Quebec digital sector a money magnet

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TORONTO -- U.S. venture capital investment continues to pour into Quebec's digital media sector, Reseau Capital reported Tuesday.

Reseau Capital, representing provincial venture capital and hedge fund investors, said that CAN$455 million ($437.5 million) was invested in 153 firms between January and September, up 27% from the CAN$357 million invested during the same period in 2006.

The investors group also said that American venture capital funds and other foreign investors remain the biggest backers of Quebec companies so far this year. The biggest magnets for venture capital remain IT companies, particularly telecommunications startups, followed by computer software players.

At the same time, expansion deals took the lion's share of Quebec venture capital dollars. For example, Montreal-based Audiokinetic, a maker of software for game developers, raised CAN$5 million ($4.8 million) in new financing this summer from a consortium led by the Business Development Bank of Canada and Investissement Quebec.

Reseau Capital said seed, startup and other early-stage investment in Quebec companies has lost ground in 2007 compared with year-earlier levels.

In addition to Montreal, Canada's two other primary digital media hubs are Toronto and Vancouver.
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