BC’s technology sector had already been on a torrid financing pace in the first half of the year when HootSuite announced its $165 million financing earlier this month.
Long-time readers of this column know of my belief in the investment seesaw theory in B.C. When the resource sector is hot, it attracts the lion’s share of investment in this region, and when the resource patch is struggling – as it is now – the technology companies move into the spotlight.
According to T-Net, major tech financings so far this year include: MDA ($287 million), HootSuite ($165 million), Urthecast ($46 million), BroadbandTV ($36 million), Aquinox Pharmaceuticals ($18 million), AppNeta ($16 million), Visier ($15 million), Ostara ($13 million), Elastic Path ($12 million), Ballard Power ($8 million), QuickMobile ($3.2 million), Thoughtstream ($2 million), viDA Therapeutics ($1.8 million), Allocadia ($1 million), PayrollHero ($1 million). That totals well over $600 million just for these reported financings.
However, the HootSuite financing is the most significant. As noted by Garibaldi Capital’s Brent Holliday, it is the largest private technology financing in western Canadian history. It has already attracted worldwide attention and could well ignite renewed global interest in B.C.’s technology sector.
The same thing happened to Vancouver’s mining industry when gold was discovered in northern Ontario’s Hemlo camp in the early 1980s. It started a staking rush not seen in Canada since the Klondike gold rush of the late 19th century. The subsequent mining investment craze revived a near-dormant mining community in Vancouver that in the past 30 years moved Canada and Canadian stock exchanges into the No. 1 rank in the world in mining financings.
While it is unlikely that B.C. ’s technology financing capacity will rocket from 26th in the world to overtake Silicon Valley, it can grow to a much more significant position.
Another indicator of what is happening in B.C. ’s tech sector is the number of top global tech players that have announced plans to move here and set up shop. These include Facebook and Twitter, both of which have announced plans this year to set up development operations in Vancouver – not just sales offices but real technical development centres. Similarly, Samsung moved in and has taken over many of the employees formerly employed by Nokia in B.C. Another noteworthy announcement was made by one of the world’s best-known digital entertainment studios, Japan’s Namco Bandai, to open a mobile/social gaming studio here. While these global giants are financing their own moves into this market, and therefore don’t show up in the investment tables, the positive economic impact on Vancouver’s technology community is the same, if not greater. The other major benefit to Vancouver will be their contribution to talent development in this region, helping to grow the quality of the local management and executive pool here, which will, in turn, help to develop better and higher value tech companies here.
The disappointing part of the financing story so far is the lack of noteworthy new publicly traded technology companies in B.C. A truly important global technology region should have a growing list of world-class public companies too. The singular recent bright spot has been Avigilon Corp., which completed its Toronto Stock Exchange IPO 22 months ago at $4.50 per share, has been recently trading at over $17 and has quickly risen to fourth place in B.C. in market capitalization.
The top 10 public B.C.-based tech companies are MDA ($2.9 billion), Westport ($1.6 billion), PMC Sierra ($1.3 billion), Avigilon ($0.65 billion), Peer 1 ($0.5 billion), Sierra Wireless ($0.4 billion), Glentel ($0.3 billion), Absolute Software ($0.3 billion), QLT ($0.2 billion), and Ballard ($0.2 billion) with an aggregate market cap of $8.65 billion. Most of these companies have been public for quite some time, some have aging products and their total market cap is just 2% of Apple’s, 6% of Amazon’s, and 30% of LinkedIn’s.
However, with the blistering billion-dollar financing pace now showing the investment banking community that the quality tech deals do exist in this market again, I’m hoping to see the local IPO drought come to an end soon. With candidate companies like DWave, HootSuite, BuildDirect, Vision Critical and others from the private financing list above becoming highly visible around town, we could well see some action here soon.
The money is flowing, and it is an exciting time in the local technology space.