Welcome to the official newsletter of CIBC’s Tech & Innovation Capital Markets Group
A curated monthly report to keep our readers abreast on relevant and recent developments within the Canadian tech ecosystem.
Canadian technology sector performance and valuation
| EV / NTM revenue multiples 1 | LTM sector price performance 1 |
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Source: FactSet and Pitchbook; as at April 30, 2022; in C$ unless otherwise noted.
1Please refer to the end of the document for technology group constituents.
Canadian Venture Capital market update 2
2 18 deals with no announced value are omitted from deal value.
3 13 deals with no announced value are omitted from deal value.
Noteworthy Canadian deals
| Company | Size | Sub-sector | Lead investors |
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US$100M | IT Services |  |
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US$30M | Software |
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C$36M | Software | Private International Consulting LLC |
T&I @ CIBC
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CIBC Technology & Innovation Conference 10.0Please join us in-person May 25-26th, 2022 Register below to be part of CIBC Technology & Innovation Conference in its 10th year anniversary, featuring leaders and founders from over 35 of Canada’s most innovative public and private technology companies. This year’s conference will be hosted in-person* at the Metro Toronto Convention Center. Please contact your CIBC representative for more information. Register here * CIBC is committed to safeguarding the health of our clients, team members and community. Due to the evolving nature of COVID-19, this event is subject to applicable health and safety protocols, as well as cancellation. |
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CIBC Innovation BankingCIBC Innovation Banking opens a new Seattle Office CIBC Innovation Banking opened a new office in Seattle to support the city’s growth as a leading technology hub. John Flemming is the newly appointed Managing Director of CIBC Innovation Banking’s Seattle office. Flemming joins from Wells Fargo, where he was Team Leader in the Pacific Northwest market for their Middle-Market Technology Banking Group. He brings his expertise in client origination – extending debt financing, providing treasury solutions, and placement opportunities. Seattle marks the 13th office to open as the group continues its strategic growth in key technology, life science, and cleantech markets across North America, the UK, and select European markets. Read the full report on Financial Post. |
Podcasts
Technology & Innovation in‘sites’ with CIBC Equity Research
T&I ‘Bits & Bytes’
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Q1/22 U.S. earnings recap – Mixed results with outsized market reactions Q1 earnings season have arrived, including some of the largest U.S. technology companies reporting. Similar to Q4, we have seen an outsized market reaction to earnings beats and misses, with Netflix down 35% given unexpected subscription declines and Meta up 12% given better-than-expected daily active users. On average, the software names we follow delivered -2% post earnings (+3% ex-Netflix), while the business services names were up an average of 0.75%. Read the full article here. |
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Re-privatization? Post-IPO weakness leads to privatization speculation There were a record number of Canadian tech IPOs in 2021, with 13 companies raising at least $50 million through public listings. Fast-forward to these IPO’s today, early returns have been almost uniformly negative, leading to greater speculation for re-privatization. We expect that private equity would be most interested in businesses that have continued to operate well post-IPO and are generating free cash or have a line of sight to positive near-term free cash flow. Read the full article here. |
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Capturing Carbon – and ESG investors – Environment coming into focus for tech investing Stripe, Alphabet, and Meta (along with Shopify and McKinsey) jointly announced the launch of Frontier, a joint venture which aims to purchase US$925M worth of carbon removal from companies developing the technology over nine years. We see Frontier as an extension of tech companies’ focus on the “E” in ESG, where the sector has historically scored well given their relatively light carbon footprint. We see demand for climate tech investments continuing to increase, with climate-tech start-ups raising US$53.7 billion in 2021. Read the full article here. |
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Paying for the news – Bill C-18 looks to follow in Australia’s Footsteps The Canadian federal government introduced legislation earlier this month that aims to force big tech platforms to provide compensation to Canadian media outlets for news content that is shared on their platforms. Bill C-18 aims to support Canadian news and journalism by forcing tech platforms to negotiate private deals for the privilege of including news content on their platforms. The deals would be subject to review by the CRTC and in situations where the parties can’t come to an agreement, the CRTC would oversee mandatory arbitration. The bill is one of a number of announced initiatives to more strictly regulate big tech in Canada. Read the full article here. |
Stay informed. Request access to CIBC Capital Markets Research Central here.
Recent technology news
“RBC and CIBC join banking group helping finance Elon Musk’s bid for Twitter”
Arguably the biggest news in tech this month was Elon Musk’s take-over of Twitter. CIBC was part of the financing of this deal with 12 other banks, in support of making Musk’s ambitions a reality, putting up US$400-million. Morgan Stanley led the financing that totaled US$25.5 billion, contributing US$2 billion into the loan themselves.
Read the full article at the Globe and Mail.
“Instagram is new frontier for Central Banks. Is TikTok next?”
The world’s central banks are now on the same platforms as wellness influencers and makeup experts, with a markedly greater presence on Instagram in 2021. Of course engaging with the public on social media is not entirely risk-free, as St. Louis Federal Reserve found out when they posted to their Instagram the greater economic value of soy-bean based dinners over turkey during last year’s American Thanksgiving. The backlash was swift and relentless.
Read the full article at Bloomberg.
“What Businesses are getting wrong about SR&ED Tax credit claims.”
With Canadians just finished filing their personal income taxes, this article provides timely insight on the millions businesses could have saved with Scientific Research & Experimental Design (SR&ED) tax credits. Whether businesses file them incorrectly or simply not at all, the SR&ED program is still severely underutilized. See how your business can take advantage in the article below.
Read the full article at BetaKit.
“Workers think less creatively in Zoom meetings, study finds.”
After two years of virtual meetings, researchers now have collected enough information to draw some conclusions on the unintended consequences of virtual work. While videoconferencing tools were indispensable in the pandemic, this study from Columbia and Stanford University suggests heavy reliance on the technology came at a cost to creativity. Initial findings found that people who collaborated online generated 20% less ideas than those who collaborated in-person.
Read the full article at the Guardian.
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Tech & Innovation Key Contacts
Canadian Technology Constituents
High-Growth Canadian SaaS – Ceridian, Coveo, Descartes, Dialogue, Docebo, Kinaxis, Lightspeed, Magnet Forensics, Q4, Shopify, Thinkific
Large Cap Canadian Tech – Altus, Blackberry, CGI, Constellation Software, Converge Technologies, Dye and Durham, E Inc., Enghouse, Evertz Technologies, Nuvei, OpenText, Real Matters, Softchoice
Mid Cap Canadian Tech – Absolute Software, Blackline Safety, Calian, Celestica, Computer Modelling Group, Sierra Wireless, TECSYS, WeCommerce
Small Cap Canadian Tech – Alithya, Baylin Tech, BBTV, Farmers Edge, Kneat, Optiva, Pivotree, Quarterhill, Sangoma, Sylogist, Terago, Vecima, Vitalhub
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