Research into Canada’s technology funding needs

Thomson Reuters has ranked Yaletown as one of Canada’s most active private independent technology investors since 2013. As an active catalyst of growth in Canada’s innovation economy we conduct routine research on the sector and its funding gaps.

Our research is aimed at enhancing our market knowledge and that of Canada’s investment community. We apply our findings to accelerate the growth of the companies in which we invest, shortening their exit timeframes and achieving strong exit premiums. 

Intelligent Industry: The Engine Driving Climate Resilient Growth

The digitalization of the physical world has created the emergence of the “Intelligent Industry”: a transformational opportunity to accelerate climate resilient growth exponentially further than the adoption of renewable energy generation. At the steering wheel is Canada, a country assuming a leadership role in building and scaling the technology companies driving this global shift founded not only on climate concerns, but competitive advantage.

Addressing climate change is no easy task. Big problems often lead to big, new thinking. However, to effectively address climate change in the near-term, the real focus should be on technology solutions that optimize the performance of what exists already.

Intelligent Industry: Canada’s Bet on Cleantech’s Future

Canada is poised to become a global leader in the next generation of clean technology applications. However, the opportunity resides not in clean technology’s historical promises of disruption but rather in Cleantech 2.0, the Intelligent Industry: empowering traditional industries to become more intelligent, efficient and productive through the adoption of communication and software technologies.

In this research, Yaletown illuminates how Canada’s bright future is being forged at the cutting edge of the Industrial Internet of Things.

Canada’s Technology Investment Gap

In 2016, Yaletown Partners conducted a detailed study on Canada’s financing activity. The report shows that gaps in Canada’s capital supply cause Canadian companies to scale more slowly, take longer to exit, and achieve smaller outcomes than U.S. technology peers.

The research looks not just at stage of financing or size, but at the impact of capital flow over time as a company matures. It reveals that the capital supply in Canada is both insufficient and inadequately distributed beyond early stage. Canada’s biggest opportunity to realize greater value from our technology sector lies in closing this growth capital gap.

Unlocking Growth Opportunities for Canada’s Innovation Economy

In February 2017, the TMX-backed, Advancing Innovation Roundtable, chaired by Yaletown partner, Salil Munjal, published a comprehensive report containing recommendations on how to close the growth capital gap in Canada, currently estimated at $4 billion and growing. The 12-member independent working group was comprised of senior leaders from across Canada’s financial services sector, including finance, investment and capital formation sourced from both public and private markets. 

The Roundtable report sets out recommendations to increase access to growth capital for Canadian innovation economy companies as they progress beyond the seed and startup stages. Recommendations are organized into three categories: 1) Institutional Capital, 2) Public Markets and 3) Ecosystem Foundations. 

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Canada’s Technology Ecosystems – Maturity by Region

Vancouver, Toronto and Montreal rank among the top 20 startup ecosystems in the world, matching Europe and ranking Canada second only to the United States. While Canada’s technology ecosystems of British Columbia, Ontario and Quebec demonstrate fairly robust access to talent, capital and markets, not all provincial regions are at the same point of maturity.

In this article, Yaletown looks at how the maturity of Canada’s technology ecosystems varies in different provinces and provides observations on the diverse capital needs by region to advance Canada’s innovation economy. More mature Canadian tech ecosystems have the greatest need for this type of capital, while less mature regions are still building early stage financing capacity.