is a big one, as the university is Canada’s second-largest post-secondary institution, and among the highest rated in the world.

The campus accounts for most of the more than 2,600 researchers that can access Univalor’s services – more than one quarter of which are currently engaged in Univalor-sponsored projects. R&D conducted at the UdeM is an especially vital source of up-and-coming life sciences and health technologies. Like the output of MSBiV’s partnership with McGill University, biotech accounts for a major share of Univalor’s current activity.

Univalor executes its mission in a variety of ways. Once product ideas are patented, validated and assessed for their possible monetization, Univalor will often act as the agent selling licenses to established businesses, such as pharma manufacturers in the case of drug discoveries. Or it will market products digitally on a popular new online storefront called eValorix.com. Or it will go the route of creating company spinoffs.

To date, nearly $180 million in venture capital and strategic investment has gone to spinoff companies leveraged by Univalor from academic research. Examples include Prevtec Microbia, a Montréal-based developer of technologies designed to improve animal health, production yields and food safety. Founded twelve years ago by scientists at UdeM’s Faculté de médecine vétérinaire, and now led by Michel Fortin, Prevtec is backed by ID Capital Management, Telesystem and other investors. Univalor is currently helping the company secure additional financing.

Simoneau hopes to build on this record through the Anges Québec partnership, and through existing relationships with Canadian and international venture firms that routinely visit the premises of Univalor to review projects and scope out deal opportunities. Among the most important are specialty life sciences firms, such as CTI Life Sciences, Lumira Capital, Sanderling Ventures-Therillia and TVM Capital, all of which have recently closed new Canadian partnerships.

Univalor has carved out a particularly close relationship with AmorChem, a seed-stage fund focused on the life sciences sector. Formed in 2011, the fund is managed by the $350 million Canadian venture capital firm GeneChem, which has been active in the space since 1997.

AmorChem’s business model is unique in the venture world. The fund does not source life sciences deals in the traditional sense. Instead, by working with organizations like Univalor, it invests in R&D-stage initiatives to enable pre-clinical proof-of-concept in a semi-virtual mode. The fund then sells projects that have reached early proof-of-concept to large biotech or pharma businesses or bundles similar projects into startups.

AmorChem’s efforts are assisted by the fund’s portfolio company,  NuChem Therapeutics, a medicinal chemistry research contractor based in Montréal. NuChem played a key developmental role in a recent collaboration of Amor Chem and Univalor – their May 2013 re-investment in a drug discovery initiative led by Dr. Nabil Seidah of the Institut de recherches cliniques de Montréal. Established last year, the Seidah project aims to find new treatments for hypercholesterolemia.

For GeneChem general partners Élizabeth Douville and Inès Holzbaur, AmorChem’s “blended model” offers the potential for big payoffs due to its operational “nimbleness” and provision of “multiple avenues” for commercialization. As such, it can deliver more effective “translation of technology beyond the university setting”, while simultaneously managing risk, and giving the fund diverse options for achieving revenues and realizations.

Douville and Holzbaur said AmorChem’s approach and pipeline of opportunities have elicited positive feedback from top strategic investors – in fact, one of the fund’s backers is Merck Canada. They give credit to their ties with Univalor, which has supplied roughly half of AmorChem’s discovery project portfolio. Simoneau is appreciative in return, and said he turns to the fund’s investment pros when the impetus of Univalor-sponsored opportunities depends on their value-added.

Douville and Holzbaur agree with Simoneau that the market environment in Québec and across Canada is these days more conducive to launching startups. However, they said that in the field of life sciences, this may no longer be the only way to go. For that reason, it will be worth watching the AmorChem model evolve over time.

Regardless of the path commercialization takes, the fresh ideas posited by Univalor, AmorChem and other Québec-based groups should be paid notice. They may help rejuvenate Québec’s and Canada’s startup ecosystems – and early-stage life sciences investment.

Photo of Jacques Simoneau courtesy of Univalor.

Photo of entrepreneur-innovation concept courtesy of Shutterstock.

Photo of lab researcher courtesy of Shutterstock.