Perhaps the biggest Canadian technology story of 2013 was social media player Hootsuite’s historic $165-million raise. The Vancouver-based company was joined by several more large private rounds from the likes of Shopify, Beyond the Rack, BuildDirect and Vision Critical, to name just a few.
The innovation sectors have been pacing the Toronto Stock Exchange for some time, and IPOs from the likes of Halogen Software, ViXS Systems and Baylin Technologies have been recent successes. But lining up the aforementioned financings against those recent public efforts, it’s easy to see that the privco crowd is currently besting the efforts of their pubco bretherin by a significant margin.
This begs the question: Do the public markets still matter to Canadian tech? Or has a range of debt and equity offerings from the VC world at home and abroad actually rendered the stock market obsolete?
On January 16, at the Cantech Investment Conference in Toronto, a panel was assembled to discuss this very issue. The panel consisted of Robert Fonn of Wildeboer Dellelce LLP, a law firm that provides corporate finance and M&A for many public and private Canadian techs, John Ruffolo, CEO of OMERS Ventures, which led the investment into Hootsuite and many other notable techs, Ungad Chadd, Senior Vice-President with the Toronto Stock Exchange, and Mike Edwards, CEO of LX Ventures, an incubator of early stage tech companies that recently went public on the TSX Venture Exchange.
Chairing the panel discussion was Mark McQueen, President & CEO of the wildly successful multi-fund venture debt firm Wellington Financial, which has provided capital to notables like Beyond the Rack, Elastic Path, Real Matters, and Vision Critical.
OMERS’ Ruffolo says part of the issue with the public markets is that tech companies may have gone public too early during the boom of the late 1990’s.
“When I look back at some of the technology companies that did go public in the late 1990’s, early 2000’s, and subsequently became stranded one of the observations was that perhaps they were just still too immature from an infrastructure perspective and reporting perspective. The business hadn’t really reached a steady state.”
Wildboer’s Fonn agreed. He chided that “Given the nature of my practice and the fact that my livelihood is inextricably tied to the capital markets, you’ll understand the predisposition in my remarks.” Fonn says Wildeboer likes to see clients go public, but noted that his firm has advised many of them, depending on the strings that come attached to the money, to stay private as long as possible.
But LX Venture’s Edwards says things are changing in the public markets. “I think the window is open now,” he told McQueen. “We saw a definite change in sentiment in the summer of 2013.” He added. “The appetite is there.”
You can watch the full panel discussion below.
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