CIBC Tech & Innovation Market Update – October 2023 – Volume 42

Canadian technology sector performance and valuation

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

Canadian venture capital market monthly recap

September 2023

Aggregate deal value

$140M
(vs. $365M in Aug-23)²
YTD: $5.0B
(vs. $6.4B YTD-22)³

Number of deals

27
(vs. 34 in Aug-23)
YTD: 401
(vs. 662 YTD-22)

Avg. deal value

$6M
(vs. $20M in Aug-23)²
YTD: $19M
(vs. $15M YTD-22)³

Most active province by value ($ / #)

Québec
($74M / 5)
YTD: Ontario
($3.1B / 205)

Most active province by count ($ / #)

Ontario
($41M / 14)
YTD: Ontario
($3.1B / 205)

Most active sector

Commercial Services
(46% of funds raised)
YTD: Software
(70%)

2 5 deals in Sep-23 and 16 deals in Aug-23 with no announced values are omitted from deal values.
3 139 deals in YTD-23 and 233 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
GHGSat US$44M Series C1 Commercial Services - Greenhouse Gas Emissions Fonds de solidarité FTQ & BDC Capital
Secoda US$14M Series A Software – Generative AI for Business Intelligence Craft Ventures

4 Clearco transaction was announced at the beginning of October and is not included in the September venture capital monthly recap

T&I @ CIBC

Deal activity

d1g1t

Undisclosed
Debt Facility
CIBC Innovation Banking acted as Sole Provider
September 2023

d1g1t – Debt Facility

CIBC Innovation Banking was the lead in providing Toronto-based company d1g1t a venture debt facility. d1g1t is a leading institutional-grade wealth management platform serving thousands of advisors at wealth management firms and multi-family offices in Canada, the US, and the Caribbean, managing over $200 billion in assets.

Ometria

₤8 million
Growth Capital Financing
CIBC Innovation Banking acted as Sole Provider
September 2023

Ometria – ₤8M Growth Capital Financing

CIBC Innovation Banking provided an £8m growth capital package to Ometria, a customer data and experience platform (CDXP), headquartered in London and New York. Ometria will use the capital to further develop and advance the retail-specific AI capabilities of its platform.

Performio

US$13 million
Debt Financing
CIBC Innovation Banking acted as Sole Provider
September 2023

Performio – US$13M Debt Financing

CIBC Innovation Banking provided $13 million in growth capital financing to Performio, an incentive compensation-software company. Performio’s innovative platform enables data-driven decision-making to improve sales performance with its analytics. The financing provides additional resources to support platform optimization, extend market reach and explore additional growth avenues.

Nanoprecise

C$3.5 million
Debt Financing
CIBC Innovation Banking acted as Sole Provider
September 2023

Nanoprecise Sci Corp. – C$3.5M Debt Financing

CIBC Innovation Innovation Banking provided a $3.5 million debt financing facility to Edmonton-based, Nanoprecise Sci Corp. (Nanoprecise). Nanoprecise is an automated AI-based maintenance solution provider that helps companies read and interpret data to effectively predict the useful life of any machine or asset. The company plans to use the funds for working capital purposes.

Technology & Innovation in‘sites’ with CIBC Equity Research

T&I 'Bits and Bytes'

The number of advertisements we see on our devices has been rising steadily over the last decade. With more and more apps competing for our attention, companies are now looking to monetize each subconscious glance at a device. Last month, ride-sharing app Lyft announced it would start displaying ads on a user’s ETA screen during their ride, similar to Uber’s in-ride advertising announced earlier this year. Everyone is now likely familiar with Netflix, Disney+ and HBO Max’s ad-supported tiers. Even recently listed Instacart owes some of its success to advertising, with ad revenue representing approximately one-third of the company’s total revenue. After a large slowdown last year, the digital ad market appears to be making a recovery.

Read the full article here.

After Arm successfully made its debut on the Nasdaq last week, Instacart was quick to follow and Klavyio not far behind. There listing appears to support the notion that the market is heating up, although initial rallies for both Arm and Instacart have already started to fizzle. Arm’s shares lost some of the day-one gains with shares closing mid-September at ~$53, 4% above its IPO price, while Instacart is now trading close to its IPO price. Whether these recent IPOs inspire other companies to come to market remains to be seen, but in the U.S., 2023 has now outpaced 2022 in terms of total number of IPOs and total proceeds raised.

Prospective tech candidates generally thought to be next include Stripe, Klarna, Chime, and Databricks.

Read the full article here.

Over the years, the phrase “Google it” has become a common colloquialism for looking up information online. So common in fact, that the Department of Justice (DOJ) is now taking action against the company whose name has become synonymous with online search engines. This week, a federal judge began hearing claims from the DOJ in a case against Google, which alleges that the company abused its power as a monopoly over online search services. The trial is expected to last 10 weeks, and will hear testimony from CEO Sundar Pichai as well as other top executives, including some from Apple. The court case is another thorn in Google’s side at a time when the company’s dominance in search is being threatened by the entrance of new AI-powered search tools, such as ChatGPT.

Read the full article here.

The 2023-2024 school year marks the first full school year where generative AI technologies such as ChatGPT are widely accessible, making it a pivotal year for determining what role AI will play in education. Although many school districts throughout the US banned ChatGPT shortly after its public launch, most later lifted the bans, with NYC encouraging teachers and students to explore the technology. Viewpoints among educators remain divided on whether AI will have an adverse impact on students’ critical thinking/creativity skills or whether it can be used to enhance learning. Within this context, Canadian educators now face the decision either to ban the technology, or embrace it.

Read the full article here.

Recent technology news

While venture capital has been lagging, technological advancements surround us in software development, artificial intelligence, computer chips, and countless other areas. The output of non-traditional investment opportunities is making investors play catch up to new trends. When the new lexicon of industries becomes better established, updated with for example “automated code modernization” or “tailored language models”, venture capital will thrive once again – and soon.

Read the full article at TechCrunch.

The ex-CEO of the bankrupt crypto exchange FTX, Sam Bankman-Fried’s first of two criminal trials began this week. In his first trial, Bankman-Fried faces seven criminal counts related to the exchange’s collapse including wired fraud, securities fraud, and money laundering. A superseding indictment alleges he misused billions on personal items such as $200 million in real estate properties in the Bahamas, and there is over $8 billion of customers’ money unaccounted for. A conviction on all counts could sentence him to more than 100 years in prison.

Read the full article at CNBC.

China is looking to invest in smart vehicle supply chains by supporting firms to form national “innovation consortia”, in hopes that through collaboration it will accelerate technological breakthroughs within the autonomous driving industry. Currently, China has four cities where self-driving cars are licensed. As the Chinese autonomous driving market ramps up, it will likely face export challenges from the US. Be that as it may, China is home to the world’s largest auto market.

Read the full article at Reuters.

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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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