Looking forward, looking back
Happy New Year, and welcome to your special-edition, year-end Tech Roundup.
In this space 12 months ago, we looked back on the unprecedented year of challenge and upheaval that was 2020, due to the COVID-19 pandemic. We also looked forward to better times in 2021, as vaccines were rolled out and new routines became more familiar.
As the blank canvas of 2022 rolls out in front of us, there’s a feeling of déjà-vu-all-over-again as the fast-spreading Omicron variant prompts a return to remote work and scaled-back holiday gatherings. But that also presents an opportunity to look forward, again, to better times – especially in our tech community.
While 2021 also threw pandemic-related challenges at founders and their teams, the overwhelming takeaway from the past year in Canadian tech can be summed up in a word familiar to all who follow Communitech’s new CEO, Chris Albinson:
How big a boom? Let’s look at the data: In the first 10 months of 2021, Communitech member companies raised more than $2.7 billion in investment. That’s more than they raised in the previous 10 years combined.
Without a doubt, our community of founders will need that kind of capital – along with top global talent and sales revenue – to propel Canada to the top of the tech world. But that’s exactly the goal laid out by Albinson – who took up the CEO’s baton from Iain Klugman in May – after consulting hundreds of founders from coast to coast.
Dubbed the True North Strategy, Albinson’s plan will use data to identify high-potential founders and surround them with the support they need to lead the world. It will also leverage trust as Canada’s competitive global advantage, helping founders with a “tech for good” focus to grow profitable companies that tackle meaningful problems – the urgency of which was on full display throughout 2021.
For now, let’s take a look back at what turned out to be another unprecedented year for our community of tech.
Clearpath Robotics in Kitchener completed a US$5-million secure convertible note financing with BDC Capital Inc. to propel growth, particularly in its OTTO Motors division. The funds brought the total raised by Clearpath in the previous year to US$43.4 million.
The acquisitions market was brisk, with Waterloo’s Athena Software joining Social Solutions Global; Kitchener-based meat-subscription startup truLOCAL selling to EMERGE Commerce Ltd.; and ShipperBee, a Guelph-based package delivery platform led by veteran founder Jim Estill, joining Metroland Parcel Services, a subsidiary of publishing giant Torstar.
Taking a literal interpretation of growth, Cadence Agricultural Systems (CASi), in Guelph, unveiled a sophisticated grow system to improve the consistency of medicinal cannabis, among other plants.
Meanwhile, Waterloo scale-up SSIMWAVE, whose technology enables broadcasters and streaming companies to deliver top-quality video, bagged its second Technology and Engineering Emmy Award.
Waterloo Region’s growing forest of cybersecurity companies welcomed another tree in the form of Cavelo, a data security startup led by founder James Mignacca, formerly of eSentire, Sandvine, Root Cellar Technologies and RootSecure. That last one was acquired in 2019 by Arctic Wolf Networks, which went on to make news of its own later in the year.
Employees at Magnet Forensics, another big 2021 newsmaker in the cybersecurity realm, launched a volunteer initiative to donate Magnet software and services to organizations that help vulnerable populations.
On the theme of “tech for good,” Omar Salaymeh, a top executive at Bonfire Interactive, was awarded the Meritorious Service Medal by Canada’s Governor General for his work with Jumpstart Refugee Talent. Salaymeh co-founded the organization in 2016 to help talented refugees find meaningful employment.
Founders from two companies that took part in Communitech’s Fierce Founders program for women entrepreneurs were also singled out in February: Alexandra McCalla, co-founder and COO of AirMatrix, and Alwar Pillai, founder and CEO of Fable Tech Labs, landed on the Globe and Mail Report on Business Magazine’s Changemakers list.
And O2 Industries, a Waterloo Region maker of personal protective equipment and former Communitech Hub startup, donated 5,000 high-quality, reusable respirators to frontline workers toiling amid the COVID-19 crisis across Canada.
As the first anniversary of the pandemic passed, Tech News brought us stories of resilience and rebirth involving founders from Nicoya, Plasticity Labs, Auvik Networks, Wavy and D2L. Staff Writer Kevin Crowley took a deeper dive into the Plasticity story in particular, with a standalone piece on co-founders Jennifer and Jim Moss, who landed on their feet despite the loss of their startup.
Investments and acquisitions among Communitech member companies also made news, with word that Tyltgo, a delivery startup, raised a CDN$2.3-million seed round, while gig-economy pay specialist Paidiem raised CDN$3.75 million.
Employee training provider Axonify announced its acquisition of a competitor, MLevel, which brought new customers and employees to the Waterloo-based scale-up.
At the acquiree end of a big transaction, meanwhile, was Vancouver-based Beanworks, a 2013 graduate of Communitech’s former Hyperdrive accelerator, which sold a 96-per-cent stake to Paris-based Quadient for CDN$105 million.
Four of the top 10 scale-up companies listed in the 2021 Narwhal Report, which tracks Canada’s fastest-scaling private tech firms, were Communitech members. And Montreal’s Inovia Capital, which has investments in many top Waterloo Region companies, closed its second growth-stage fund, with US$450 million.
After an 18-month search for a worthy successor to CEO Iain Klugman, Communitech made the much-anticipated announcement that Chris Albinson, a venture capitalist and veteran founder, would take up the role in May. Albinson, whose youth included a stint as the Tragically Hip’s first roadie in Kingston, Ont., shared details of his background and vision in a Tech News Q&A.
On the funding front, April saw a flurry of deals for Waterloo Region founders. U.S.-based Luminate Capital Partners acquired a controlling stake in Axonify for a reported CDN$313 million, prompting the company’s ever-candid co-founder, Carol Leaman, to muse that this might be her “last rodeo.”
Magnet Forensics announced plans for an initial public offering (IPO) on the Toronto Stock Exchange (TSX), teeing up the first tech IPO for a Waterloo Region company since COM DEV spinout exactEarth went public in 2016.
Medchart announced a US$17-million Series A raise, while fellow medtech firm NERv Technology announced a US$2.65-million seed round. Live-broadcast tech firm Dejero, meanwhile, announced a CDN$60-million recapitalization led by Vertu Capital in partnership with Ubicom Ventures.
Archangel Network of Funds, a new network of “superangel” investors in the Toronto-Waterloo corridor, completed an oversubscribed first closing of CDN$10 million, with plans to invest in early-stage, high-growth Canadian startups and support a more diverse range of founders.
As Chris Albinson took up the torch from Iain Klugman as Communitech CEO, he told a BetaKit panel discussion how the recent flurry of Canadian tech IPOs, funding rounds and big exits spoke to a growing “competition for awesome.”
The discussion followed an opinion piece Albinson penned for the Globe and Mail, in which he argued that Canada can lead the world in tech by borrowing from the Own the Podium strategy that helped the country’s Olympians win an unprecedented number of gold medals in 2010.
As Canadian tech IPOs and investments continued to grab headlines, Tech News took a closer look at the factors high-growth founders weigh when deciding between going public and raising private investment.
One company that exercised the latter option in May was Ada Support, a chatbot maker and graduate of Communitech’s Rev accelerator program. The company announced a US$130-million Series C round that pushed its valuation to US$1.2 billion.
In acquisition news, Kitchener-based Quantum Benchmark, whose software improves and validates the capabilities of quantum computing hardware, was acquired by Keysight Technologies of Santa Rosa, Calif.
“Awesome, incredible, unbelievable” is how Albinson described the deluge of public and private investment that continued to pour into Canadian tech companies as summer got under way. Waterloo Region’s ApplyBoard raised an eye-popping CDN$375-million Series D round, the largest private raise to date for a local tech firm.
Faire, the online wholesale marketplace bi-nationally founded in Waterloo and San Francisco in 2017, followed up with a US$260-million Series E round, though it wouldn’t be the last investment news we’d hear from that company last year.
Tulip, another retail-focused company that has operations in Waterloo Region and Toronto, announced a Series C round of US$28 million, while SkyWatch, a satellite-data specialist and Communitech Rev grad, announced a US$17.2-million Series B raise.
With so many of-the-moment news developments, it can be easy to forget how deeply the roots of the Waterloo Region tech community extend. Staff Writer Kevin Crowley dug into the 40-year history of medtech firm Northern Digital Inc. (NDI) and unearthed a trove of colourful detail.
June also brought news that MasterClass, the video platform that connects online learners with celebrity experts, had opened an engineering operation in Waterloo Region.
The start of vacation season did little to slow down the hard-charging Waterloo Region tech community.
Cybersecurity juggernaut Arctic Wolf Networks, which has a large office in Waterloo and deep ties to the region, announced a US$150-million Series F funding raise and a new valuation of US$4.3 billion.
Waterloo-based Auvik Networks landed a US$250-million investment by private-equity firm Great Hill Partners of Boston.
P&P Optica (PPO), which creates automated inspection technology for the food industry, raised an undisclosed amount through a Series B funding round.
Material-science company Trusscore, which makes an alternative to drywall and has space in the Communitech Hub, acquired Calgary-based Westech Building Products in July.
Miovision, a Kitchener company that uses computer vision, AI and analytics to help cities modernize traffic management, acquired Arizona-based Traffop.
And in an acquisition of the top-talent kind, Montreal-based Inovia Capital welcomed a new partner – Steve Woods, Google’s long-time engineering lead in Waterloo Region.
Taking stock in the midst of a crazy year, a report from Hockeystick and [b]riefed.in said tech companies in Waterloo Region burned up the track in the second quarter, setting a Q2 record with a collective CDN$749.7 million in venture funding raised.
Break time over, the investment news just kept rolling in. Autonomous-transport startup Gatik, recent grad of the AVIN Waterloo Ventures at Communitech program, announced a US$85-million Series B raise. Meanwhile, RainStick CEO Alisha McFetridge, who won Communitech’s 2020 Fierce Founders Pitch Competition, announced that her water and energy conservation startup had raised CDN$1 million in seed funding.
On a different front, the federal government once again recognized the value of investing in Southwestern Ontario. Ottawa announced a $10-million investment to establish a health-tech innovation hub in the region, involving a new partnership between the University of Waterloo, Western University, the City of Kitchener and the Kitchener-based Medical Innovation Xchange.
Speaking of tech for good, a new startup incubator to support Black entrepreneurs was announced in August. Called LiftOff, the incubator launches with its first cohort in early 2022 and will be located in UW’s Velocity space, adjacent to Communitech in downtown Kitchener.
Veteran tech founder and community builder Jim Estill was at it again. The Guelph entrepreneur announced plans to spearhead an effort to bring 50 families from war-torn Afghanistan to settle in the Royal City. Estill led a similar effort five years ago to support Syrian families.
After consulting with hundreds of tech leaders in Waterloo Region and across Canada, Communitech CEO Chris Albinson rolled out his action plan for the next few years – the True North Strategy. With a laser focus on founders, the strategy builds on Canada’s “trust advantage” on the international stage and aims to help founders grow their companies faster and bigger than ever before. Albinson, who likes to swing for the bleachers, also set an ambitious goal for Communitech: To help 14 Canadian founders reach $1 billion in annual revenue by 2030.
The True North Strategy was the centrepiece of this year’s Communitech Annual General Meeting. If you missed the fun-packed AGM, you can still check out the video and find out why Communitech Chair Dave Caputo strapped a sunglass-wearing baby to his chest.
September was also the month for rankings, and Waterloo Region once again stood out. The Waterloo-Toronto tech ecosystem made big gains in an international ranking of global tech hot spots, leaping four spots to No. 14 overall. Meanwhile, more than 20 businesses with ties to Waterloo Region made the annual list of top growing Canadian companies published by the Globe and Mail’s Report on Business. And in another set of rankings, ApplyBoard and Ada Support made LinkedIn’s list of Top 15 Canadian Startups.
And, oh yeah, more companies raised more money. Digital-process developer FormHero, which recently rebranded to Daylight Automation, announced a US$12.3-million Series A raise. And health-care compliance company MedStack closed a US$3.1-million Series A round.
Just when you thought things couldn’t get any busier, along came October. And it kicked off with – what else? – more blockbuster funding news.
D2L, the online-education powerhouse founded by CEO John Baker back in 1999, made the biggest splash with an IPO that saw it join the Toronto Stock Exchange (TSX) and raise CDN$150 million.
Trusscore, led by serial founder Dave Caputo, announced a CDN$26-million Series A raise aimed at helping the maker of sustainable building products expand its production, marketing, sales and R&D capabilities.
Sticking with construction, Bridgit founders Mallorie Brodie and Lauren Lake completed a Series B raise of CDN$24 million that will help the Kitchener-based company further develop its workforce-intelligence solution.
Fresh off its IPO success, Magnet Forensics filed a plan with regulators to raise an additional CDN$950 million by selling additional subordinate voting shares, preferred shares, debt securities, warrants, and subscription receipts over a 25-month period.
And in a different growth play, Waterloo-based HockeyTech – which provides data technology to hockey clubs, and livestreams hockey games – was sold to Flosports of Austin, Texas.
If investment was the big story of 2021, a close second was the constant search for tech talent. In an ongoing series, The Logic reported on Communitech’s successful Outposts program, which helps Canadian tech companies hire skilled employees wherever they live in the world.
Another top story was the future of the workplace – in-person, remote or hybrid? Tech News took a deep dive and found that the market for office space was picking up in Waterloo Region as tech founders look past the Covid-19 pandemic to see what the future holds for the traditional workplace.
OK, so maybe October was just a warm-up for November. By the middle of the month, founders of Communitech member companies had raised north of $2.7 billion in venture capital in 2021 alone – more than they raised during the previous 10 years combined.
Topping the charts was Faire. The online wholesale marketplace for independent retailers, co-founded and launched jointly in Waterloo Region and San Francisco in 2017, announced a US$400-million Series G round at a valuation of US$12.4 billion.
Meanwhile, clean-tech company EnPowered announced a CDN$12-million seed round, and online tech-sales academy Uvaro closed a US$12-million Series A round as demand for qualified sales talent continues to surge throughout the tech industry.
In other investment news, edtech platform D2L officially began trading on the Toronto Stock Exchange on Nov. 3.
At the early-stage end of the spectrum, the co-founders of Paperstack shared the story behind their fintech startup, which recently secured $250,000 in angel funding as well as acceptance into three sought-after support programs for startup founders.
On the acquisitions front, information management giant OpenText increased its cybersecurity clout with the acquisition of Zix, an email encryption firm based in Dallas, for US$860 million.
And fast-growing Roadmunk, a product roadmapping software startup that launched in Communitech’s former Hyperdrive accelerator nearly a decade ago, announced an agreement to join Tempo Software, headquartered in Boston. Roadmunk co-founder Latif Nanji credited the company’s involvement with Communitech for helping set it up for success, saying, “They’re not just your cheerleaders; they’re your coaches, they’re your physiotherapists, they’re your strength-training coaches. They are the full-service gym you go to when you need to get your body in shape for a startup.”
Talent was again big news. Communitech CEO Chris Albinson had lots to say on the topic on several occasions, including in a chat with Accelerator Centre CEO Jay Krishnan and on a podcast with BetaKit’s Douglas Soltys. In a panel discussion called Spoiler Alert: Canadian Tech is Winning, hosted by Communitech and CityAge, Albinson made the case for meeting the talent challenge by leveraging Canada’s global reputation for trust to attract the world’s best and brightest.
Meanwhile, a Communitech Hyperdrive graduate, Plum, was enlisted by Scotiabank to help take a bold step towards diversifying its talent pool – by getting rid of resumés as a requirement for job applicants from its campus hiring program.
And OpenText – whose CEO Mark Barrenechea, as we’ve previously reported, has been a strong advocate for greater corporate social responsibility – announced a sweeping new initiative called OpenText Zero, to remove barriers to diversity, eliminate waste and cut emissions from operations to net-zero by 2040.
Things did slow down as the year drew to a close but, fortunately, there was still plenty of good news.
Kitchener-based Nicoya Lifesciences, which uses AI and nanotechnology to make analytical tools for medical researchers, extended its Series A round, adding CDN$20 million to the original CDN$10 million announced in early 2020.
Bidmii, a platform that connects homeowners with reliable contractors, raised $1 million in pre-seed investment led by HGTV host Scott MacGillivray.
Speaking of home improvement, Trusscore's mission to replace drywall with its plastic wall panels was the subject of a Globe and Mail profile (subscription required).?
Mixing tech for good with help for founders, Communitech entered a new partnership with the CAN Health Network to drive innovation in health care by helping Canadian tech companies gain better access to public-sector procurement. A great example is the deployment of Axonify’s e-learning platform to help busy frontline staff at Grand River Hospital prepare for an important accreditation survey.
As we all know, the pandemic has spurred a huge increase in remote work and video meetings. And that, in turn, has increased the number and frequency of cybersecurity risks – everything from “Zoom bombing” to ransomeware attacks and data theft. In an interview with CBC Radio, eSentire VP Mark Sangster urged people to use the security tools that platforms such as Zoom offer – things like waiting rooms, turning off chats and disabling file sharing.
To end the year on a high note – a very high note – Kitchener-based Clearpath Robotics, which became the world’s first robotics company to sign on to the international Campaign to Stop Killer Robots in 2014, was tapped to help develop systems to drive the robotic lunar rover on a mission to the moon in 2026.
And finally… with a brand new year ahead of us, we at Communitech would like to wish you all the very best for a safe, prosperous and tech-for-good 2022.
This edition of the Roundup compiled by Anthony Reinhart and Kevin Crowley
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