CIBC Tech & Innovation Market Update – August 2023 – Volume 40

Special Announcement – 2023 BC Innovators Hall of Fame Inductee

CIBC Capital Markets’ Kathy Butler was inducted into the 2023 BC Innovators Hall of Fame by BC Tech Association in partnership with the Government of British Columbia. The BC Innovators Hall of Fame recognizes the key role of innovation to BC’s economy and the leaders that have left a legacy in the province, enriching the technology and innovation ecosystem and building a stronger BC economy.
Kathy Butler
Vice Chair and Head of CIBC Capital Markets – B.C.

Canadian technology sector performance and valuation

Source:
FactSet and Pitchbook; as at July 31, 2023; in C$ unless otherwise noted.

Canadian venture capital market monthly recap

July 2023

Aggregate deal value

$338M
(vs. $714M in Jun-23)²
YTD: $4.5B
(vs. $5.7B YTD-22)³

Number of Deals

36
(vs. 37 in Jun-23)
YTD: 340
(vs. 593 YTD-22)

Avg. deal value

$ 15M
(vs. $30M in Jun-23)²
YTD: $20M
(vs. $15M YTD-22)³

Most active province by value ($ / #)

Ontario
($231M / 24)
YTD: Ontario
($2.8B / 174)

Most active province by count ($ / #)

Ontario
($231M / 24)
YTD: Ontario
($2.8B / 174)

Most active Sector

Software
(88% of funds raised)
YTD: Software
(75%)

2 13 deals in Jul-23 and 13 deals in Jun-23 with no announced values are omitted from deal values.
3 118 deals in YTD-23 and 213 deals in YTD-22 with no announced values are omitted from deal values.

Noteworthy Canadian deals

Company Size Financing round Sub-sector Lead investors
Mindbridge US$60M Growth Equity Round Software – AI-Enabled Financial Analytics Software PSG
Solink US$60M Series C Software – Video Surveillance as a Service Goldman Sachs Asset Management
ProShop ERP US$32M Growth Equity Round Software – Enterprise Resource Planning for Heavy Manufacturing Mainsail Partners
Orennia US$25M Series B Software – Commercial Analytics for Renewable and Low Carbon-Energy Wellington Management

T&I @ CIBC

Deal activity

Calian

$250 million
Credit Facility
CIBC acted as Lender
July 2023

Calian – $250M Credit Facility

CIBC acted as a lender on a $250 million debt agreement for Calian, a diverse solutions company providing innovative products and services in healthcare, learning, communications, and cybersecurity. The credit facility will help Calian execute its growth strategy and consider new mergers and acquisitions opportunities.

Phrase

€12 million
Debt Financing
CIBC Innovation Banking acted as Sole Provider
July 2023

Phrase – €12M Debt Financing

CIBC Innovation Banking provided €12 million in debt financing to Phrase, a global cloud-based localization software provider, headquartered in Prague. Phrase will use the funds to further develop the next generation of AI-driven language technology.

ConnectCPA

Undisclosed
Growth Capital Financing
CIBC Innovation Banking acted as Sole Provider
July 2023

ConnectCPA – Growth Capital Financing

CIBC Innovation Banking provided growth capital financing for ConnectCPA, an industry-leading provider of cloud-based accounting and bookkeeping services. The financing will help fund ConnectCPA’s product development and expand its market footprint.

Medisolv

Undisclosed
Senior Credit Facilities
CIBC Innovation Banking acted as Sole Provider
July 2023

Medisolv – Senior Credit Facilities

CIBC Innovation Banking provided senior credit facilities to support BVP Forge’s strategic investment and fund working capital in Medisolv, a leading healthcare quality management platform. The platform is used by thousands of hospitals and healthcare providers across the US.

Bridgit

$7 million
Growth Capital Financing
CIBC Innovation Banking acted as Sole Provider
July 2023

Bridgit – $7M Growth Capital Financing

CIBC Innovation Banking provided $7 million in additional growth capital financing to construction software company Bridgit. The company’s platform is used by 30% of top American contractors to plan their resourcing needs.

Technology & Innovation in‘sites’ with CIBC Equity Research

T&I 'Bits and Bytes'

Q2 results from the US software companies we track have been solid, with roughly 70% of the software names beating revenue and EPS estimates. Earnings beats continue the trend seen in Q1, when software results outperformed lowered Street expectations. This quarter, revenue increased 8% Y/Y on average for the companies we track, while EBITDA increased ~14% Y/Y on average. Post Q2 results, the Street revised its F2023 revenue and EBITDA estimates upwards by an average of 1% and 2%, respectively.

Read the full article here.

Recently the Washington Post reported that the FTC has initiated an expansive investigation into Microsoft’s OpenAI, delivering the company a 20-page demand letter seeking details on how it handles risks related to its AI models. The FTC has repeatedly warned it would take action on AI, with many articles posted on the agency’s site outlining the risks of the technology dating back to over a year. The probe into OpenAI marks the agency’s first substantial move to enforce consumer protection laws in the AI realm, and we expect the outcome will set the stage for future law enforcement and regulation of the space.

Read the full article here.

Earlier this month Meta launched Threads, its Twitter rival app, another blow to Elon Musk’s struggling social media platform. Threads gained 30 million users in its first 18 hours, and has now climbed beyond 100 million users in just five days – surpassing ChatGPT as the fastest growing app. By comparison, Twitter had ~240 million monetizable daily active users as of its last public disclosure in July 2022. Threads is linked to Meta’s photo-sharing social media platform Instagram, making installation simple for existing Instagram users – and there are currently ~1 billion monthly active users worldwide. The platform is currently ad-free and Meta CEO Mark Zuckerberg has disclosed no active plans to monetize Threads this year, focusing first on user growth. With Meta already controlling a massive market share in social media, some are questioning whether adding another platform to the company’s roster allows Meta to wield too much power.

Read the full article here.

In today’s age, the adoption and integration of new technologies is critical to sustained operational success. However, many new technologies can present challenges when the risk of their misuse or their inability to live up to expectations meets or exceeds the risk of not adopting them. Enter ChatGPT, the now familiar natural-language processing tool open to the public and trained on databases from the internet. For industries that rely heavily on accuracy such as law, healthcare, education and finance – to name a few – ChatGPT is a double-edged sword. The tool can be used to maximize productivity, but the data used to train the AI may be biased, misleading, or inaccurate. As such, an opportunity has arisen for entrepreneurs and developers to create generative AI tools specific to these sectors, and AI start-ups are taking advantage of these niches.

Read the full article here.

Recent technology news

While many were surprised by Twitter’s recent rebranding to “X”, Musk has had a long history with the letter: X is used as his signature, his child X Æ A-XII goes by X for short, Tesla has a ModelX and there is even his SpaceX program. But the rebrand to some seems like a full circle moment of his original “X” venture, X.com which was an online finance company back in 1999. His vision with Twitter now is to create a WeChat-like “everything app” that includes payments, streaming video, and e-commerce.

Read the full article at Bloomberg.

There is an enthusiastic tech ecosystem growing in Alberta, receiving more venture capital funding than any other Canadian region in Q1 2023. James Lochrie, Partner at Thin Air Labs and Brett Colvin, CEO at Goodlawyer, guest star in the latest BetaKit podcast to talk about the recent venture capital developments for the province.

Listen to the podcast at BetaKit.

In a recent congressional hearing, David Grusch, a United States Air Force officer and former intelligence official publically claimed that the US government maintains a UFO recovery program that has non-human spacecraft and extraterrestrial remains. Ross Douthat of the New York Times cautions that while the source may appear credible, there may be a vested interest for the military to promote this idea of UFO landings.

Read the full article at the New York Times.

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Tech & Innovation Key Contacts

Roman Dubczak
Deputy Chair
Susan Rimmer
Managing Director And Head, Global Corporate & Investment Banking
Kevin Li
Managing Director and Head, Global Investment Banking

Global Investment Banking

Kathy Butler
Vice Chair and Head of CIBC Capital Markets – B.C.
Colin Ryan
Managing Director, Head of Technology & Innovation, Global Investment Banking
Adam Noily
Managing Director, Head of U.S. Technology & Innovation, Global Investment Banking
Daniel Lee
Managing Director, Technology & Innovation, Global Investment Banking
Emilie Bissonnette
Managing Director, Global Investment Banking
Rob Magwood
Managing Director, Equity Capital Markets
Frazer Wong
Executive Director, Technology & Innovation, Global Investment Banking

Innovation Banking

Mark Usher
Executive Managing Director, Innovation Banking
Paul McKinlay
Vice-President and Head of U.S. Origination, Innovation Banking
Amy Olah
Managing Director and Head of Canadian Origination, Innovation Banking

Canadian Technology Constituents

High-Growth Canadian SaaS
  • Ceridian
  • Copperleaf
  • Coveo
  • Descartes
  • Dialogue
  • Docebo
  • Kinaxis
  • Lightspeed
  • Q4
  • Shopify
  • Thinkific
Large Cap Canadian Tech
  • Altus
  • Blackberry
  • Celestica
  • CGI
  • Constellation Software
  • Converge Technologies
  • Dye and Durham
  • Enghouse
  • Evertz Technologies
  • Nuvei
  • OpenText
  • Softchoice
  • Well Health
Mid Cap Canadian Tech
  • Calian
  • Computer Modelling Group
  • D2L
  • Kneat
  • Payfare
  • Real Matters
  • TECSYS
  • Tiny
  • Vecima
Small Cap Canadian Tech
  • Alithya
  • Baylin Tech
  • BBTV
  • Blackline Safety
  • Farmers Edge
  • Optiva
  • Pivotree
  • Quarterhill
  • Sangoma
  • Sylogist
  • Terago
  • VerticalScope
  • Vitalhub
  • Voxtur

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