Tech company hit cash-flow positive in 2016

Continued from FP1

The term ‘unicorn’ became a thing at the end of 2013 after venture capitalist Aileen Lee used it to describe the kind of billion-dollar exits the biggest venture funds now needed to justify their size. Lee found 39 so-called unicorns that November. Over the next two years, as valuations ballooned and pension managers, sovereign wealth funds and private equity investors chased venture capitalists into private tech, that number grew to more than 150.

Hootsuite’s $60-million funding round and corresponding valuation were certainly large, especially by Canadian standards. And the company attracted some big backers, including Fidelity and the VC arm of the Ontario Municipal Employees Retirement System pension fund. Journalists and politicians, keen to show that Silicon Valley-type success was possible in Canada, heaped attention on Hootsuite. Investors and executives left the unicorn label unchallenged, said one of the people, who requested anonymity to discuss private information.

Valuations at private companies are based on whatever factors backers think are most important, and can differ widely from investor to investor. Fidelity, which led the $60-million round, has since written down the value of its investment in Hootsuite. Another investor has kept its valuation around the same as it was at the time of the deal, one of the people said.

CB Insights, a popular resource for venture capital and startup data, has Hootsuite on its list of unicorns, one of only two Canadian companies to make the cut (the other one is messaging app Kik). Publications, including Bloomberg News, have cited CB Insights when calling Hootsuite a unicorn in the past.

Hootsuite’s inclusion on the CB Insights list was based on a September 2014 TechCrunch story that reported on the company’s $60-million funding round, a spokeswoman for CB Insights said. That story isn’t concrete about the valuation though, saying only “there are murmurs that it’s now valued at around $1 billion.”

Hootsuite is still one of Canada’s most promising tech companies. It hit cashflow positive last year and recently bought social media advertising tool AdEspresso and analytics company LiftMetrix. It’s on a short list of Canadian tech firms considering going public in 2017, sources told Bloomberg in November.