Nov 9, 2022
Following significant layoffs at Twitter Canada late last week, and with more expected at Facebook parent company Meta, the Toronto tech sector is bracing for challenges in an uncertain economic environment.
Osler partner Chad Bayne, Co-Chair, Emerging and High Growth Companies, spoke to the Toronto Star about how rising interest rates and fears of a broader recession are impacting the industry.
“When interest rates go up, the growth stories are the ones that are usually going to be impacted the most initially, and that’s usually tech,” Chad points out.
As venture capital funding has slowed down, many tech firms have been forced to cut costs for the time being.
“With a lot of the companies in the Canadian ecosystem going through layoffs, it’s part and parcel of a company that’s burning and growing at a particularly quick rate and now is growing slower and having to preserve cash. … The ability to raise money as easily as it once was is not going to be the case over the next 12 to 18 months,” Chad says.
“The investors that were there a year ago, the Tigers, the Fidelitys, the Altimeters, are just not deploying capital right now. So if you don’t have a source of readily-available capital, then you need to change your tack.”
Chad doesn’t consider it as a crisis for the sector, however, saying that many of the companies Osler works with are in good financial positions.
“I get that layoffs make the headlines, but a lot of the companies we work with are doing just fine.”
You can read the full article, “Toronto’s tech sector shaken following Twitter purge and possible cuts at Facebook,” on the Toronto Star website.