CIBC Tech & Innovation Market Update – June 2022 – Volume 27

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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

 
EV / NTM revenue multiples 1 LTM sector price performance 1
EV / NTM revenue multiples bar graph: High-Growth Canadian SaaS was 4.0x, Large Cap Canadian Tech was 2.9x, Mid Cap Canadian Tech was 2.3x, Small Cap Canadian Tech was 1.9x. LTM sector price performance bar graph: High-Growth Canadian SaaS was -53.3%, Large Cap Canadian Tech was -35.4%, Mid Cap Canadian Tech was -17.4%, Small Cap Canadian Tech was -31.4%."

Source: FactSet and Pitchbook; as at June 30, 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

$553M

(vs. $645 in May-223)
Aggregate deal value

47

(vs. 31 in May-22)
Number of deals

$18M

(vs. $31M in May-223)
Avg. deal value

Ontario

($327M / 19)
Most active province by count ($ / #)

Ontario

($327M / 19)
Most active province by value ($ / #)

Software

(76% of funds raised)
Most active sector

2 17 deals with no announced value are omitted from deal value.
3 10 deals with no announced value are omitted fr  om deal value.

 

Noteworthy Canadian deals

Company Size Sub-sector Lead investors

Ataccama logo

US$150M Software Bain Capital logo
Kidoodle logo US$62M Digital Media

Triwest logo

Delphia logo US$60M Financial Services

Multicoin Capital logo

CanadaDrives logo C$40M Software

Goeasy logo

Potloc logo C$35M Software

Investissement Quebec logo

 

T&I @ CIBC

Deal Announcements – CIBC Global Investment Banking

ReeBee sale to Flipp - Undisclosed, financial advisor to ReeBee, June 2022

reebee – Acquistion by Flipp

One of the largest Canadian digital savings content provider was acquired by Flipp. This acquisition allows Flipp to deliver savings to nearly every household across Canada. CIBC Global Investment Banking was financial advisor to reebee on this deal.

Read the full report on BetaKit.

CIBC Global Investment Banking

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2022 Founder of Canada’s Digital Economy

The Hon. Navdeep Bains was awarded the 2022 Founder of Canada’s Digital Economy Award at the IdentityNORTH Annual Summit. The award celebrates leaders whose contributions have been significant to the creation, growth, and security of our digital economy. Also in the month of June, the Hon. Navdeep Bains was appointed to the North American Life Sciences Capital Markets Advisory, alongside CIBC’s Dr. Paul Gorman, for McMaster Innovation Park (MIP). Leveraging the experience and networks of the Council, MIP aims to identify, attract, build and advance life sciences companies in Canada.

Learn more on CIBC Capital Markets.

Deal Announcements – CIBC Innovation Banking

NowSecure - Undisclosed, Debt financing, June 2022

NowSecure – Debt Financing 

CIBC Innovation Banking is pleased to announce new debt financing for Chicago-based NowSecure, a mobile application security and privacy software company. NowSecure plans to use the capital to further invest in its advanced application security testing solutions and go-to-market strategy

Read the full report on Financial Post.

CIBC Innovation Banking

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CIBC Innovation Banking Targets $1.5B in Growth Capital to fill U.S. Funding Gap

Access to capital has reduced dramatically in 2022 with inflation high, valuations down, and recession-looming headlines. This is in stark contrast to the year prior with capital raising at an all-time high.

Despite current market conditions, there remains innovative companies within software, life sciences, healthcare, and cleantech industries that require reliable capital to extend their runway, CIBC Innovation Banking plans to add an additional $1.5 billion to fill this wide gap in the U.S. funding environment.

Read the full report at TechCrunch+.

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CIBC Innovation Banking expands Denver Team

Ron Singh joined the CIBC Innovation Banking’s Denver office as Managing Director. Formerly Senior Vice-President at Bank of America, Ron provides over 20 years of industry experience within business development, deal structuring, and team leadership.

“I’m looking forward to making an immediate impact on the Mountain Region,” said Ron Singh, Managing Director in CIBC Innovation Banking’s Denver office. “In four short years, CIBC Innovation Banking has become the #2 lender to U.S.-based Series A-C tech and life science companies. Our ecosystem thrives on agility, commitment, and experience, and I know that I’ve found the right fit in CIBC Innovation Banking.”

Read the full report on Yahoo! Finance.

 

Podcasts

Headshot of Jason Felger

Most common mistakes made by early stage entrepreneurs with Head of Operating Platform at Jump Capital Jason Felger.

Listen to the Podcast here.

 

Technology & Innovation in‘sites’ with CIBC Equity Research

T&I ‘Bits & Bytes’

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Doors wide open – Immigration driving tech sector growth in Canada

As Canada continues to open its doors wide to accept immigrants, the U.S. remains firm in its stance of keeping the walls up. Global shortages for tech workers are forecasted to reach 4.3MM by 2030, and Canada’s less restrictive policies are already paying off. As the Great Resignation made its way through the world, Canada was better insulated compared to the U.S., which saw an ~50% immigration decline in 2021.

Read the full article here.

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Rules & regulations – Big Tech appears less combative in face of regulation

European regulators continue to be the most aggressive at regulating global technology firms, offering a preview of what North American and global standards and governance frameworks could potentially look like in a not-so distant future. Two recent developments include a number of large social media platforms agreeing to follow a more detailed set of rules around content moderation and Google dropping its appeal of a EUR500MM fine related to copyright violation and committing to ending copyright disputes. Regulatory successes in Europe are likely to be viewed as templates for other countries as tech firms appear less willing to fight back against rules around moderation and copyright.

Read the full article here.

A red vector drawing of a wallet

VCs tighten the purse strings – Down rounds making a comeback

Venture capital (VC) funds have enjoyed an incredible run over the past three years as the bull market helped them record a 30.5% internal rate of return (IRR) over that time frame, according to the latest data from Pitchbook. Abundant committed capital, negative real interest rates, and a race for growth over profitability incentivized VCs to bid up prices to all-time highs. With 2021 valuations now a thing of the past and as public market derating continues to filter down into the private markets, markdowns have started to accelerate as paper gains propped up by the bull market start to disappear.

Read the full article here.

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Culture clash – Employers double down on return-to-office mandates

After more than two years of remote work, the debate over the return to office has started to intensify as employees push back against recent mandates. Return-to-office mandates are seeing mass pushback with low employment and a record of unfilled positions, due in part to an aging population. While the Great Resignation did give workers additional leverage, recent hiring freezes in the tech sector and recessionary concerns are starting to put some of that leverage back in the hands of management.

Read the full article here.

A red vector drawing of gears

Bring in the robots – Robots move beyond the automotive industry

In the midst of a tight labour market, companies are increasingly turning to robotic alternatives, with orders for workplace robots in the U.S. surging by a record 40% Y/Y in Q1 2022. Innovations in warehouse robotics via smarter programming arrived just in time to help support the pandemic-driven ecommerce rush. With companies losing production days due to COVID-related shutdowns while simultaneously dealing with rising wages and a shrinking labour pool, robots have become increasingly important in helping to meet surging demand. We expect that there will be many more robotic developments to come as the technology continues to evolve and offer broader use cases.

Read the full article here.

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

 

Recent technology news

“Tech hiring is still bonkers”

Despite attention-grabbing headlines of companies letting go large portions of their staff, like Coinbase cutting 18 percent of its work force, the job market within tech remains strong. Recruiters are still starved to fill tech roles, and those that have been let go have made for great candidates elsewhere.

Read the full article at the New York Times..

“Sheryl Sandberg’s mixed legacy at Meta”

Sheryl Sandberg at the beginning of her tenure was considered the No. 2 person at Facebook, and is often cited as the person responsible to transforming Facebook into a scalable, operational mega-business. But as her operations went under greater scrutiny over user privacy concerns, her sphere of influence greatly diminished. She resigns with a series of controversies to consider.

Read the full article at Vox..

“Toronto wants to kill the smart city forever”

In February 2022, the Toronto municipality revealed their new plan for the city’s waterfront. At first glance, the inclusion of 800 affordable apartments, a two-acre forest, a rooftop farm, a new arts venue focused on indigenous culture, and a pledge to be carbon-neutral seemed like an exciting development for Canada’s largest tech hub. But author Karrie Jacobs considers what could have been if Alphabet’s now defunct 2017 venture for the same area took off.

Read the full article at MIT Technology Review..

 
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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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