In 2012, when Michael Kousaie was tapped to be the Head of Business Development for the Technology sector for the TSX, it is no exaggeration to say the world was a very different place, at least from a Canadian capital markets perspective.
Back then, the world of mining and metals still held sway and talk of a “Super Cycle” in that sector had yet to fizzle. The tremendous runs that would drive TSX innovation sector leaders such as Descartes Systems Group, Constellation Software, Kinaxis and Shopify had not yet happened. And, of course, there was nary a marijuana stock to be found.
Flash forward to July of 2018 and things had changed tremendously, with innovation playing a central role for one of the world’s largest exchanges. That’s when Kousaie moved on to become Vice-President, Strategy and Product Innovation and his successor, Dani Lipkin was promoted from within the organization. Lipkin inherits a very different world than Kousaie did, but his task remains the same: help get tech on the front page of the business section and keep it there.
As his tenure in the role commences, Cantech Letter sat down with Lipkin to talk about the impact of his predecessor, the ongoing puzzle that is the cannabis sector, and why the phrase “Boom Shakalaka” might soon matter to sector investors.
Dani, congrats on your appointment as the new head of technology for the TSX. Perhaps we could begin with a few words about your predecessor Michael Kousaie and his accomplishments in the role you assume..
Michael has done a phenomenal job in helping to grow the tech eco-system in Canada. TSX has long been committed to growing the innovation space in Canada through regulatory advocacy, helping to grow conferences like the Cantech Conference into preeminent events, and showcasing our issuers’ successes on a global stage. We are no longer known as “just a resource exchange”, but a diverse marketplace, with a growing innovation sector.
You are an inside hire for the TSX. Can you tell us about your previous experience?
I have been at TSX for seven years now primarily focused on exchange traded funds (ETFs). I started off in our listings group working with ETF issuers, but also helped guide companies through the going public experience and ensuring listed companies ongoing transactions complied with our rules. For the last few years I have been heading up our business development for Investment Funds. When I started in 2011 there were four ETF issuers, 200 ETFs in Canada, and $40B in assets under management (AUM). Fast forward to today, and we have 31 issuers listed on TSX, with over 600 products, and close to $160B in AUM. The industry has grown up quite a bit.
What percentage of the overall exchange is the innovation sector currently?
The Innovation Sector currently represents 18% of all our corporate issuers on TSX/TSXV. This is up from 13% five years ago. In the first 10 months of the year we have already surpassed our previous record of 41 new innovation listings in one year with 51.
Cannabis presents a challenge when it comes to categorization, I presume. How has the exchange chosen to look at it?
The cannabis industry has grown tremendously over the past five years, and regulation in the industry is constantly evolving. As companies from different parts of the industry go public, we have ensured that they are bucketed with their proper sector. The majority of the issuers fall under our life sciences category because they are licensed producers of cannabis for medical purposes. If a company is not directly involved in the actual production of cannabis we have categorized them in sectors such as Technology, Financial Services or Consumer Products & Services. We want to always ensure that they are properly compared to peers within their appropriate industry.
Cannabis stocks are bringing attention to the Canadian capital markets in a way that we haven’t seen for some time, if ever. What do you think about this attention?
In a short period of time (the first cannabis companies listed in 2014), the legal cannabis industry has thrived on TSX and TSXV. Through the help of the Canadian capital markets, Canadian cannabis producers have become global leaders in the medical cannabis space. I think Canada should be proud of our ability to lead the global charge in this emerging industry. We know that many jurisdictions around the world look to the regulatory example Canada has set and how we have progressed from medical to recreational use.
What other spaces within tech do you find exciting currently?
My childhood was centered around phrases “Boom Shakalakah” and “He’s on Fire”. For those not familiar, those were key lines from the video game NBA Jam. It is immensely exciting to see how the e-sports phenomenon has taken off over the last number of years. Arenas throughout the world, traditionally used for hockey and basketball, are now being used to host massive e-sports tournaments.
TSX has seen many successes in the past few years including Shopify, Kinaxis, and Constellation Software. Do you think there will be another wave of companies who will decide to go public and emulate this success?
There are many private companies that are looking to emulate the success of those companies. People all over the world are taking notice of the tremendous growth of Canadian tech companies, and their abilities to build global companies with a Canadian address.
What about graduates from TSX Venture exchange? It seems that has been a pretty good source of new listings for the big board of late…
We operate the world’s most successful ecosystem that allows a worldwide community of entrepreneurs to grow their companies using public venture capital. Through the first ten months of the year we have already seen five companies in the innovation sector graduate to TSX. Over the course of its history, we have seen over 650 companies graduate from TSXV to TSX and close to 40% of innovation companies on TSX got their start on TSXV.
There has been a smattering of new listings that are based outside Canada. Is this a trend TSX is pursuing?
TSX has been welcoming international issuers to our markets for a long time now. Over the last number of years we have added regional people in Israel and California, two preeminent areas for technology companies. We have seen a growing interest in these regions from companies wanting to list in Canada. We have even welcomed two Israeli led Capital Pool Companies (CPC) to our market this year. Our CPC program is a unique vehicle that helps small and medium cap companies transition from being a private company to a successful public company with an experienced board of directors and the capital to execute on its business plan.
Finally, let’s nail down the pronunciation of your first name, because I got it wrong the first time…
Imagine laughing at a bad dad joke that I constantly tell and saying “That’s Funny”. Now replace the F with a D and tell me the truth and say “That’s not really funny Dani”.