RAY WALIA, executive director, Launch Academy
Vancouver is racing into 2015 with some powerful momentum. The year ended on a high note with community-galvanizing events such as Startup Week, where the Vancouver tech community held more than 60 tech-related events, and Launch Academy’s Cascadia Summit, where more than 600 people gathered to hear from some pre-eminent Silicon Valley venture capitalists and watched more than 16 early-stage companies pitch for funding.
Notable funding achievements in 2014 included:
- Slack hitting a $1.2 billion valuation and raising $120 million;
- Hootsuite hitting a $1 billion valuation and raising an additional $60 million, bringing total investment to $250 million for CEO Ryan Holmes and his team;
- BuildDirect announcing its second raise of the year ($30 million in January and $50 million in December); and
- BC Technology Industry Association (BCTIA) ($10.4 million), Wavefront ($9.5 million) and Highline ($600,000) each receiving funding from the Canada Accelerator and Incubator Program (CAIP).
Funding in 2015
I’m predicting that significant new capital will continue to flow into Vancouver tech companies in 2015. Investment will come from private and public interests and increasingly from south of the border. Investors beyond Vancouver have our city on their radar. As long as companies such as Slack, BuildDirect, Hootsuite, BroadbandTV, Recon Instruments, Avigilon and Vision Critical keep growing and are anchoring the Vancouver ecosystem, there will be little momentum loss.
Anticipation is also growing around some rumoured IPOs from local Vancouver tech companies in 2015. They will add a new flair to our local industry and economy and generate a new crop of angel investors.
As recipients of a significant portion of the federal government’s CAIP funding, Wavefront and BCTIA will be poised to contribute more support and resources for Vancouver’s technology companies.
Additional dollars will potentially be available to our local community with over $100 million injected into Canadian venture firms via the federal Venture Capital Action Plan and an additional $100 million recently announced via the immigrant investor fund. It’s likely that more international capital will follow this new source of venture funding and hit our local economy.
Challenges:
Think bigger, think business
Just because there’s a potential new influx of capital doesn’t mean the local funding climate will get any easier. Not every entrepreneurial idea or venture is worthy of early investment. Our early-stage entrepreneurs still have to up their game, and in many cases think much bigger and bolder. Vancouver entrepreneurs need to focus more on enterprise solutions and business-to-business (B2B) startups.
Talent crunch
With all that being said, one of our biggest potential challenges will be a talent shortage in 2015’s second and third quarter. Companies such as Hootsuite, BuildDirect and BroadbandTV are in a recruiting frenzy. Having to compete with the opening of Amazon’s new office (1,000 new hires) and Microsoft’s Canada Excellence Centre (400 new hires) will create added pressure for fulfilling positions that are on everyone’s radar. If an Alibaba office opens in Vancouver it will stir things up even further.
BRENT HOLLIDAY, founder and CEO, Garibaldi Capital Advisors
As we head into 2015, CEOs and investors in the B.C. technology industry are smiling. With the U.S. economy recovering, Canadian exports will be strong and the tech sector in B.C. will benefit directly. The weaker Canadian dollar also helps cash flow in the labour-intensive tech industry. Among the larger technology companies locally, massive continued growth is forecast. Not many industries have businesses growing at 40%-plus with sales of over $100 million, but that’s what is happening for many of the larger tech companies in the province. Publicly traded companies such as Avigilon and Sierra Wireless are growing rapidly, but the private bushel of global tech companies is growing even faster (Hootsuite, BuildDirect, Vision Critical, Endurance Wind Power, PlentyOfFish and others).
The new year could bring some IPOs for local technology companies. Within the e-commerce sector alone there are some large and growing companies.
For example, Roger Hardy’s ShoeMe has grown by acquisition, and lesser-known Cymax (online furniture retailer) is also making huge waves. Early-stage tech is exciting as well. Themes for 2015 include wearable technology (Recon Instruments and Fatigue Science, for example), the continuing shift to mobile (Mobify, QuickMobile and Eventbase) and robotics (including 3D printing and drones). Newer B2B software products in marketing automation are still hot (Unbounce, Allocadia) and technology-enabled service companies are also exciting (Global Relay, Traction on Demand, Bench, PaySavvy, Square One Insurance), and I didn’t mention medical devices, digital health and energy technology.
MARCUS DANIELS, CEO, Highline
Over the past few years, Vancouver has quietly developed one of the world’s top startup ecosystems, but that little secret is going to disappear in 2015. There will be a national spotlight not only on Vancouver but also one driven globally by:
Global corporations choosing Vancouver to accelerate innovation
More major tech companies such as Amazon will set up major presences Vancouver, but the real development in 2015 will be that several global enterprises will take things to the next level by choosing Vancouver as a key hub to accelerate corporate innovation.
Central Canada will continue to dominate with Canadian sales and marketing operations, but an increased proportion of core innovation operations including new research and development models and tech startup integration will emerge in the Vancouver ecosystem.
B.C. incubators and accelerators leading the way with collaboration models
Unlike many other startup ecosystems in which private, non-profit, academic and government programs often work in silos and overlap with redundant services, B.C. incubators and accelerators will lead the way with new collaboration models. It’s no surprise that in the recent CAIP funding announcement, B.C.’s open collaboration approach and track record for delivering excellence got rewarded with the highest percentage of overall funding for the size of its population. Expect to see new innovative collaboration initiatives and a new foundation that will yield first-rate results on the national stage over the next five years.
Web boot camp evolution being driven by a new Vancouver focus
Like the Canadian accelerator market before it, the Canadian web boot camp industry will grow rapidly across the country, and a new focus from the leading organizations on Vancouver will yield high-profile initiatives. As Lighthouse Labs continues to expand, I expect to see other boot camp leaders such as the recently funded Bitmaker Labs and recently acquired BrainStation (Konrad Group) make plays in the B.C. market. Deeper partnerships with academic institutions and new entrants will produce new programs that try to meet the insatiable demand for skills in the innovation economy.
B.C. angel investors making bigger waves in new funding vehicles
Investment super-angels like Boris Wertz, Leonard Brody and Mike Edwards have put themselves and Vancouver in the international spotlight for the quantity and quality of the deals they have made over the past five years. In 2015, I’m expecting to see big things from many new angels banding together as part of the Open Angel Canada movement. Also, expect big moves from Jonathan Bixby as he fuels new ventures such as Koho.ca from new models and fellow Business in Vancouver Forty under 40 recipient Ray Walia delving into new ways to boost funding in B.C.
