Owls, Unicorns and Narwhals: A Big Year in Technology in BC

First, the news: Investment in private technology companies in British Columbia was up 6% year on year from 2012 to 2013. Until you count Hootsuite… Including their eye-popping, record breaking, $165m USD financing ($170.3m CAD at close), investment was up 104% year on year. In other words, one financing in 2013 accounted for as much financing as the other 45 or so financings in each of 2012 and 2013. Simply amazing.

In 2011, the private technology financing in BC was $148 million, 2012 it was $174 million and 2013 is $355 million… clearly we are on a roll in this province.

Here are the investment facts for private technology companies from 2013:

Private placements in BC 2013

Investment totals in 2012 included some large financings like D-Wave ($29.5m), BuildDirect ($20.5m), Vision Critical ($20m) and Hootsuite ($20m) accounting for a lot of the total.

Clearly the company with the Owl brand has established itself as the largest private technology company in BC, both in terms of capital raised (just under $200 million total since inception) and in terms of rumoured valuation (somewhere in the vicinity of half a billion has been bandied about on-line). You simply can’t get $100m+ investments if your valuation can’t support it (as a minority financing), so valuations are high when the investment round is huge. That financing, coupled with the Ottawa area rock star company Shopify getting $100 million in December, got me thinking about Unicorns. The rumoured valuation on Shopify was $1 billion, printed in the Globe and Mail article the day after the announcement. That puts it in the Unicorn Club, if the valuation is true (more on that in a minute).

Unicorn Club? What the heck is that? Aileen Lee, formerly of Kleiner Perkins, started the club to honour the start-ups, formed after Google went public in 2003, that have reached $1 billion in value or more. That list (http://techcrunch.com/2013/11/02/welcome-to-the-unicorn-club/) is currently at 39 US based companies including Facebook, Twitter, Groupon, Dropbox, Pinterest, etc, etc. Many of these reached $1 billion as private companies, although it does count if they reached the valuation as public companies as well.

Is Shopify number 40? It was founded in 2004 and, if you believe the Globe and Mail, then yes. Further, it is validated by the fact that a US fund led the deal and presumably set the price. But, alas, I don’t believe it is true. My information is that it is not at $1 billion in value, backed up by the fact that the company has never come out and said that it is that high. Hootsuite is another Unicorn Club candidate (founded in 2008) and I am confident that both it and Shopify will reach the club soon.

I do know of a BC company that is irrefutably number 40 in the Unicorn Club: Avigilon. Avigilon was created in 2004 and passed the billion dollar mark as a public company in November 2013. Amazingly, it accomplished this without requiring any capital from the US VCs and/or growth equity gang, which is certainly why it never appeared on the radar of Aileen or her club members. Before Alex Fernandes can add “Unicorn Club: Member” to his business card, there is one gotcha… The club is for US firms only, according to Aileen.

Based on the fact that I believe we have an existing Unicorn and an Owl well on its way here in BC, and we have others across Canada certain to join the party, I am hereby proposing a Canadian only club: The Narwhal Club. We have our very Canadian pointy headed beast, Aileen, so there. And the beast actually exists! Current membership of the Narwhal Club is one (Alex, please put this on your business card), with two or more on the way. If we get to four, we are holding our own on a per capita basis against our US friends.

There you have it. A fantastic year for Hootsuite and other big fundings like BroadbandTV here in BC are certain to leak over to 2014 (BuildDirect closed on $30m funding and Zymeworks added $15m, announced Jan 3rd). Let’s see if we can confirm our second Narwhal Club member in BC this year and look to our friends in the East to add a couple more.

(Article originally published here)

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