Shopify looks to Amazon model as growth slows
Shopify Inc.’s (SHOP.TO) scorching rally and Lightspeed POS Inc.’s successful trading debut this year are throwing the spotlight on who might be the next Canadian tech star to go public.
A total of $1 billion was invested in 142 venture capital deals in the first quarter, up 48 per cent from a year earlier, according to the Canadian Venture & Private Equity Association. More than half of that was in tech and increasingly from U.S. investors.
Here’s what the founders of some of Canada’s hottest tech firms are saying about the future of their companies, and the potential for initial public offerings:
Clearbanc offers $10,000 to $10 million to startups to help fund their marketing campaigns on Facebook, Google and the like in return for a flat fee and a share of revenue.
The Toronto-based alternative lender, founded in 2015, raised $300 million in new funding led by Highland Capital Partners of the U.S., the largest disclosed VC-financing this year in Canada. That brings total funding to $420 million.
Clearbanc plans to start funding parts of a business that could turn into a repeatable revenue stream--infrastructure, shipping and sales commissions.
It’s expanding outside the U.S. and Canada, where there’s a less developed venture ecosystem and “banks are more conservative,” according to co-founder and chief executive officer, Andrew D’Souza.
“We think that the fundamentals of the business, the market opportunity, justifies a large standalone business,” D’Souza said about the possibility of an IPO.
Wattpad Corp. may no longer be a startup but its ambitions just keep growing. Founded as a mobile-reading app, 12-year-old Wattpad now calls itself a “multi-platform entertainment company.”
The Toronto-based company has provided content for one of the most re-watched movies on Netflix (“The Kissing Booth”), a Hulu series (“Light as a Feather”), and this year a Hollywood feature film (“After”), all through Wattpad Studios, launched in 2016.
Last week it inked a deal with Penguin Random House in the U.K. to turn its online content, mainly created and read by young women, into books. That follows the launch of its own publishing imprint, Wattpad Books, in the U.S. in April.
The company uses data from more than 80 million monthly active users to identify the best stories across its platform and turn them into content. It has launched a paid, ad-free version as well as exclusive content for a fee.
Wattpad has raised $117.8 million from investors including OMERS Ventures, Tencent Holdings Ltd.’s capital arm, and August Capital Corp, and is generating revenue in “eight figures,” according to co-founder and chief executive, Allen Lau.
As for an IPO, it’s “not what we spend time focusing on,” Lau said. “Our focus right now is on movies and TV shows, with our partners.”
Vidyard Inc. wants to be the YouTube of business videos. Its software allows companies to create personalized videos to engage with customers and use data from their viewing habits to analyze that engagement.
Companies are expected to spend $103 billion annually in video-ad marketing by 2023, according to Forrester Research.
Vidyard counts 1,200 businesses in over 170 countries as its customers, including enterprise customers such as Honeywell International Inc., LinkedIn and Citibank.
“In terms of the next two to three years, we’re just focused on consistent, hockey-stick style growth,” says Devon Galloway, co-founder and chief technology officer at Kitchener, Ontario-based Vidyard.
Tdhe company has raised $60 million to date from investors including OMERS Ventures, Inovia Capital and the venture capital arm of Salesforce Inc.
Galloway said if Vidyard continues to grow as well as it has an IPO would certainly be on its path.
Wealthsimple Inc., wishes to replace banks as a customer’s primary financial relationship, according to founder and chief executive, Michael Katchen.
“We want to be a firm that demystifies money,” Katchen said in an interview in Bloomberg’s Toronto office. The investment services company has more than C$5 billion in assets under management and 175,000 customers in Canada, the U.S. and U.K.
The robo-adviser favored by millennials, is also targeting wealthier Canadians and has branched out into commission-free stock trading and savings products. Mortgages, life insurance and checking accounts could be next, Katchen said.
Founded in 2014, WealthSimple is not yet profitable, but its backers are patient, Katchen said. These include Power Financial Corp., an investment arm run by the Desmarais family and Allianz SE.
Katchen said he’s interested in an IPO but it’s still “a few years away.”