CIBC Tech & Innovation Market Update – October 2022 – Volume 30

Young business woman using digital tablet and looking away in an office

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

Canadian technology sector performance and valuation

 
EV / NTM revenue multiples 1 LTM sector price performance 1
EV NTM revenue multiples  LTM sector price performance

Source: FactSet and Pitchbook; as at September 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

$361M

(vs. $340M in Aug-223)
Aggregate deal value

28

(vs. 41 in Aug-22)
Number of deals

$18M

(vs. $12M in Aug-223)
Avg. deal value

Ontario

($178M / 13)
Most active province
by count ($ / #) 

Ontario

($178M / 13)
Most active province
by value ($ / #)

Software

(43% of funds raised)
Most active sector

2 8 deals with no announced value are omitted from deal value. Market update for September 2022.
3 12 deals with no announced value are omitted from deal value.

 

Noteworthy Canadian deals

Company

Size

Sub-sector

Lead investors

Avidbots logo

US$70M

Robotics

Jeneration Capital logo
doodles logo

US$54M

Software

Seven-Seven-Six logo
Monos logo

US$30M

e-Commerce

Venn Growth Partners logo
Manifest Climate logo

C$30M

Software

BDC (CNW Group/Business Development Bank of Canada) logoClimate Innovation Capital logo

kaloom logo

C$27.4M

IT Services

Province of Quebec logoAlternative Capital Group logo

Perspectives from The Hon. Navdeep Bains

Vice-Chair and Managing Director for Global Investment Banking, and former Canadian Minister of Innovation, Science, and Industry shares his insights.

A headshot of Navdeep Bains

A red vector graphic of quotation marks

There are three clear strategic opportunities for Canada to match, or even exceed U.S. action: hydrogen, critical minerals and climate technologies.”

Keeping up with the Bidens – Canada needs to up its climate change game

President Biden’s Inflation Reduction Act includes a set of comprehensive tax credits covering the entire waterfront of the energy economy. In addition to helping to decarbonize the most carbon-intensive sectors of the U.S. economy, it should encourage the production of EV cars and car-parts in the U.S. Add to that incentives to build up domestic clean-hydrogen, direct air capture, and advanced nuclear industries and it is an impressive set of policy measures. These measures will also trigger the creation of thousands of green jobs for the U.S. economy. If Canada does not respond with its own policies to support the decarbonization of the economy, there will be greater perceived investment opportunities south of the border and Canada could see an outflow of capital.

Read the full report on the Financial Post

Watch the follow-up interview with Financial Post’s Larysa Harapyn

T&I @ CIBC

Deal Activity

Userlane – Undisclosed Growth Financing, September 2022

Userlane – Growth Financing

CIBC Innovation Banking provided growth capital financing to Userlane, a software company based in Germany. Userlane will use the funds to expand its suite of products that help companies master enterprise software and associated processes more easily.

Huntress – $40M Growth Financing, September 2022

Huntress – $40M Growth Financing

CIBC Innovation Banking is pleased to announce it has provided $40 million of debt financing to Huntress, a managed cybersecurity platform for small and mid-sized businesses (SMBs). Huntress plans to use the financing for M&A opportunities, research, product development, and expansion into international markets across Canada, the UK, Europe, Australia and New Zealand.

Read the full report in Venture Capital Journal.

Announcements

A flat burgundy icon representing apartment buildings on a hill

Eastern Institutional Investor Conference takeaways

CIBC’s 21st Annual Eastern Institutional Investor Conference was recently held in Montreal and back in person. Among the 52 corporations presenting were Stantec Inc., Corus Entertainment, and Rogers Communication Inc. The three takeaways from our corporate presenters overall were: 1) spending on digital transformations remaining strong, with a special focus on automation and optimization technology; 2) inflationary pressures were mitigated well through price increases and automation; and 3) M&A remaining a focus with public market valuation compression trickling into private markets. The keynote presenter was Dominic Barton, Chair of Rio Tinto & LeapFrog Investments, and former ambassador of Canada to the People’s Republic of China.

Read our conference equity coverage here.

Watch keynote speaker Dominic Barton on CIBC CM’s Insights*

* Must be registered member of CIBC Capital Market’s Insights – registration is free and easy for all CIBC Capital Markets clients

A flat burgundy icon representing 3 people

#ElevateFest2022 – In conversation with the founder of Canada’s latest tech Unicorn

The Hon. Navdeep Bains sat down with Martin Basiri, CEO and Co-founder of Applyboard, the world’s largest online international student recruitment platform at this year’s Elevate Festival to a crowd of over +3000 attendees. Martin shares his inspiring journey from leaving Iran to study at the University of Waterloo, to co-founding a $1 billion company that is helping to address the challenges he faced as a young immigrant.

Read more on Elevate Festival 2022 here.

 

Two images side by side - the left image is a large sign that reads "#Unicornfuel". The right image is a group of people gathered in an office space listening to a speaker

Bringing #UnicornFuel to CIBC Square

On September 28th, the Innovation Banking team brought together corporates and investors to CIBC Square for a Technology and Innovation reception promoting CIBC’s $1.5bn in growth capital commitments, dubbed ‘Unicorn Fuel’, for later stage startups.

Speak to your RM about upcoming T&I receptions.

Technology & Innovation in‘sites’ with CIBC Equity Research

T&I ‘Bits & Bytes’

A flat burgundy icon of a magnifying glass

With great AI comes great responsibility – We test OpenAI’s Image And Text Generator

Could this report be auto-generated? CIBC’s interested authors recently had the opportunity to test some of OpenAI’s tools. We are not the first to do so, with law firms testing OpenAI’s playground feature, which uses predictive text to draft contracts, and companies such as Heinz and Nestlé testing OpenAI’s DALL-E and DALL-E-2 image generator as part of their marketing campaigns. While AI cannot yet ghost-write Bits & Bytes, the technology continues to improve, bringing with it inherent moral and ethical issues that still need to be resolved.

Read the full article here.

A flat burgundy icon depicting a plant growing out of half a globe

ESG in Canadian tech (2022) – Progress is green

Technology is considered one of the most ESG-friendly sectors, with lower environmental risks than other more resource-intensive industries.

Companies in the tech sector are increasingly focused on environmental and social measures, generally managing these risks well. We regard data security as one of the biggest risks in the industry and see the potential for additional disclosures around data privacy. We also see governance risks stemming from dual-class share structures and non-independent boards, although expect these risks to lessen over time as pre-IPO shareholders gradually reduce their stakes in the businesses.

Read the full article here.

A flat icon representing a bank

Tech monopolies – EU crackdown on anti-competitive practices continues

EU regulators scored a major legal victory against Google mid-September, with a record €4B fine levied against the company for anti-competitive behavior. This is the second recent EU court defeat for Google, which lost its challenge to a €2.42B fine last year. This most recent fine could offer a precedent for other regulators to ratchet up the pressure on Big Tech amid a slew of anti-trust enquiries and suits.

Read the full article here.

A flat burgundy icon of two triangles forming a diamond

SPAC bust – SPAC market running on fumes as enthusiasm fades

After rapidly gaining popularity during the pandemic with the promise of a faster and easier path to a public listing, the SPAC (special purpose acquisition company) market has crashed back to earth in 2022. Recent months have been particularly barren for SPACs, with minimal issuances throughout the summer months. There were no new SPAC issuances in July 2022 and only four in August. There have also been a number of notable deal cancellations as investor appetite for the announced SPAC mergers faded along with the overall stock market. It certainly appears that enthusiasm around the SPAC market has faded as equity markets have weakened and regulators have stated their intentions to tighten the rules and processes around the SPAC listing process.

Read the full article here.

Recent technology news

Hurricane Ian is a warning from the future

Hurricane Ian hit Florida last week with winds close to 150 mph. The week prior – Hurricane Fiona battered the Atlantic region of Canada. Extreme weather events like these are not unheard of in historical record, but they are rare. In a year of other records being set – like the extreme heat in Sacramento and flooding in Yellowstone, climate scientists are becoming increasingly more worried about the future. To support the recovery of the communities affected by Hurricane Ian, CIBC is contributing $100,000 to the American Red Cross.

Read the full article at Wired.

“Stuck on the streets of San Francisco in a driverless car”

Cade Metz of the New York Times describes his experience of being in the back seat of a driverless car operated by the General Motors-backed company Cruise, as spooky, impressive, perplexing, and a little bit stressful. At certain parts of the journey, the car would confidently respond to pedestrians strolling through crosswalks, avoid the orange cones of a construction site, and maneuver around illegally parked cars. While impressive, the demonstration also revealed the technology wasn’t quite ready – for example when the car skidded to a halt in the middle of an intersection.

Read the full article at the New York Times.

“Looking at 320 pitch decks, here’s what science tells us works best”

According TechCrunch+, VC’s are spending less time reviewing startup pitch decks, indicating startups need to be even more cognizant of making the right first impression with investors. A review of 320 different pitch decks of both successful and unsuccessful startups provides the insight to what investors are really looking for when learning about a business.

Read the full article at TechCrunch+.

 
A red vector drawing of a computer screen with a mouse pointer on the screen

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
Adam Noily
Managing Director, Head of U.S. 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, Copperleaf, Coveo, Descartes, Dialogue, Docebo, Kinaxis, Lightspeed, Magnet Forensics, Q4, Shopify, Thinkific

Large Cap Canadian Tech – Altus, Blackberry, Celestica, CGI, Constellation Software, Converge Technologies, Dye and Durham, Enghouse, Evertz Technologies, Nuvei, OpenText, Sierra Wireless, Softchoice, Well Health

Mid Cap Canadian Tech – Absolute Software, Calian, Computer Modelling Group, D2L, E Inc., Payfare, Real Matters, Sangoma, TECSYS

Small Cap Canadian Tech – Alithya, Baylin Tech, BBTV, Blackline Safety, Farmers Edge, Kneat, Optiva, Pivotree, Quarterhill, Sylogist, Terago, Vecima, Vitalhub, WeCommerce

The CIBC logo and “CIBC Capital Markets” are trademarks of CIBC, used under license.

Related Insights

Your feedback matters to us!

Please fill out the form below to share your feedback to the CIBC Capital Markets Insights team.
If you would like to provide further details, please feel free to contact us.