Looking forward
Happy New Year! And welcome to our year-end Roundup of Roundups.
Twelve months ago, we were looking back at 2021 and marvelling at a record-breaking year for investment in Canadian tech. We were also looking forward to finally escaping the clutches of COVID-19.
While the pandemic indeed dropped several notches on the challenge scale, 2022 served up a masterclass on the harsh realities of economic cycles.
International political unrest, rapid inflation and surging interest rates combined to slow the global economy and deliver a gut punch to the tech sector.
But looking back over the past 12 months, there were plenty of bright spots and success stories, too. Heck, the year even ended with a much-welcomed boom!
So, before we plunge headlong into a new year, let’s take a few minutes to reflect on the one we’re leaving behind.
January
The year opened with confidence and optimism, fueled by 2021’s record-breaking levels of investment in Canadian tech. The Canadian Venture Capital Association reported that CDN$14.7 billion had been invested across 752 deals in 2021, more than double the previous record set in 2019 when CDN$6.2 billion was invested over 539 deals. A news story in The Record gushed about the CDN$2.8 billion that was invested in Waterloo Region companies alone, a figure that exceeded the previous 10 years combined.
And the investment continued to flow.
Health-tech startup Hyivy announced a pre-seed raise of $1.1 million, money that would help the Kitchener-based company further develop its pelvic-health rehab system.
Crunchbase reported that another Kitchener startup, device-management company Springdel, had raised $2 million in seed funding from Beyond Ventures.
And Ecopia AI, a Toronto-based HD-mapping startup with strong ties to Waterloo Region, landed a $3.39-million federal contract.
Tech-for-good takes many forms, such as the award-winning partnership between Waterloo-based DarwinAI and London-based Aspire Food Group, which raises crickets as a nutritious and sustainable food source. The innovative collaboration was honoured by the United Nations as one of 10 Outstanding Projects for applying AI to advance the UN’s sustainable development goals.
February
Bells rang and confetti flew as tech founders gathered at the Communitech Hub for a special remote opening of the Toronto Stock Exchange, the first time the TSX ever opened the day’s trading from Waterloo Region.
The occasion? Celebrating the spectacular success of Canadian tech companies in the past year. Two Waterloo Region companies – cybersecurity dynamo Magnet Forensics (TSX:MAGT) and edtech phenom D2L (TSX:DTOL) – began trading on the TSX in 2021, while more than a dozen others raised significant amounts of investment.
And the good news kept coming.
Waterloo-based cybersecurity powerhouse eSentire Inc. announced a massive US$325-million raise that propelled it to unicorn status and a valuation north of US$1 billion.
Kitchener-based DOZR continued to blaze a trail with its heavy-equipment rental platform, announcing a Series B raise of CDN$27.5 million.
ISP and connectivity company RouteThis announced a CDN$25-million Series A raise.
And Waterloo-based RideCo, which makes rideshare transit software, announced a Series A raise of CDN$20 million.
Internationally, the biggest news of the month – if not the year – was Russia’s invasion of Ukraine, a tragic horror for the people of Ukraine and a significant disruption to the global economy.
March
Success comes in many shapes and sizes. Just look at Kitchener-based Intellijoint Surgical. After years of selling its Intellijoint HIP abroad, the company announced the first sale of its flagship product to a public hospital in Canada.
As The Globe and Mail reported, the Intellijoint story highlights a broader challenge: the difficulty Canadian medtech companies encounter when trying to sell their products to public health-care institutions here at home.
This procurement-access issue is one that Communitech continues to work on through a partnership with the Coordinated Accessible National Health Network, known as CAN Health.
From medtech to edtech, Kitchener-based ApplyBoard had a big month in March. First, it announced a partnership with Big Five bank RBC to adapt its document-verification platform to help international students prove their ability to support themselves while studying in Canada. A week later, the company announced its first acquisition – Panda Portal, a platform that helps independent recruiters learn more about the schools, colleges and universities they promote. And finally, founder and CEO Martin Basiri was the subject of a glowing profile in CanadianSME magazine.
A number of Waterloo tech leaders marked International Women’s Day by launching a new angel investment fund to support women founders. Phoenix Fire, part of the Waterloo-based Archangel Network of Funds, plans to invest between $100,000 and $250,000 in early-stage tech companies that have high growth potential and the ability to scale globally.
Speaking of scaling, the latest list of Canadian tech narwhals was released and several Waterloo Region companies made the cut. One of the newest additions was Axelar, a blockchain interoperability network that raised US$35 million through a Series B round earlier this year and quietly joined the stable of Canadian unicorns with a valuation of $1 billion.
As Communitech has been saying for years, Canada is the best place on the planet to work in tech. The New York Times added some welcome validation with a story about Toronto’s growing reputation as an international tech hub (a hub, we might point out, that extends to Waterloo Region).
April
VC interest in Waterloo Region companies was brisk in the first quarter of 2022, despite signs of a softening market elsewhere. According to Briefed.in, CDN$157.2 million was invested in Waterloo Region tech across 11 deals between Jan. 1 and March 31.
No sooner was the Q1 report out than several new investment deals hit the news.
Waterloo-based VueReal announced a Series B raise of US$14.4 million, saying the investment would help it add customers in the fast-growing market for microLED displays.
Meanwhile, employee-experience company Wavy raised CDN$2.5 million in seed funding.
And after making headlines in March, Intellijoint Surgical was back in the news. The Ontario government announced a $1-million grant to support a study at Grand River Hospital involving Intellijoint’s hip-surgery technology.
April was award season, at least for several tech companies in Waterloo Region.
Edtech unicorn ApplyBoard won a prestigious Governor General’s Innovator Award for its international student-recruitment services. Meanwhile, global chip-maker Intel named PEER Group – a Kitchener software company celebrating its 30th anniversary – an Epic Program Outstanding Supplier. And cyber-investigations company Magnet Forensics was named a “Leader” in the IDC MarketScape: Worldwide Digital Forensics in Public Safety 2022 Vendor Assessment.
Also in April, employee training company Axonify and construction tech firm Bridgit were both named to the Best Workplaces in Canada listing.
May
Despite a tightening of investor purse strings, tech companies in Waterloo Region continued to attract investment.
Faire, an online wholesale marketplace with anchor operations in Waterloo and San Francisco, raised another whopping US$416 million through an extension of its Series G round.
Fable Tech Labs CEO and co-founder Alwar Pillai, an alum of Communitech’s Fierce Founders program, announced a US$10.5-million raise. The startup helps clients make their digital products easier to use by people with accessibility challenges.
Paidiem, which provides payment solutions for gig and freelance workers, closed an oversubscribed seed round.
Waterloo Region companies were also on the acquisitions trail.
Magnet Forensics (TSX:MAGT) added UAE-based Comae Technologies to its cybersecurity stable. Meanwhile, Kitchener-based Nicoya Lifesciences, which celebrated its 10th anniversary in 2022, expanded its lab space in downtown Kitchener, made an acquisition (LSK Technologies) and was named Life Science Company of the Year by the industry association, Life Sciences Ontario.
Back in the spring, competition for top talent was still the No. 1 challenge for tech companies. Tech News took a deep dive into the issue in May. Our four-part series is still worth the read, given the many available roles still out there and the fact that attracting top talent is a cyclical challenge.
June
Halfway through the year, the Canadian tech scene was still humming.
Communitech launched its inaugural Team True North roster with hoopla galore at a TMX investor day in Toronto. The Team True North initiative is a data-driven strategy to identify and support Canadian private tech companies that have the highest probability of reaching $1 billion in annual revenue by 2030.
On the investment front, Inovia announced a monster raise of US$325 million for its early-stage Venture Fund V. The company, which has close ties to Waterloo Region through partners like Steve Woods and Dennis Kavelman, said it remained bullish on Canadian tech and planned to continue investing in seed and Series A rounds.
Speaking of raises, Natasha Dhayagude, a finalist at the Fierce Founders Bootcamp pitch competition in 2018, announced that her food-tech startup, Chinova Bioworks, had raised $6 million through a Series A round.
Impossible Mining Inc., which uses robotics to extract seabed minerals used in battery production, said it closed an additional US$10.1 million in seed funding, led by University of Waterloo alumnus Justin Hamilton.
PEER Group, a Kitchener-based supplier of semiconductor factory automation, opened a new 4,000-square-foot office in downtown Toronto. It also announced plans to hire 40 new employees by the end of 2022.
Canada’s two largest digital shopping-flyer companies joined forces in a deal that saw Toronto-based Flipp acquire its biggest competitor, Kitchener-based reebee (whose co-founders, Michal Martyniak and Tobiasz Dankiewicz, are grads of Communitech’s former Rev accelerator program).
The Federal Economic Development Agency for Southern Ontario (FedDev) announced a $10-million investment in AC:Studio, a new startup-support program offered by the Accelerator Centre (AC) in Waterloo.
Meanwhile, signs of an economic downturn were attracting media attention. Both the CBC and the Canadian Press sought comment from Communitech CEO Chris Albinson. And a story in the Globe and Mail warned of a “big hit” in store for Canadian tech.
July
There was more good press for the Toronto-Waterloo tech corridor.
CBRE’s Scoring Tech Talent 2022 report, an annual ranking of the top 50 tech centres in the U.S. and Canada, named Waterloo Region the top small market (under 50,000 tech workers), and ranked Toronto No. 3 overall, behind only the San Francisco Bay Area and Seattle.
In another global ranking, Startup Genome’s Global Startup Ecosystem report listed the Toronto-Waterloo startup ecosystem as No. 17 in the world – and the third-fastest growing, behind only Silicon Valley and New York City.
A report from Briefed.in said tech companies in Waterloo Region raised a combined $559.1 million in Q2 of 2022, up 256 per cent over the same quarter a year earlier. Deal volume was down, however, with 96 per cent of the total money raised coming from a single transaction: Faire’s Series G extension of US$416 million in May.
More tech companies started cutting staff and costs to navigate the economic headwinds. E-commerce leader Shopify, along with fintechs Wealthsimple and Clearco, were among those making headlines for layoffs.
Communitech revived The Help List, an online resource where displaced tech employees can showcase their skills to employers.
Thankfully, some companies were bucking the trend. Kitchener-based PEER Group, for example, held a virtual hiring event to staff up its Kitchener and Toronto locations.
Rogers Communications made national headlines for a July 8 network outage that left millions of customers across the country without cell or internet service. The network failure, and the massive disruption it caused, prompted parliamentary hearings and questions about how to avoid similar outages in future.
August
Waterloo-based OpenText knocked the doom-and-gloom stories off the front page with a blockbuster deal to purchase British software-maker Micro Focus International PLC for a whopping US$6 billion. The acquisition, which is expected to close in 2023, will make OpenText one of the largest software and cloud businesses in the world.
Ecopia AI, a member of Communitech’s Team True North, announced $10 million worth of contracts with the U.S. National Oceanic and Atmospheric Administration (NOAA). The deal includes another $6 million in possible option contracts.
Health-tech startup Care2Talk announced a raise of more than $1 million to help launch a software solution that enables seniors and those with cognitive or physical limits to make video calls to loved ones and caregivers.
In a plot straight out of an espionage thriller, the Waterloo-based cybersecurity firm eSentire announced that it had unmasked a Canadian hacker behind an insidious malware used by Russian gangs. The company’s cyber sleuths spent more than a year tracking “Chuck from Montreal,” one of several aliases used by a hacker associated with the Golden Chickens suite of malware.
Meanwhile, the Communitech Hub was a popular stop for federal officials in August.
First up was Finance Minister and Deputy Prime Minister Chrystia Freeland, who met with tech leaders, toured the Communitech facility and took a virtual spin on the flight simulator in the RCAF innovation space.
“I want all Canadians to really appreciate that Canada is not an aspiring technology power – Canada has totally arrived,” Freeland told an enthusiastic audience of tech workers and reporters.
Mary Ng, Minister of International Trade, Export Promotion, Small Business and Economic Development, also dropped by for talks with CEO Chris Albinson and a roundtable discussion with tech industry leaders.
Also paying a visit was federal Deputy Minister of Health Stephen Lucas, who met with medtech leaders to talk about the role of innovation in Canadian health care.
September
While the downturn has squeezed a lot of tech companies, many others continue to thrive.
Just look at the headlines from September.
Kitchener-based Avidbots, which makes a line of commercial floor-cleaning robots called Neo, announced a Series C raise of US$70 million. The company planned to use the investment to expand its fleet of robotic cleaners, increase its sales and marketing efforts, and add 100 more employees to the more than 300 people it already employed.
Meanwhile, insurance-tech startup PolicyMe announced a CDN$18-million Series A round, while fellow insurance-tech company ProNavigator announced a CDN$10-million round.
In other big news, IMAX Corp., the Canadian-founded company best known for its large-format motion-picture technology, announced the acquisition of SSIMWAVE, a Waterloo company whose AI-driven video quality software has earned two Emmy Awards. The deal – worth US$25 million in cash, stock and incentives – allowed SSIMWAVE to retain its name, brand and Waterloo-based team.
In other M&A news, Kitchener-based IT-solutions provider Able One was acquired by Quadbridge Inc. of Montreal.
One area of the Waterloo Region technology community that has quietly grown in recent years is medtech. Tech News took a deep dive into the region’s emerging medtech ecosystem, which includes more than 100 health-innovation companies and a growing web of expertise and support.
Finally, Communitech celebrated its 25th anniversary with a breakfast reunion that attracted many of the organization’s first backers. Launched by founders for founders, Communitech sprang to life in 1997 with just a handful of original members. Over the decades, it has grown into one of Canada’s most successful founder-support organizations and a model for tech associations the world over.
October
There was plenty of sausage, beer and Gemütlichkeit as Communitech opened its doors for Techtoberfest, a celebration of Canada’s tech community and Waterloo Region’s German heritage.
It was the first large gathering in the Hub since COVID-19 hit in March 2020, and the crowds were thrilled to be back. Nearly 500 visitors toured the Communitech facility in downtown Kitchener, while more than 45 investors came out for a pitch session with startup founders.
The highlight of the afternoon was the unveiling of 26 new members of Communitech’s Team True North, a roster of privately owned Canadian tech companies that have the highest probability of reaching $1 billion in revenue, based on verified data.
For an amazing visual taste of the Techtoberfest spirit, check out this photo spread.
Filomena Tassi, the Minister responsible for the Federal Economic Development Agency for Southern Ontario, visited Communitech, and she came bearing gifts: $7.5 million in federal funding to help three Waterloo Region tech companies – Shinydocs, Encircle and Proto Research – scale their businesses and create jobs.
There was plenty of other good news in October.
Investment tracker Briefed.in, which Communitech recently acquired, reported that although deals were down in the first three quarters of the year, the total dollars invested in that period – more than $8 billion – exceeded the total invested in all of 2019 ($5 billion) and 2020 ($4.4 billion).
One such example was Waterloo-based video-game creator Odyssey Interactive, which announced a US$19-million series A round that will help it finalize an updated version of its debut game, Omega Strikers.
Internationally successful cybersecurity company Arctic Wolf Networks also had big news – the closing of a debt financing round of US$401 million. The money will support the company’s ongoing “hyper growth” and continued hiring across Canada, President and CEO Nick Schneider told Tech News.
Other wins included a pair of acquisitions by Waterloo-based network-management company Auvik. The two acquired companies – Saaslio and Boardgent – will expand Auvik’s ability to help managed-service providers and internal IT departments.
Meanwhile, Kitchener-based Miovision – another member of Team True North – announced the acquisition of Pittsburgh-based Rapid Flow Technologies. The deal expanded Miovision’s traffic-management and smart-city capabilities while adding talent to the overall team.
And in the cool-tech category, Kitchener-based Voltera unveiled a circuit-board printer that it says will transform the electronics industry. Voltera’s new NOVA printer enables circuit-board designers to “print anything on everything,” including circuit boards on soft, flexible materials such as film, paper, clothing and biomaterials.
November
Let’s get it out of the way: November was a lousy month for tech workers globally, and the Canadian and Waterloo Region communities didn’t escape the pain.
As international behemoths like Twitter, Meta and Amazon were each laying off thousands of employees, cutbacks were also taking place closer to home. ApplyBoard, Faire and D2L were among companies to cut staff in November. Even Communitech laid off 11 team members, about 10 per cent of its workforce.
Communitech continued to support displaced Canadian tech workers through The Help List, which connects skilled workers with companies that are hiring. Communitech also runs the Work in Tech job board, the largest listing of tech jobs in Canada.
While Canadian VC investment slowed in the third quarter, it was still higher than historical averages and more in line with historical levels, according to the Canadian Venture Capital and Private Equity Association (CVCA).
Meanwhile, the federal government provided $2.4 million in repayable funding to help Waterloo-based P&P Optica showcase its innovative food-inspection technology to the meat-processing industry.
While our economic challenges are real, innovation advisor and filmmaker Dan Herman put things into perspective with an inspiring documentary about Ukraine’s tech community as it struggles to survive in the midst of a brutal Russian invasion.
Cybersecurity is one area of tech that hasn’t slowed down. Eldon Sprickerhoff, who launched powerhouse eSentire 21 years ago, decided to take a step back from day-to-day operations. In an interview with Tech News, he talked about the company’s early days, shared tips for aspiring founders and emphasized the importance of knowing what you’re good at and hiring talented people to help with the rest.
Marc Morin, another prominent Waterloo tech founder, also announced a change. In a blog post, Morin said he was stepping down as CEO of Auvik Networks and handing the reins to Doug Murray, a Silicon Valley veteran.
Material-science company Trusscore revealed that it’s dipping its toes into digital paint, a new technology that it hopes will disrupt the world of interior décor.
Communitech teamed with CityAge to host an international conference on Vision Zero, a Swedish approach to creating safer roads by trying to reduce traffic fatalities and serious injuries to zero. On a related note, Communitech is working with the Ontario Vehicle Innovation Network (OVIN) and the University of Waterloo to help Ontario-based tech companies develop and deploy solutions that support Vision Zero goals.
Communitech also worked with the Waterloo Artificial Intelligence Institute to host a day-long conference called Data: The Fuel for AI. A number of guest speakers, including Canada’s Chief Statistician, Anil Arora, led discussions on data governance and the rapid rise of AI technology.
December
The year ended with a boom for Waterloo-based DarwinAI, which announced a US$6-million raise. The funding round, led by BDC’s Deep Tech Venture Fund, will help the company improve its AI-powered visual quality inspection system for the manufacturing of printed circuit boards (PCBs).
The year also ended with a boom for Communitech and others who’ve been pounding the drum about the importance of intellectual property strategies.
Less than a week before Christmas, François-Philippe Champagne, the federal Minister for Innovation, Science and Industry, delivered a long-awaited present – an announcement unveiling the five regional partners that will help the federal government deliver $90 million in programming designed to help Canadian startups develop IP strategies.
Communitech received the lion’s share of the ElevateIP funding – $38 million over four years. Working with a variety of partners, Communitech will use the money to help startups understand IP, develop their own IP strategies, and implement those strategies.
As IP lawyer and Communitech advisor Jim Hinton said, IP strategies are critically important to Canada’s economic prosperity.
“More than 90 per cent of the value of companies today is in intellectual property,” said Hinton. “Canadian companies need to generate IP, retain that IP, and then commercialize that IP. They make money from that, and that drives economic prosperity for the whole country.”
In another boom, Communitech convened a roundtable discussion to initiate a much-needed conversation about modernizing Canada’s national security. The virtual gathering attracted 50 representatives from government, military, security, academic and private-sector organizations.
The event was a first step toward creating a national-security innovation forum based on Communitech’s “future of” collaboration model, which brings the public sector together with Canadian tech companies to identify challenges and find solutions.
Meanwhile, a similar initiative for health care entered the solutions stage. The Communitech-led Future of Health collaborative connected representatives from public health-care organizations with innovative Canadian tech companies to explore challenges and potential solutions. In mid-December, Communitech hosted a Solutions Showcase in which 10 companies pitched market-ready tech solutions to improve health-care systems. Participating founders will receive support from Communitech’s Founder Success team, and the opportunity to pursue procurement and piloting discussions with health-care organizations across Canada.
And with that, dear reader, Tech News bids farewell to 2022. Enjoy the rest of your New Year’s Day – and all the best for a safe and prosperous 2023!
This edition of the Roundup compiled by Kevin Crowley.
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