A View from the Canadian Capital Markets
Canada. Innovation. Leaders: three words that aren’t always used in the same sentence. But over the last few years, the scene has begun to change, trends are being bucked and today some of the world’s most exciting technology and innovation companies are being founded, built and funded in Canada.
This is due, in large part, to all parts of Canada’s technology ecosystem working together: promising founders are being supported by great accelerators and mentors (like the C100 Charter Members); government programs are encouraging innovation; angel investors and venture capitalists are backing exciting new and established companies; management teams are executing their growth strategies; initial public offering (IPO) investors are providing attractive exit alternatives (more on this below); and strategic buyers are stepping-up with attractive valuations.
Success breeds success, and you only need to read the recent headlines about private companies like Hootsuite, Shopify, Real Matters, Beyond the Rack and many others to see that momentum is rippling across the Canadian technology sector. John Ruffolo, Chief Executive Officer of OMERS Ventures in Toronto, Canada, sees great promise in Canada’s technology scene. “There are more potential [technology] companies in the hopper to go public than I have seen in over 10 years,” says Ruffolo.
This momentum is also evident in Canada’s public equities markets, where the technology and innovation sector (comprised of technology, clean technology and life sciences sectors) continued to stand out in 2013. Before we turn the page on the last year, let’s take stock of the progress made over the last 12 months on Toronto Stock Exchange (TSX) and TSX Venture Exchange (TSXV).
Led by global leaders like Avigilon Corp. (TSX:AVO), CGI Group Inc. (TSX:GIB.A), Constellation Software Inc. (TSX:CSU) and Open Text Corp. (TSX:OTC), the nearly 400 technology and innovation companies listed on TSX and TSXV had a total market capitalization of over $135 billion at the close of last year – an increase of over 50% since the end of 2012. Over the course of 2013, innovation companies raised $6 billion in new capital through 280 financings, and there were 31 IPOs and new listings in the combined sector during 2013.
Not bad for a sector that some called “in decline” a few years ago. With the dotcom bubble far in the rear view mirror, it appears the Canadian innovation industry is making a comeback and demand is growing as companies are returning to the Exchanges. Over the last few years, the sector has moved into the spotlight and shown an impressive depth of talent and dynamism.
What was also interesting about 2013 was that public market investors were not just focused on the largest companies. Of course, the largest TSX-listed companies captured more headlines, but nearly $400 million was raised by the smaller technology and innovation companies listed on TSXV. These are companies with a median market value of less than $10 million. Clearly, public investors demonstrated a willingness to back early-stage businesses in 2013.
Look out for future blog posts on this site, where I’ll share thoughts on some of the great Canadian success stories in the technology and innovation sector.
For more information about listing statistics on TSX and TSXV, please click here to consult the Market Intelligence Group (MiG)’s December 2013 MiG Report.
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