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Tracking B.C.’s unicorn surge

Companies valued at US$1B or more are becoming commonplace in the province

This article was originally published in BIV Magazine's BC Tech issue.

Sightings of unicorns have traditionally been sporadic on Canada’s West Coast.

Prior to December 2020, one would have to go back to Vancouver-based Avigilon’s sale to Motorola to find a private tech startup with a valuation of US$1 billion.

But over the past year that once rare breed has been bursting from the stables of B.C.’s tech landscape, owing to a mix of macroeconomic issues partially brought on by the pandemic.

“Across North America, activity has accelerated in terms of investing, and exits and valuations across the board,” says Chris Erickson, general partner at Vancouver-based Pangaea Ventures Ltd.

His venture capital (VC) firm recently cashed in on its early investment in B.C. chipmaker Redlen Technologies, which was sold to Japanese multinational Canon Inc. in a deal worth just north of $400 million.

“It’s a bit easier for the big U.S. VCs to invest in Vancouver when they’re mostly doing their work over Zoom. They don’t need to attend a board meeting now. You don’t necessarily need to get on a plane,” Erickson says.

Those deep-pocketed American investors — typically based in Silicon Valley or the Northeastern U.S. — don’t care as much about being geographically close to the startups they’re investing in following the rapid shift to remote work amid the pandemic, he adds.

“You’d get some venture capital firms in California that were reluctant to invest across the country or in Canada because of the travel requirements,” Erickson says.

That’s no longer the case — and it’s rapidly boosting B.C.’s technology profile.

Firms specializing in everything from geo-fencing to non-fungible tokens, from COVID-19 treatments to legal-tech products, have been leading the explosion of unicorns in B.C. since late last year, when AbCellera Biologics Inc. hit the markets in a blockbuster initial public offering (IPO).

This surge of unicorns is unprecedented for the local economy.

David Raffa, president of Valeo Corporate Finance, says the local tech ecosystem is benefitting from private equity firms swimming in cash amid the pandemic, while credit markets are wide open and interest rates are at record lows.

“You build a dam dependent on a river and the water is piling up, piling up, piling up. Then the dam bursts. And so that’s what happened,” Raffa, whose Vancouver-based firm provides services for mergers and acquisitions and IPOs, told BIV earlier this year.

Access to top-tier universities, and a large talent pool paid in Canadian dollars at lower comparable salaries than American counterparts, have been particularly enticing, according to Raffa.

Brent Holliday, CEO of Vancouver-based Garibaldi Capital Advisors, says the local tech sector had been held back to a certain degree in years past owing to the lack of available talent in the city.

“Getting big financings in companies like Hootsuite, BuildDirect, etc., 10 years ago helped fuel a broader talent pool we have,” he said this past spring.

So how did this unprecedented wave of unicorns begin to emerge in B.C.? BIV Magazine traces this explosion of US$1 billion valuations from late last year through to the early fall of 2021.

December 2020

AbCellera: Shares of the biotech company surge as much as 250% upon debuting on the Nasdaq. The West Coast firm had originally sought to raise US$200 million through an IPO before revising that to as much as US$450 million. Its valuation at IPO eventually came to US$5.3 billion.

AbCellera came to prominence when pharmaceutical giant Eli Lilly began using the company’s artificial intelligence-powered technology platform to zero-in on antibodies generated in a natural immune response to COVID-19.

With fresh capital in hand from the IPO, AbCellera is building a 380,000-square-foot campus in Vancouver. The labs have been custom-designed to bring together research that cuts across biology, software development and machine learning, and CEO Carl Hansen says one of the company’s top priorities is recruiting talent throughout different disciplines.

“Historically they’ve [local university grads] had to seek those opportunities south of the border,” Hansen says. “That’s one of the reasons it is so important to have these facilities here in Vancouver.”

February 2021

Galvanize: New York-based Diligent Corp. acquires Galnaize — a Vancouver company known for its governance, risk management and compliance software. The terms of the deal were not disclosed, but former CEO Laurie Schultz confirmed to BIV the transaction was worth US$1 billion.

Galvanize’s technology has been used to bust drug cartels committing fraud using food stamps, catch doctors falsely diagnosing cancer patients, help tax authorities around the world ensure proper collections and mitigate against money laundering at casinos.

“We started [as a] small and humble Canadian story. We made some bold moves and this kind of outcome just really legitimizes the effort, and I’m so proud and grateful,” Shultz said on the day the deal was announced. “It’s not just about the financial outcomes — we’re really, really proud of a US$1 billion valuation — it was actually about the opportunity to fast forward.”

March 2021

GeoComply: The Vancouver company, best known for its geo-fencing technology, inks an agreement with Blackstone Growth and Atairos Management for minority investments. The terms of the deal were not disclosed, but chairwoman Anna Sainsbury tells BIV “it’s safe to say that Vancouver definitely has birthed another unicorn.”

Founded in Las Vegas, the company relocated to Sainsbury’s hometown of Vancouver in the 2010s after determining there was better access to talent in B.C. than Nevada.

But it wasn’t until 2018, when the U.S. Supreme Court struck down the Professional and Amateur Sports Protection Act (PAPSA), that Sainsbury knew with certainty GeoComply’s technology was about to explode. The PAPSA ruling gave way to American states legalizing sports betting — and with it, the need for those states to ensure bets were being placed in proper jurisdictions.

“We’re just so fortunate that both the initial niche market grew, but also the use cases across other large sectors grew as well,” Sainsbury says.

“So many industries are moving online, and the vulnerabilities of e-commerce and online banking are becoming more apparent.”

Dapper Labs: The non-fungible token (NFT) giant’s US$305 million raise propels the company into the stratosphere with investments coming from the likes of National Basketball Association (NBA) legends Michael Jordan, Kevin Durant and Kyle Lowry. The company is best known for its online marketplace, known as NBA Top Shot, which trades in digital collectibles, such as video highlights, that come with NFTs. Backed by blockchain technology, NFTs function as a certification of ownership for digital assets.

A public valuation has not been released, but Dapper Labs raises another US$250 million in September 2021. TechCrunch pegs the Vancouver company’s value at US$7.6 billion.

April 2021

Thinkific: Known for its online course-creation platform, the Vancouver tech company’s shares surge on its first day of trading in an IPO aimed at raising $160 million. The IPO in turn delivers a US$1 billion valuation.

“When you have the opportunity for large valuations I think it allows companies to go public faster or earlier,” CEO Greg Smith says.

“Being a public company gives us a greater platform to attract, retain and compensate exceptional people.”

Clio: The same day as Thinkific’s big debut on the markets, legal-tech startup Clio reveals a US$110 million raise from investors that puts its valuation at US$1.6 billion.

“We’ve seen a huge acceleration in the adoption of technology in law firms that have traditionally been viewed, maybe, as one of the slower adopters of technology,” says Clio CEO Jack Newton.

“What COVID-19 has really done is it’s driven 10 years of acceleration and digital transformation in the legal industry over the course of 10 months.”

The Burnaby company, known for developing software that helps lawyers reduce administrative tasks, is setting its sights on expanding its employee roster significantly, with 1,000 more workers expected to be hired within 12 months. Strategic acquisitions are also being targeted.

“We’re looking at anyone that will help us accelerate our product roadmap,” says Newton.

June 2021

Trulioo: Known for specializing in online identity verification, Trulioo raises a recording-setting US$394 million at the end of spring 2021, surpassing Dapper Labs’ US$305 million raise just a few months earlier. The haul brings the company’s valuation to US$1.75 billion.

Visier: The Vancouver tech firm kicks off the summer with the close of a US$125-million Series E funding round that now places the Vancouver-based software firm’s valuation beyond the US$1-billion mark. Visier is best known for specializing in software dedicated to workforce analytics.

“It’s really important that we have technology companies in Vancouver that can attract, and grow and develop talent here,” says chief strategy officer Dave Weisbeck.

“That’s a huge boon for the city and ... I hope Visier can contribute not only to developing that talent, but the next generation of talent as well.”

Weisbeck says the past year-plus has seen major shakeups for businesses that have been tapping workplace analytics tools. Companies have had to navigate the rapid adoption of remote working, as well as face pressure from employees urging better diversity and inclusion practices amid the Black Lives Matter movement.

“We’ve suddenly gone from something where we were very important to the organization, to [where] we were absolutely mission critical because of these issues that have now become board-level discussions,” Weisbeck says.

August 2021

Blockstream: The Victoria-based crypto company lands $210 million in a Series B financing round, propelling its valuation to $3.2 billion.

September 2021

Nexii: The greentech company’s $45 million raise brings its valuation over the US$1 billion mark in what Nexii says is the shortest amount of time a Canadian startup has ever reached unicorn status. Founded in late 2018, Nexii is best known for developing a building material known as Nexiite, which can be used as a low-carbon alternative to cement and concrete for floors, walls and roofs.

“Vancouver is a rising star in the tech world globally, and we’ve attracted amazing talent from around the world and incubated some incredible technologies that are now breaking through,” says Gregor Robertson, Nexii’s executive vice-president.

“We’re seeing companies like Nexii providing market solutions that are competitive and ultimately will save building owners money with lower energy costs and more durable, climate-resilient buildings.”

Semios: The Vancouver-based agtech firm raises $100 million from investors — the second time it’s hit that exact number in a year. The newly minted unicorn spends much of 2021 on an acquisition spree as it looks to consolidate the market for using sensors and data to monitor crop health.

“We can obviously grow our business organically, getting more customers, building our products and expanding geographically,” CEO and founder Michael Gilbert says.

“But obviously, acquiring companies for either their product or their market is going to accelerate the plan, and for me that’s the big thing.”

Meanwhile, the CEO says demand for technology that closely monitors and collects data on land is ramping up as climate change wreaks havoc on the environment.

“Just because you can’t grow whatever you’re growing for the last 20 years on that field, doesn’t mean there’s nothing you can grow. There’s probably a different crop that does well when it’s a bit warmer or drier,” Gilbert says.

October 2021

Copperleaf Technologies: Shares of the Vancouver-based software firm surge upon its Toronto Stock Exchange debut just ahead of Thanksgiving. Initially priced at $15 each, shares go as high as $24.44 on the first day of trading, ultimately propelling the company to a $1.3 billion valuation. Copperleaf is best known for developing software that helps clients who manage critical infrastructure — such as electricity generation or natural gas distribution — make investment decisions.

This article was originally published in BIV Magazine's BC Tech issue. The full digital edition of the magazine is available here.