We the North: Homegrown tech is on the rise — and offers lucrative VC opportunities

We the North: Homegrown tech is on the rise — and offers lucrative VC opportunities
July 18
11:48 2016

By the Canadian Venture Capital and Private Equity Association

*Revised on August 3, 2016

Canada is beginning to prove itself as a competitive powerhouse market for tech talent and innovation. And the proof is in the numbers.

Based on data extracted from CBRE’s annual Scoring Tech Talent Report—which used various metrics including population trends and education levels—Tech Hub has ranked the top 20 tech sectors in North America. It comes as no surprise that Silicon Valley was named number one. Canadian markets, however, have managed to grow flourishing tech hotspots somewhat under the radar.

Tech Hub listed two Canadian cities: Toronto in 12th place and Vancouver in 20th. The latter of the two was noted for having the lowest cost to operate a tech company in all markets surveyed by CBRE.

In addition, CBRE found many smaller markets took dominant positions on top ten “momentum markets”, which ranked cities based on tech talent growth between 2010 and 2015. On that list, Vancouver made 10th place, with tech talent growth rate increase of 50.1 per cent.

Toronto was only steps behind CBRE’s top five markets—Silicon Valley, Washington D.C., Seattle, New York and Austin—and was noted for hosting a high volume of tech jobs, including data processing, software publishers and computer system design.

According to our own data, we saw record-breaking VC activity in the first quarter of 2016 in Canada, with a total of $838 million invested—nearly double the amount in the same quarter of 2015. This builds on the past few years of growth and highlights a continuing shift towards private investment in innovation and growth. More importantly, this dramatic increase has primarily been driven by larger deals—which is also a trend we’re seeing carry through to this last quarter (Q2).

Ontario and BC no doubt had the largest share of the dollar invested in Q1—58 per cent of dollars invested were in Ontario, while 25 per cent were from BC. These are substantial portions compared to other regions in Canada. Impressively, Canada saw $616 million alone invested in ICT in Q1.

While it is still common for skilled Canadian innovators and entrepreneurs to leave Canada is search of more opportunities, we are seeing an increasingly strong and tight-knit tech community interested in building opportunities within Canada. More and more investors are now showing interest in investing in homegrown companies, versus oversaturated Bay Area tech start-ups.

Increasing investment and fostering digital talent at home will help insure Canada evolves as a primary destination for tech innovation.

For a snapshot of the current domestic tech scene, here are the tech companies in both Toronto and Vancouver that have received the most funding from private investors over the last two-and-a-half years (January 2014-June 2016):

Toronto:

1. Real Matters Inc. – $130 Million

Real Matters serves the North American mortgage industry through its Solidifi offering and the property and casualty (P&C) insurance industry through its iv3 CUS business.

Disclosed Investors: BMO Capital Partners, Whitecap Venture Partners, Radar Capital Inc., Urbana Corporation

2. Influitive Corporation – $52.6 Million

Influitive develops the AdvocateHub advocate marketing platform, helping businesses create lasting relationships with their customers and facilitate customer mobilization strategies, improving leads and sales.

Disclosed Investors: Atlas Venture, BDC Capital Inc., CommonAngels Ventures, Docomo Capital Inc., EDC Equity, First Round Capital, Georgian Partners Inc., Hummer Winblad Venture Partners, Illuminate Ventures, Leaders Fund Inc., OurCrowd Management Limited, Relay Ventures, Resolute Ventures

3. WP Technology Inc. – $51.5 Million

Wattpad is a self-publishing platform that allows users to publish their writing, read other authors, and provide feedback and comments on works in progress.

Disclosed Investors: AME Cloud Ventures, LLC, August Capital, Golden Ventures Partners, Khosla Ventures, Northleaf Capital Partners, OMERS Ventures Management Inc., The Raine Group, Union Square Ventures, Version One Ventures

4. SHOP.CA Network Inc. – $51 Million

SHOP.CA Network Inc. operates a multi-merchant Marketplace-as-a-Service portal. The company’s platform offers Canadian consumers shopping experience through selection of brands, service, and a loyalty program that has various active members.

Disclosed Investors: 1832 Asset Management L.P., Difference Capital Financial Inc., Shaw Ventures, Slaight Communications, Torstar Corporation

5. Scribble Technologies Inc. – $47 Million

Scribble Technologies is the developer of ScribbleLive, a real-time content publishing and delivery platform used by news organizations to deliver enhanced coverage, drive engagement and create new revenue opportunities.

Disclosed Investors: Blue Cloud Management, LLC, EDC Equity, Georgian Partners Inc., Innovation Network LP, Northleaf Capital Partners, OpenText Ventures, Summerhill Venture Partners, VCIC/Emerillon Capital, Waterloo Innovation Network LP, Rogers Venture Partners LLC

6. Peraso Technologies Inc – $44 Million

Peraso is a fabless semiconductor company specializing in the development of 60 GHz wireless chip sets. Peraso is committed to providing leadership for the wireless industry in markets such as portable WiFi and small cell backhaul.

Disclosed Investors: Celtic House Venture Parters, iNovia Capital Inc., Ontario Capital Growth Corporation (OCGC), VL Advisors Inc., Roadmap Capital Inc.

7. VarageSale, Inc. – $33.4 Million

VarageSale is a community-based marketplace where people can buy and sell in a friendly, fun and non-threatening environment.

Disclosed Investors: iNovia Capital Inc., Lightspeed Venture Partners, Real Ventures, Sequoia Capital, Version One Ventures

8. 2ndSite Inc. – $32.2 Million

Founded in 2002, 2ndSite Inc. – which does business as Freshbooks, Inc. – provides cloud accounting solutions for small business owners. Its platform offers solutions in the areas of online invoicing, expense tracking, time tracking, accounting reports and taxes, and bookkeeping software.

Disclosed Investors: Atlas Venture, Georgian Partners Inc., Oak Investment Partners

9. Blueprint Software Systems Inc. – $26 Million

Founded in 1996, Blueprint provides a software solution to help large organizations build better business applications. It transforms the business-IT relationship into a visual and engaging collaboration, enabling a unified approach that results in on-time, and on-budget applications.

Disclosed Investors: BDC Capital Inc., Centana Growth Partners, Tandem Expansion Fund

10. Q4 Web Systems Inc. – $24 Million

Q4 is revolutionizing the IR landscape by bringing together best-in-breed market intelligence, websites and webcasting under a single, innovative desktop.

Disclosed Investors: Accomplice, LLC, Atlas Venture, HarbourVest Partners, LLC, Information Venture Partners Inc., Kensington Capital Partners Limited, OpenText Ventures, Plaza Ventures, VCIC/Emerillon Capital

Vancouver:

1. BuildDirect.com Technologies – $71.3 Million

BuildDirect is an online supplier of home improvement products dedicated to being below budget and above expectations.

Disclosed Investors: 1832 Asset Management L.P., Aurion Capital Management Inc., Beedie Capital Partners, BMO Asset Management Inc, Deans Knights Capital Management Ltd., Kingfisher Investment Management, LLC, Ladaz Technologies Inc., Pelecanus Investments Ltd., TMH Capital Corp.

2. HootSuite Media Inc. – $66.5 Million

HootSuite is a social media management system for businesses and organizations to collaboratively execute campaigns across multiple social networks from one secure, web-based dashboard. HootSuite was created by Invoke Media in November 2008.

Disclosed Investors: Accel, Difference Capital Financial Inc., FMR LLC (Fidelity), Insight Venture Partners, OMERS Ventures Management Inc.

3. D-Wave Systems Inc. – $65.9 Million

D-Wave Systems is a developer of quantum computers targeted at commercial applications.
Disclosed Investors: Astrolink International LLC, BDC Capital Inc., bcIMC, Colin Jang Holdings Inc., Discovery Capital Management Corp., Draper Fisher Jurvetson, Explore Holdings LLC, Fidelitas West Investments Ltd., Goldman Sachs Group, Inc., GrowthWorks Capital Ltd., Kensington Capital Partners Limited, Public Sector Pension Investment Board (PSP), FMR LLC (Fidelity), Fractal Capital Corp., Kensington Capital Partners Limited, Vell & Associates, Inc., VPL Investments Inc., VPL Ventures Inc.

4. Indochino Apparel Inc. – $42 Million

Founded in 2007, Indochino is an online menswear fashion company, providing custom tailored, premium quality suits in the latest styles – backed by superior customer service and fast delivery times.

Disclosed Investors: Dayang Group Co., Ltd.

5. Cymax Stores Inc. – $33.2 Million

Founded in 2004 and based in Burnaby, Cymax is an online furniture retailer.

Disclosed Investors: BDC Capital Inc., Frind Enterprises Ltd.

6. Bench Accounting, Inc. – $30.2 Million

Bench Accounting is a provider of virtual bookkeeping with professional bookkeeper services.

Disclosed Investors: Alpine Meridian, Altos Ventures, Bain Capital, LLC., Contour Venture Partners, Ian Crosby Holdings Inc., Lerer Hippeau Ventures, Quotidian Ventures

7. Allocadia Software Inc. – $29 Million

Allocadia provides cloud-based marketing performance management software, giving marketers complete visibility into all investments and all results, whatever the source.

Disclosed Investors: Altos Ventures, Beech Holdings Ltd., Beehive Holdings Ltd., Boardwalk Ventures Inc., Illuminate Ventures, iNovia Capital Inc., Susquehanna Growth Equity, LLC

8. Vision Critical Communications Inc. – $26.5 Million

Vision Critical is a provider of insight communities, currently supporting over 650 brands worldwide. The company builds software and provides comprehensive services that empower organizations to engage groups of customers and stakeholders on a continuous basis for the express purpose of extracting and managing insight to drive better, faster decisions.

Disclosed Investors: Difference Capital Financial Inc., Georgian Partners Inc., Northleaf Capital Partners, Kensington Capital Partners Limited

9. Visier Inc. – $26 Million

Visier Workforce Analytics is a cloud-based, comprehensive analytics application using attractive visuals and advanced predictive technology designed to provide managers and HR professionals with immediate insight into their organization’s performance and to improve the return on their most important investment: human capital.

Disclosed Investors: Adams Street Partners, LLC, Foundation Capital, Summer Street Capital Partners, LLC

10. CoolEdge Lighting, Inc. – $24.7 Million

CoolEdge Lighting, founded in 2009, is a provider of solid-state lighting solutions to the general illumination market.

Disclosed Investors: Arch Venture Corporation, BDC Capital Inc., EDC Equity, GE Ventures LLC, Yaletown Venture Partners, Vertex Venture Capital

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