What is the rule of 18.8? It’s a rule I just made up, but will probably be remembered forever or until you get to the end of reading this article. In the meantime, you probably clicked on this article to find out more about this obscure number.
18.8 is the average annual return for the S&P/TSX Capped Technology Index* over the last ten years. A remarkable return that exemplified the increasing significance and rise of the tech and innovation sectors in Canada. But past performance does not guarantee future returns, and many people over the last few months have been wondering if the tech sector has seen its best days.
Things have been difficult as of late. Don’t get me wrong. This is a tougher environment than many companies have faced in over a decade. But these conditions are the result of a changing macroeconomic environment, not because the world has given up on tech. Higher interest rates and higher inflation have caused problems across the globe, and across sectors and industries.
Yet, when we read the papers, there are constant headlines about layoffs at tech companies.
Yes, valuations have changed with higher interest rates and it is tougher raising money today than it was two years ago, but we should not look at this as a fundamental shift in the prospects of companies with great tech and great product market fit.
As we sit in a strange new norm in early 2023, where does that leave us today? It’s not all gloom and doom – let’s take a look at just a few recent items in tech that highlight the good:
Open Text purchases Micro Focus for $5.8B
Yes, you are reading that correctly. On January 31, 2023, Open Text completed the acquisition of Micro Focus International plc, a software company that serves organizations globally, including many companies in the Fortune Global 500.
C100 Growth Summit
Last week the C100 convened in San Francisco for their annual growth summit. The C100 Annual Summit brings together its members, the global community of Canadian tech leaders and entrepreneurs, to build long-lasting connections with fellow Canadian leaders. This event is crucial to further the group’s stated goal to galvanize the global Canadian tech diaspora to support, inspire and advance Canadian entrepreneurship.
After the C100 Summit, Ray Newal, CEO remarked:
“Canadian tech entrepreneurs are a remarkable group of individuals who possess an extraordinary amount of agility and resilience. They have always been able to overcome various challenges, but the current global climate is putting their expertise to the test. At our recent Summit, we had the privilege of listening to some of the most seasoned Canadian tech leaders who have persevered through previous downturns. Their insights and wisdom are instrumental in guiding and supporting founders in navigating through these turbulent times. We firmly believe that adaptation is the key to not only surviving the present but also securing our long-term success, and we are confident that Canadian tech entrepreneurs will emerge stronger and better equipped to tackle any challenges that come their way.”
Jobber raises $100M in Series D
On February 7, 2023, Jobber announced that they had raised $100 million USD in primary capital. Jobber’s stated mission is to help small home service businesses modernize their operations, increase earning potential, and meet evolving consumer expectations. Jobber offers an all-in-one SaaS and mobile solution to support businesses through the full customer lifecycle—from sending quotes to scheduling crews, dispatching jobs, invoicing customers, and accepting credit card payments.
So now what?
Will the next ten years also see an average annual return of 18.8? Who knows, but what I do know is that there are great events happening everyday in the Canadian tech sector, and we should celebrate them. After all, it wasn’t too long ago that the tech sector was almost non-existent in Canada.
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*As at December 31, 2022. The S&P/TSX Capped Technology Index (the “Index”) is the product of S&P Dow Jones Indices LLC (“SPDJI”) and TSX Inc. (“TSX”). Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); and TSX® is a registered trademark of TSX. SPDJI, Dow Jones, S&P and
TSX do not sponsor, endorse, sell or promote any products based on the Index and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions or interruptions of the Index or any data related thereto.