CIBC Tech & Innovation Market Update – July 2022 – Volume 28

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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

A line graph showing Canadian technology sector performance and valuation - S&P Info Tech Index was 9.2%, DJIA was 8.2%, S&P 500 was 9.0%, NASDAQ was 18.6%

 
EV / NTM revenue multiples 1 LTM sector price performance 1
A bar graph showing High-Growth Canadian SaaS was 4.5x, Large Cap Canadian Tech was 3.2x, Mid Cap Canadian Tech was 2.3x, Small Cap Canadian Tech was 2.0x. LTM sector price performance bar graph: High-Growth Canadian SaaS was -50.7%, Large Cap Canadian Tech was -29.5%, Mid Cap Canadian Tech was -14.7%, Small Cap Canadian Tech was -27.2%.

Source: FactSet and Pitchbook; as at July 29, 2022; in C$ unless otherwise noted.
1 Please refer to the end of the document for technology group constituents.

 

Canadian Venture Capital market update 2

$114M

(vs. $553M in Jun-223)
Aggregate deal value

23

(vs. 47 in Jun-22)
Number of deals

$8M

(vs. $18M in Jun-223)
Avg. deal value

Ontario

($80M / 11)
Most active province
by count ($ / #) 

Ontario

($80M / 11)
Most active province
by value ($ / #)

Software

(87% of funds raised)
Most active sector

2 9 deals with no announced value are omitted from deal value.
3 17 deals with no announced value are omitted from deal value.

 

Noteworthy Canadian deals

Company

Size

Sub-sector

Lead investors

Darwynn logo

US$20M

Software

Undisclosed

Acto logo

US$18M

Software

Questa Capital logo
Stadium Live logo

US$10M

Software

Kb Partners and Union Square Ventures logos
 

T&I @ CIBC

Deal Announcements – CIBC Global Investment Banking

Smart – £40 Million Growth Financing, July 2022

Smart – £40 Million Growth Financing

CIBC Innovation Banking is pleased to announce £40 million of growth financing for London-based Smart, a leading retirement technology provider. Smart will use the capital to expand its market growth, accelerate the launch of strategic products, and undertake acquisitions.

Read the full report on Financial Post.

CIBC Innovation Banking

A red vector drawing of a smartphone

Mark McQueen thinks it’s a great time to have a chequebook

Mark McQueen, President & Executive Managing Director, CIBC Innovation Banking was a guest on BetaKit’s podcast most recent episode in July. He provides his outlook on the Canadian tech market, informed in part by his extensive experience within the sector, including his time witnessing the dot-com bubble burst, the impact of the 2008 financial crisis, as well as the present day market downturn.

Listen to the full episode on BetaKit.

Celebrating +100k downloads of CIBC Innovation Banking Podcast

Across 29 episodes, we have engaged with leaders, entrepreneurs, experts and venture capitalists about the changing dynamics of North America’s innovation economy since 2020. As you wait for the launch of season 3 – catch up on the series highlights and see for yourself why Bay Street Bull picks the CIBC Innovation Banking Podcast as one of the top 8 branded podcasts in the innovation space.

Series Highlights

A headshot of Deven Parekh

Passionate problem solving with Insight Partners Managing Director Deven Parekh.

Listen to the Podcast here.

A headshot of Tom Keiser

Maintaining the momentum as a new CEO with Hootsuite CEO, Tom Keiser.

Listen to the Podcast here.

A headshot of Stephany Lapierre

Connecting the data dots with Tealbook CEO Stephany Lapierre.

Listen to the Podcast here.

A headshot of Damir Hot

A powerful mindset for business growth with Canalyst CEO Damir Hot.

Listen to the Podcast here.

 

 

Technology & Innovation in‘sites’ with CIBC Equity Research

T&I ‘Bits & Bytes’

clipboard icon

Q2/22 U.S. earnings recap – Better than feared

Q2 earnings season has arrived for the U.S. tech giants and results have generally been better than feared, with revenue roughly in line and average EBITDA missing consensus by 2%. While results were generally solid, the focus has been on the demand environment and the impact of inflation. The demand environment appears mixed, with the majority of downward revisions to date focused on pandemic beneficiaries. Inflation remains a focus, with many software firms initiating headcount reductions and hiring freezes amid an uncertain market environment. In the business services sector, revenue was slightly above consensus as demand for consulting remains robust, although the group missed consensus EBITDA by 3% as the sector contends with wage inflation.

Similar to Q1, we have seen outsized market reaction on earnings misses, with SNAP down 38% given the revenue miss and weak commentary from management.

Read the full article here.

A red vector drawing of a magnifying lens hovering over a pair of gears

Getting versed in the Metaverse – Founding fathers scale up to shape the Metaverse

The Metaverse, one of the most talked about ideas in modern technology and backed by massive investments from Big Tech, still seems to raise more questions than it answers. While it doesn’t have a uniform definition, the Metaverse can be described as an immersive 3D world that is still in its early phases. With AR and VR devices and the rise of Web 3.0, the Metaverse is expected to see strong growth, with Gartner predicting that 25% of people will spend at least one hour per day in the Metaverse by 2026 for work, shopping, education, social activities and/or entertainment.

Read the full article here.

Stay informed. Request access to CIBC Capital Markets Research Central here.

 

Recent technology news

“Does Elon Musk have a strategy?”

While his public persona and pull-out from the Twitter acquisition make him a controversial figure of the tech world, authors Andy Wu and Goran Calic of the Harvard Business Review posit there is a definitive strategy at work when it comes to how he runs his businesses. Among Musk’s many companies, there are common themes that stand out in terms of his vision for problems to solve, how he design his organizations, and how he mobilizes resources effectively.

Read the full article at the Harvard Business Review.

“The default tech settings you should turn off right away”

As noted by some, “the devil is in in the defaults.” Author Brian Chen provides guidance of the common “default settings” to watch out for from tech companies that try to extract as much user information as possible without us even noticing.

Read the full article at the New York Times.

“The 15 best tech podcasts you need to listen to right now”

Do you ever wonder how it is possible to stay on top of the tech world? Author Mark Sullivan says that’s what podcasts are for, (as would anyone with a long work commute would likely tell you.) His colleagues compile their top 15 podcasts to keep up with today’s major tech trends.

Read the full article at Fast Company.

 
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CIBC Capital Markets Insights

Leverage leading insights and stay abreast of developments in the markets with CIBC Capital Markets Insights.

Connect with us on Twitter and LinkedIn.

Tech & Innovation Key Contacts

Roman Dubczak
Deputy Chair
Kathy Butler
Vice Chair and Head of CIBC Capital Markets – B.C.
Colin Ryan
Managing Director, Head of Technology & Innovation, Global Investment Banking
Emilie Bissonnette
Managing Director, Global Investment Banking
Daniel Lee
Managing Director, Technology & Innovation, Global Investment Banking
Frazer Wong
Executive Director, Technology & Innovation, Global Investment Banking
Mark McQueen
President and Executive Managing Director, Innovation Banking
Mark Usher
Executive Managing Director, Innovation Banking
Robert Rosen
Managing Director, Innovation Banking
Julia Kassam
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
Eric Laflamme
Managing Director, Innovation Banking
Joe Timlin
Managing Director, Innovation Banking
Rob Magwood
Managing Director, Equity Capital Markets
Stephen Redding
Managing Director and Head

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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