CIBC Tech & Innovation Market Update – November 2023 – Volume 43

Canadian technology sector performance and valuation

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

Canadian venture capital market monthly recap

October 2023

Aggregate deal value

$531M
(vs. $140M in Sep-23)²
YTD: $5.5B
(vs. $7.1B YTD-22)³

Number of deals

60
(vs. 27 in Sep-23)
YTD: 461
(vs. 703 YTD-22)

Avg. deal value

$15M
(vs. $6M in Sep-23)²
YTD: $19M
(vs. $16M YTD-22)³

Most active province by value ($ / #)

Ontario
($336M / 21)
YTD: Ontario
($3.4B / 226)

Most active province by count ($ / #)

Ontario
($336M / 21)
YTD: Ontario
($3.4B / 226)

Most active sector

Software
(50% of funds raised)
YTD: Software
(68%)

2 24 deals in Oct-23 and 5 deals in Sep-23 with no announced values are omitted from deal values.
3 163 deals in YTD-23 and 246 deals in YTD-22 with no announced values are omitted from deal values. 

Noteworthy Canadian deals

Company Size Financing round Sub-sector Lead investors
Clearco US$160M Debt Facility / Series D E-commerce Growth Capital Provider Pollen Street Capital / Inovia Capital & Founders Circle Capital
Procurify US$50M Series C Software - Mid-Market Spend Management Platform Ten Coves Capital
Arteria AI US$30M Series B Software – AI-Powered Documentation Generation for Financials GGV Capital U.S.

T&I @ CIBC

Deal activity

DealMaker

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

DealMaker – Growth Capital Financing

CIBC Innovation Banking upsized its growth capital financing for DealMaker, a leading capital-raising technology platform. The company plans to use the funding to accelerate its expansion across North America.

Payapps

₤10.5 million
Debt Financing
CIBC Innovation Banking acted as Sole Provider
October 2023

Payapps – ₤10.5M Debt Financing

CIBC Innovation Banking provided a £10.5 million financing package to Payapps, a cloud-based construction software company founded in Melbourne, Australia. Payapps will primarily use the funding to acquire WebContractor Holdings Limited, a UK-based construction software developer specializing in subcontractor applications for payment.

Podcasts

Technology & Innovation in‘sites’ with CIBC Equity Research

T&I 'Bits and Bytes'

As the growth-at-all-costs era moves further into the rear view, streaming services continue to look for new strategies to drive profitable growth. Netflix has taken the lead when it comes to new initiatives, rolling out cheaper ad-supported tiers and cracking down on password sharing to drive subscriber growth. Disney has since rolled out a similar ad-supported tier and Amazon has followed with a slightly different approach to advertising that will see it make an ad-supported tier the default option in 2024 and charge users $2.99 to upgrade to a version without advertising. Amazon is no stranger to integrating advertising into its broader business, having generated US$10.7B in advertising revenue in its most recent quarter. Perhaps as a result of its advertising experience, Amazon is reported to be asking advertisers for commitments as large as $100MM to advertise on Prime. With new initiatives already translating into subscriber growth at Netflix, don’t be surprised if your streaming bill starts to look a lot like your old cable bill as the entire streaming ecosystem looks for new ways to generate additional revenue.

Read the full article here.

Shareholder activism is on the rise again, driven by declining valuations as well as broader economic uncertainty. In the tech space, Elliott Capital disclosed an upsized holding in SaaS company E2open, whose shares are down ~50% year to date, while Salesforce recently appeased a swarm of activist investors by acquiescing to the changes the group was demanding. The annual 13D Monitor Active-Passive Investor Summit was also held recently, a hedge fund activism conference created in 2010 where activist investors, C-suite executives, proxy solicitors and others gather to discuss the activist investing space. Shareholder activism has been gaining momentum; by the numbers, FTI Consulting reported a total of 233 activist campaigns involving U.S. and Canada-based companies launched in H1/23, up 4.5% Y/Y.

Read the full article here.

The traditional model for online password protection has involved users creating their own passwords, ideally passwords that were kept private and difficult to guess or hack. Companies like Toronto startup 1Password, a subscription-based password manager that generates and stores various passwords and other sensitive information in a virtual encrypted vault, gained popularity with individuals and businesses interested in taking additional steps to keep their passwords secure. As the sophistication of hackers and malicious actors increases, the effectiveness of traditional passwords is being called into question. The concept of passkeys has emerged as an easier and more secure alternative to passwords, and Google announced this week that it would be making passkeys the default options across personal Google accounts.

Read the full article here.

Competition regulation has been heating up in the US as the FTC continues to put forward complaints centered around illegal monopolies, targeting everyone from big tech to private equity. Earlier this month, the FTC filed a suit against Amazon for illegally maintaining monopoly power, as the historic Google monopoly trial continues in U.S. Federal courts. In September, the FTC also filed suit against United States Anesthesia Partners in a suit thought to be targeting private equity, rollup business models and acquisitions in the healthcare space. Recently, CIBC hosted a discussion on the changing competition regulation in both countries with Mark Warner, an Ontario and New York attorney specializing in trade, competition and investment law.

Read the full article here.

Recent technology news

Many people in the bitcoin community know of the Swiss crypto investor Stefan Thomas who has been unable to access 7,002 bitcoins, worth close to $235 million because he lost his password to his IronKey USB drive. He has made 8 attempts, but if he doesn’t get it in two more tries then the USB drive will be wiped permanently and he loses this fortune forever. The San Francisco start-up company Unciphered, has developed an IronKey password-cracking technique that has successfully unlocked thousands of IronKey devices. Oddly, Thomas shows little interest in using their services despite Unciphered believing they have his password.

Read the full article at Wired.

According to recent surveys, 65% of Canadians now work either remotely or in a hybrid format with 89% saying they are happy with hybrid work. That being said, there is no definitive answer as to what hybrid model works best across different job roles. As a starting point, companies need to document what work the company is looking to accomplish and identify what work functions are best suited for in-person vs. remote work.

Read the full article at BetaKit.

From nuclear fusion to meatless burgers, MIT Technology Review curates their 15 climate tech companies to watch. The list includes Blue Frontier (air conditioning), Gogoro (electric vehicles), and Climeworks (carbon removal).

Read the full article at MIT Technology 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
  • 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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