Jan 24, 2022
It was a record-shattering 2021 for Canadian tech firms in terms of venture capital financing and M&A activity, which is a testament to the strength of this sector, Mark Longo, partner and co-chair, Osler’s Emerging and High Growth Companies, told listeners on a recent PenderFund podcast with Maria Pacella, managing partner of Pender Ventures.
“In my view, the Canadian tech sector is now on the global radar of venture capital firms and acquirers,” says Mark. More U.S. and foreign investors and acquirers are taking a closer look at the Canadian market. “This is a testament to the world-class companies that are being built here,” he says. “This bodes well for the founders running these companies.”
By the end of Q3 of 2021, the amount of venture capital financing in Canada had exceeded the total for all of 2019. Sectors in favor in 2021 included enterprise SaaS, climate and clean tech, health tech, AI and Fintech.
A trend Mark observed in 2021 was more successful Canadian tech companies becoming acquirers, particularly those which had achieved unicorn status. These companies now have a war chest to build through acquisition in addition to organic growth.
On the IPO side, Mark also noticed a flight towards quality towards the end of the year. Investors are becoming more selective in looking for companies that can achieve revenue and profitability metrics for their IPO in today’s market.
For the year ahead, Mark suggests entrepreneurs and company boards looking for possible deals should be due diligence ready in terms of having a virtual data room and pitch deck up-to-date. Investors should ensure that their deal process is streamlined, and their deal term sheets are as clean as possible, so they can be more competitive and able to close deals quickly.
Listen to the full podcast