CIBC Tech & Innovation Market Update – September 2023 – Volume 41

Canadian technology sector performance and valuation

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

Canadian venture capital market monthly recap

August 2023

Aggregate deal value

$365M
(vs. $338M in Jul-23)²
YTD: $4.9B
(vs. $6.0B YTD-22)³

Number of deals

34
(vs. 36 in Jul-23)
YTD: 374
(vs. 634 YTD-22)

Avg. deal value

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

Most active province by value ($ / #)

Ontario
($255M / 17)
YTD: Ontario
($3.0B / 191)

Most active province by count ($ / #)

Ontario
($255M / 17)
YTD: Ontario
($3.0B / 191)

Most active sector

Semiconductors
(36% of funds raised)
YTD: Software
(71%)

2 16 deals in Aug-23 and 13 deals in Jul-23 with no announced values are omitted from deal values.
3 134 deals in YTD-23 and 225 deals in YTD-22 with no announced values are omitted from deal values.

Noteworthy Canadian deals

Company Size Financing round Sub-sector Lead investors
Tenstorrent US$100M Convertible Note Semiconductors – AI/ML Accelerators Hyundai Motor Group & Samsung Catalyst Fund
decbl US$50M Series B Climate Tech – Smart EV Chargers Idealist Capital
Andorix US$40M Series A IT Services – Smart Building Voya Investment Management

T&I @ CIBC

Deal activity

Ignition

$15 million
Growth Capital Financing
CIBC Innovation Banking acted as Sole Provider
August 2023

Ignition – $15M Growth Capital Financing

CIBC Innovation Banking provided Texas-based company Ignition a USD$15 million growth capital facility. Ignition is an all-in-one platform for professional services that optimizes and automates business processes including proposals, client agreements, billing, and payment collection.

Joblogic Service

Undisclosed
Debt Financing
CIBC Innovation Banking acted as Sole Provider
August 2023

Joblogic Service – Debt Financing

CIBC Innovation Banking provided debt financing for Joblogic to acquire Protean Software. The UK-based company is now positioned to be the no.1 field service management software in the region, taking in more than 10,000 users from the acquisition.

Bidgeley

$18 million
Growth Capital Financing
CIBC Innovation Banking acted as Sole Provider
August 2023

Bidgeley – $18M Growth Capital Financing

CIBC Innovation Banking increased its growth financing commitment to Bidgely. Bidgely is a leading provider of artificial intelligence (AI) powered energy intelligence solutions for energy providers. The additional financing will help fuel the company’s continued expansion into EV and grid modernization markets.

Technology & Innovation in‘sites’ with CIBC Equity Research

T&I 'Bits and Bytes'

After UK regulators blocked Microsoft’s $69B purchase of Activision Blizzard earlier this year, Microsoft announced a restructuring of the proposed acquisition that involves transferring cloud gaming rights for current and new Activision Blizzard games to Ubisoft. The UK Competition and Markets Authority (CMA) is treating the revised offer as a new transaction and has initiated a phase 1 investigation. Elsewhere, EU antitrust regulators are closely monitoring the move to determine if the new transaction will impact concessions Microsoft previously made to the European Commission. With the changes, experts believe the deal will now address the CMA’s concerns.

Read the full article here.

Norway’s data regulator, Datatilsynet, imposed fines of $99K per day on Meta in the social media company’s most recent clash with European data privacy regulators. Big tech companies have amassed some of the largest collections of personal data in the world and have come under fire from a litany of regulators in recent years, particularly in Europe. As legislation around the world evolves to address the complex privacy issues that have arisen from data collection, Big Tech has been forced to continuously adapt to avoid fines and retain their ability to legally use their stores of data.

Read the full article here.

Earlier this month, Zoom became the latest company to announce the mandatory return of its workers, requiring those within a 50 mile radius of an office to return in person at least twice a week. Amazon, Apple, Disney, Google, Meta, Salesforce, Tesla, Twitter and Uber are among some of the other tech giants that have made similar announcements over the last year. After two and a half years of a global pandemic that forced corporations and their employees to adapt to a work-from-home environment, 2023 appears to be the year of returning to in-office work. According to a survey by Stanford University, ~59% of U.S. workers are now fully on-site as of July.

Read the full article here.

After an explosive year of venture capital (VC) investing in 2021, start-up funding came to a near standstill in late 2022. The first quarter of 2023 represented a three-year low for Toronto in terms of total venture capital invested, with $120 million raised, down 94% Y/Y. However, Canadian venture capitalists appeared to return to the playing field in Q2, with tech start-ups in Toronto raising $1 billion during the quarter, up significantly over Q1 and up 71% Y/Y. The Q2 uptick in Canada contrasts with the broader North American environment, where start-up funding continues to decline Y/Y. The current valuation environment could prove to be an attractive entry point for Canadian venture capitalists; data from the BDC shows that Canadian VC managers that raised funds in 2011-2013 after the financial crisis delivered their best net returns over the last 10 years.

Read the full article here.

Recent technology news

With ChatGPT reporting a 10% loss in users in June and some experts claiming that its newer language models are more prone to generating false information, interest in ChatGPT is appearing to wane. A recent Pew survey found that only 18% of US adults have ever used ChatGPT, and generally are increasingly concerned about the impact of AI on privacy and the job market.

Read the full article at Vox.

Venture capital and private equity-backed IPO exit values on US exchanges in 2020 totaled $339.3B and then jumped to $763.2B in 2021. In 2022, it plummeted to $9.1B, and IPO issuances continue to struggle drastically in 2023. With Instacart, Klaviyo, and Arm recently submitting for IPOs, these submissions will be an important litmus test of investor demand for new tech offerings.

Read the full article at CNBC.

With more than 10 years of expertise, Nvidia has become a market leader in producing chips that can handle AI processes like image, facial, and speech recognition, as well as generating text for chatbots. In today’s market, Nvidia accounts for more than 70 percent of AI chip sales and holds an even bigger position in training generative AI models, according to the research firm Omdia.

Read the full article at the New York Times.

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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
  • Dialogue
  • 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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