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Canada’s red-hot technology sector smashes venture-capital funding

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Canada’s burgeoning tech sector has produced a full-year report for venture-capital fundraising after 9 months, surpassing previously set excessive during the dot-com bubble.

As of Wednesday, 427 companies had raised a total of $10.92 billion in venture capital in 2021, according to preliminary data provided by market knowledge company Refinitiv to The Globe and Mail.

This is already higher than the previous high of $7.57 billion set in 2019. However, considering inflation, the total number for 2019 did not surpass the report set in 2000. That year, at the peak of the unique web bubble, the companies raised $6.71. – Billions in venture capital, currently equivalent to $10 billion. According to Refinitiv, this is a report that just dropped last month.

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The number of rounds raised by more than $100 million to boost this year’s performance — 34 this year — is nearly triple the 12 sets reported in 2019. There are companies available in many technical sub-sectors, including online. travel, schooling, finance and health care; small enterprise and enterprise software programs; semiconductors; cryptocurrency; and precision farming. The size of the common deal has nearly doubled to $23.4 million from $12.4 million in 2019.

The reported funding range is partly due to investor keenness in information driven by the broad-based accelerating pace of digitization during the pandemic. More and more aggressive international buyers such as Tiger World and SoftBank have also offered promising companies huge {dollars} at exorbitant valuations and quick closings. After such aggressive dating, many companies have raised funds twice a year despite not having the money needed.

Yet it also demonstrates the maturity of Canada’s tech sector, which was affected by the demise of Nortel Networks a decade earlier and the decline of BlackBerry. Access to capital was scarce for startups, and venture capitalists pleaded for monetary support from governments. Home Tech Corporation has been offered at low cost to international patrons. Some indigenous startups with promise have been advised by venture capitalists that they need to move south.

However, a new wave of Canadian entrepreneurs began building digital companies, benefiting from trends that included the mass adoption of smartphones and social media, the shift to cloud-based software programs, and the commercialization of synthetic intelligence. The new Canadian venture-capital corporations raised stakes that would drive higher U.S. dollars. Generate returns equal to the fund’s. Governments dedicated money to venture capitalists who financed Canadian startups.

Senia Rapisard, managing director of Harbourwest Companions, a Canadian tech sector financier, said the success of this time “is the result of a paradigm shift in the mindset of entrepreneurs and buyers with the help and initiative of strong executives.”

While many corporations have failed, stumbled or were offered, a large crop has reached the dimensions and measure to attract more and more large funding and valuations, and are emerging as world gamers or business disruptors. Is. As such, they are largely U.S. The categories of funding and valuations for startups are attracting more.

Alison Nankiwell, senior vice president of fund investing with BDC Capital, a branch of the Enterprise Growth Financial Institution, said, “Valuations have moved more cautiously from US valuations, and this is really the effect of US buyers coming into our market.” Is.” of Canada. “It’s partly a catchphrase. … I believe we’re all a little bit impressed by how quickly they’re shifting to the unexpected.”

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There are growing views that valuations are too high, as they have been in 2000, and that many buyers may hold back if valuations crash. Although many rising stars have more essence this time around – although many are not meaningful – and the wisdom is more pervasive in all corners of life.

“In 2000, it was the early stages of the web, there were few sound companies, it was clearly a bubble,” noted Boris Wertz, general partner at Model One Ventures, which is considered one of Canada’s most profitable seed buyers. . “The most important lesson of the last decade is that these tech markets are really much, much bigger than we ever imagined. All of that has accelerated.”

Mr. Wertz said: “In terms of valuations, of course, they are exorbitant. However, every year during the last 10 years everyone has mentioned it, and we have been in a bubble – and that has been confirmed. That the underlying option was huge. So it’s tedious to say whether it’s too expensive.”

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