CIBC Tech & Innovation Market Update – December 2023 – Volume 44

Canadian technology sector performance and valuation

FactSet and Pitchbook; as at November 30, 2023; in C$ unless otherwise noted.

Canadian venture capital market monthly recap

November 2023

Aggregate deal value

(vs. $531M in Oct-23)²
YTD: $5.9B
(vs. $7.9B YTD-22)³

Number of deals

(vs. 60 in Oct-23)
YTD: 507
(vs. 754 YTD-22)

Avg. deal value

(vs. $15M in Oct-23)²
YTD: $18M
(vs. $16M YTD-22)³

Most active province by value ($ / #)

British Columbia
($169M / 6)
YTD: Ontario
($3.5B / 250)

Most active province by count ($ / #)

($81M / 24)
YTD: Ontario
($3.5B / 250)

Most active sector

Computer Hardware
(44% of funds raised)
YTD: Software

2 16 deals in Nov-23 and 24 deals in Oct-23 with no announced values are omitted from deal values.
3 179 deals in YTD-23 and 269 deals in YTD-22 with no announced values are omitted from deal values. 

Noteworthy Canadian deals

Company Size Financing round Sub-sector Lead investors
Photonic US$100M Series D Computer Hardware - Quantum Computing BCI / Microsoft
Deep Sky C$57.5M Series A Environmental Services – Clean Tech Brightspark Ventures / Whitecap Venture Partners
Promise Robotic US$15M Series A Commercial Services – AI-Powered Industrial Production System Horizons Ventures


Deal activity

Parsec Automation Corp.

Debt Financing
CIBC Innovation Banking acted as Sole Provider
November 2023

Parsec Automation Corp. – Debt Financing

CIBC Innovation Banking provided debt financing in support of BVP Forge’s strategic investment in Parsec Automation Corp. Parsec Automation Corp. is a leading manufacturing operations management (MoM) software platform. The company plans to use this funding to expand its platform globally.


Growth Capital Financing
CIBC Innovation Banking acted as Sole Provider
November 2023

Jirav – Growth Capital Financing

CIBC Innovation Banking provided growth capital financing to Jirav Inc., an Austin-based company that specializes in budgeting, forecasting, dashboarding and analytics solutions for small to medium-sized companies and accounting firms. The company will use the financing to further accelerate product development.


Technology & Innovation in‘sites’ with CIBC Equity Research

T&I 'Bits and Bytes'

In the long-standing debate over which music streaming app is superior, Google appears to have chosen its favourite. Testimony in the Epic vs. Google trial revealed that Spotify secured a sweetheart deal with Google for in-app purchases, paying 0% in commission when users elect to use Spotify’s payment system, and just 4% if users choose Google Play Billing. That’s a steep discount compared to the 15% fee Google charges other apps under its User Choice Billing program. During the trial, Google’s head of partnerships claimed the reasoning for the deal was due to Spotify’s unprecedented popularity, stating “if we don’t have Spotify working properly, people will not buy Android phones.” The debate around in-app payments continues in the Epic trial.

Read the full article here.

Sam Altman, CEO and co-founder of OpenAI, was abruptly fired in late November. Following the board’s removal of Mr. Altman as OpenAI’s CEO, we’ve seen him get hired by Microsoft as head of the company’s new AI team and 700 OpenAI employees threaten to resign from OpenAI to join Microsoft unless Mr. Altman is reinstated (and the board resigns), and within a week, Mr. Altman had returned as OpenAI’s CEO with a new initial board. The updates over the dismissal had placed a spotlight on the ongoing debate about how commercial competition is shaping the development of AI technology, and provided a chance to revisit the discussion about how AI can be deployed ethically and safely.

Read the full article here.

Recent research from Gartner suggested that worldwide end-user public cloud spending is forecast to grow 20.4% Y/Y in 2024, totalling $678.8 billion. Given the scale generative AI requires, companies looking to add GenAI services will likely look to the public cloud to support these services, driving the growth. However, data is beginning to reveal that the interest in AI is significantly higher than the current rate of adoption. Over the course of 2023, we’ve seen the AI frenzy place pressure on tech companies as well as non-tech companies to show results from AI and GenAI solutions, driving higher investment in cloud infrastructure. However, it may be years before we see true profits from GenAI, as its unknown ROI is a key barrier to adoption, especially amid a weaker macro economy.

Read the full article here.

President Biden signed the US’s first AI Executive Order (E.O.), designed to place safeguards around the use and development of AI. The E.O. covers eight key priorities, including safety and security, consumer protection and privacy, equity and civil rights, as well as innovation and competition. The E.O. is the broadest attempt to date by the Biden Administration to regulate AI while also attempting to solidify the US as a leader in AI innovation. Despite the extensive list of actions, Congress will still need to act on many of them, and almost every federal department or agency has a role in carrying out one or more of the E.O.’s eight priorities. With some actions items expected to be completed in under one year, the ways in which the E.O. will shape the AI landscape in the US will become evident in the near future.

Read the full article here.

Q3 results from the US software companies we track have been solid, with 85% of software names we track beating revenue and EPS estimates. However, share price reactions varied based on company-specific factors, with Google shares down ~9.5% despite a Q3 revenue and EPS beat as investors focused on weaker-than-expected cloud growth. This quarter, revenue increased 13% Y/Y on average for the companies we track while EBITDA increased 38% Y/Y on average, driven by cost-cutting initiatives. Despite the solid Q3, the Street revised its F2023 revenue and EBITDA estimates downwards by an average of 9% and 13%, respectively, after some Q4 guides came in below expectations.

Read the full article here.

Recent technology news

Prominent Toronto-based tech company Q4 agreed to a buyout late November by Silicon Valley-based Sumeru Equity Partners for $257 million. Q4 joins a growing number of Canadian tech companies that listed IPOs during the pandemic and subsequently accepted buyouts which includes MindBeacon Holdings Inc., Dialogue Health Technologies and BBTV Holdings Inc.

Read the full article at The Globe and Mail.

Within five days after Open AI CEO Sam Altman was ousted by its board for not being “consistently candid in his communications with the board”, he had been offered a job by Microsoft to run a new AI research lab, 90% of OpenAI’s employees signed a petition for his reinstatement as CEO, new board members were assigned and he was finally reinstated as CEO. The celebration that followed Tuesday featured chicken fingers, champagne, and boba tea – a nod to the delivery orders that occurred during tense company talks on Sunday.

Read the full article at The New York Times.

Mike Wessinger is the newly appointed co-Chair of PointClickCare, one of Canada’s largest private software companies. He provides his thoughts on the challenges within the Canadian tech sector and the nation’s current funding environment. While there are challenges, Wessinger points to Canada’s incredible talent pool and liberal immigration policies that positions Canada strongly in tech markets.

Read the full article at BetaKit.

With the proliferation of remote work, people have a greater choice of where they work as opposed to being limited by the distance of their daily commute. Areas surrounding major business hubs such as Toronto, New York and London are seeing influxes of population growth. This trend will influence companies location strategies moving forward.

Read the full article at the Harvard Business Review.

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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
  • 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
  • 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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