Canadian venture capital and startup predictions for 2019: an update


Photo courtesy of klenger/iStock/Getty Images

At the beginning of each year, I look backwards and forwards on trends shaping the Canadian technology startup industry.

It is mid-year, and I have a bit of recharging time before I start my new role at Wittington Investments, so I thought I would review how my technology startup predictions from six months ago are shaping up.

Canada’s financing environment

As I first reviewed what I wrote six months ago, I noticed that I was significantly wrong on my predictions of exits for 2019; but at least I’m wrong in a good way.

I predicted one significant exit for the year, and sitting here halfway through the year we already have three — Lightspeed (US$1.1 billion), Intelex (US$570 million) and Wave (US$405 million).

Given the significance of these and other exits during the year, I wrote a companion piece to this comparing exit values over the last decade or so.

Related to the above, six months ago I thought that 2019 would see two new venture capital firms announce formation and fundraising.

Well, little did I know at the time that I would be part of one of them as Wittington gets more serious about venture capital. As well, Eva Lau’s Two-Small Fish Ventures announced formation as a formal fund. And Radical Ventures announced its first fund. Tick the box on this one.

As it relates to funding of Canadian startups, I felt that total funding would drop, and that we would continue the trends of growth in later-stage investment and drop in early-stage investment.

Photo courtesy of Jim Orlando

Data from CVCA for Q1 and my quick scan of Q2 deals seems to suggest that I may be partially right for the year — total VC funding is growing (Q1 alone saw an almost 50 percent increase over the previous year, Q2 seems about flat), and late-stage and growth-equity rounds continue to increase (the amount of investment between each for 2018 was about equal, whereas in year-to-date 2019, later-stage investment is about 50 percent higher).

I’m doing 50/50 on my new funding predictions.

Canadian financing environment score: three out of four.

Technology trends

My various technology predictions for the year included:

  • No apparent next new innovation platform: With VCs investing widely in robotics, artificial intelligence, autonomous vehicles, augmented reality, virtual reality, bitcoin/blockchain, quantum computing, internet of things, healthtech, foodtech, cleantech, proptech, synthetic biology, it’s still not yet clear to me which, if any, are the transformational platform(s) the way mobile and social have been in past decade.
  • AI will be tainted by negative sentiment : Continued coverage of AI continues to be mixed. I remain hopeful that we can find the right balance between privacy and control of one’s data, versus the aggregate benefits that a centralized analysis can provide to all in many instances.
  • Bitcoin will increase in value, greater attention to stablecoins from known companies:  Bitcoin is on a bit of an upswing recently, and both Facebook’s and JPMorgan’s launch of their own stablecoins suggests that I was on the right track in my bitcoin/blockchain thinking.
  • Fintech resumes its march into Canadian consciousness: Although there have been a few instances of fintech startups increasing market share, I don’t feel there is an overall stronger awareness of these offerings versus this time in 2018.
  • AR/VR reality meet blockchain: Again, I haven’t seen much evidence that blockchain-based virtual worlds or collectables have increased awareness over the last year or so.
  • Micropayment adoption driven by privacy concerns and subscription saturation : And again, not much evidence to say I’m on the right track on this one. It certainly seems like monthly subscriptions are here to stay.
  • Remotely-controlled robotics: My thinking that robots in the Western world controlled by offshore humans would emerge as a segment also does not appear to be coming to fruition. Autonomous AI-controlled robotics remains a key focus of the industry.
  • Non-animal protein becomes the new cleantech: Nailed this one. The blockbuster IPO of Beyond Meat has moved this prediction strongly into the limelight.
  • Synthetic biology venture funding will continue to increase:  This one will be hard to validate, but certainly more attention in the area as evidenced by a key article in the Economist.

Technology trends score: five out of nine.

International trends

My predictions for international trends for the year include:

  • An expectation of some high profile IPOs in the U.S., yet overall a similar total number of IPOs: The Uber, Lyft, Beyond Meat and Slack IPOs have been very high profile, and the overall pace of IPOs has been flat so I may prevail on that prediction.
  • A Chinese tech company entering the top 5 market cap leader-board: Trade wars are pulling down Chinese public company valuations, so it seems unlikely that the tech leader-board will change during 2019.
  • An increased number of tech acquisitions by traditionally non-tech companies: I haven’t really found any data to support my tech/non-tech linkage prediction.

My international trend predictions thus far seem like a mixed bag.

International trends score: one out of three.

So, long story short, it looks like I am on track for a score of nine out of 16 for my 2019 predictions. The year of course isn’t over and I’ll revisit these in more detail at the end of 2019 for a full accountability.

To read the original article, including additional links, please click here.

Jim Orlando has most recently served as a managing partner at OMERS Ventures, the venture capital arm of Canadian pension fund OMERS. This year, Canada’s Weston family recruited Orlando to run its new $100 million venture capital fund as part of the family’s holding company Wittington Investments.