Was 2015 the year that tech officially made its comeback in Canada?
It depends on who you speak to, but for many people the last twelve months have, indeed, stood out as a remarkable time of resurgence for the sector. One four-week period, in particular, set the tone for much of the year.
It began on April 30. On that day, DH Corporation (TSX: DH), one of Canada's largest financial technology companies, completed the US$1.25 billion acquisition of a major global payments services business based in the U.S. As part of this acquisition, DH also successfully raised C$950 million in a public equity and convertible debenture offering that was one of the ten largest public follow-on offerings by a tech company anywhere in North America in 2015 (as at November 30).
Canadian tech was definitely on display to the world with that deal.
Three weeks later, on May 20, Shopify Inc. (TSX: SH) priced its C$187 million IPO on Toronto Stock Exchange (TSX) and NYSE, and became one of Canada's best performing IPOs ever and one of the top tech IPOs in North America in 2015 (measured by the first day movement in the share price). And, yet again, a Canadian tech company made the headlines at home and abroad.
Less than a week later, on May 26, Stingray Digital Group Inc. (TSX: RAY.A) priced its C$140 million IPO on TSX, yet another significant capital event for a global company based in Canada.
By coincidence, this four-week period concluded on the same day as TSX and TSX Venture Exchange's (TSXV) annual Technology Investor Day and Startup Showcase. As 17 companies (public and private) presented to over 200 investors and capital market professionals through the day, an audience member started using the hashtag #TechIsBack on Twitter. Not surprisingly, this caught on and the next day, some media outlets were using the same three words: Tech Is Back.
Of course, the successes of three large public companies over a four-week period shouldn't be the measure of whether a sector is "back". No doubt, the transactions of DH, Shopify and Stingray helped bring tech back into the headlines, but there were many more successes for Canada's technology and innovation sector in 2015. A few highlights include:
- Strong venture capital (VC) investment levels over the first nine months of 2015 with 410 completed deals, capturing C$1.6 billion (both metrics are on pace to exceed the already strong 2014 levels, according to the Canadian Venture Capital & Private Equity Association (CVCA)).
- Large private funding rounds by some of Canada's emerging technology companies, including Coveo Solutions, Influitive, Intelex Technologies, Kik Interactive, Lightspeed POS, and ScribbleLive.
- Significant M&A and IPO exits by companies like Achievers, Chango, Distech Controls, Plenty of Fish, Recon Instruments, Shopify, Stingray and Vertical Scope.
- Over C$10.5 billion in equity capital raised by TSX/TSXV-listed technology and innovation companies (more than in any other sector in Canada, as at November 30)
- More than 25 new technology and innovation companies went public on TSX/TSXV. This brings the total since the start of 2014 to over 65 companies (again, more than any other sector in Canada, as at November 30)
- The S&P/TSX Capped Information Technology Index rose by 19% in the last 12 months (to November 30). By comparison, the S&P 500 Information Technology Index of U.S. companies increased by 7% during the same period.
These are encouraging statistics.
So, did tech in Canada really come back in 2015?
There's no doubt that the sector made its share of headlines during the year, but I'd argue that the success actually started a few years ago when the current generation of tech companies was being formed. Over this period, these companies have benefited from the strong support of accelerators and incubators like HIGHLINE, BCTIA, TEC Edmonton, Communitech, MaRS, Invest Ottawa, and many others. Organizations like C100, CENE, and AceTech are also playing an important role in mentoring the new generation of Canadian entrepreneurs.
Of course, the VC community is also playing a critical role - not just in providing capital, but also in offering guidance and resources as companies scale internationally. And lastly, we've been doing our part at TSX/TSXV to help private and public companies succeed by leading a popular series of peer-to-peer learning and networking forums, funding and IPO preparedness workshops, mentoring and referral programs, and tech-company showcase events in Canada, the U.S. and Europe.
So, lots of people can claim part of the credit for the success of tech in Canada - and that's a good thing because we all have an important role to play. Tech is back. Now let's make sure that we all do our part to ensure that the sector continues to thrive in 2016.
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