Shopify’s success puts spotlight on next Canadian tech stars
Are IPOs in the cards for Wattpad and Vidyard?
Shopify Inc.’s 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 and 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
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 investment firm, 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 offer $1 billion in financing this year and is interested in 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 stand-alone business,” D’Souza said about the possibility of an IPO.
Wattpad
Wattpad Corp. may no longer be a startup but its ambitions just keep growing. Founded as a mobile-reading app, 12-yearold Wattpad now calls itself a “multi-platform entertainment company.”
The Toronto-based company has provided content for one of the most rewatched movies on Netflix ( The Kissing Booth), a Hulu series ( Light as a Feather) and, this year, a 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.
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.
Vidyard
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, Forrester Research has found.
“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-based Vidyard.