Pa­trick Wood (Uoft BA ’94)

Rotman Management Magazine - - FROM THE EDITOR -

Pres­i­dent, Tor­mont Group and Founder, The Tor­mont50

TH­ESE DAYS,THE BIG IN­VEST­MENT BANKS are gen­er­ally look­ing for ‘easy kill’. They tend to grav­i­tate to­wards com­pa­nies that are easy to fund over those that would take more time and ef­fort. We fo­cus on find­ing the smaller op­por­tu­ni­ties that they over­look. The Tor­mont50 plat­form fea­tures growth op­por­tu­ni­ties in the small and mi­cro­cap space that we be­lieve have sig­nif­i­cant growth po­ten­tial for in­sti­tu­tional in­vestors, and we open it up to a base of about 75 in­sti­tu­tions across Canada and the U.S. To be in­cluded, a small-cap com­pany has to have iden­ti­fi­able growth driv­ers, whether it be an im­pres­sive in­no­va­tion or the po­ten­tial dis­rup­tion of an in­dus­try. Even a change in man­age­ment can have a broad im­pact on a com­pany’s growth. We look out for ev­ery­thing that can make a com­pany a fu­ture win­ner.

In Canada, the com­pa­nies get­ting the most fund­ing right now in­clude cannabis com­pa­nies, to the detri­ment of other seg­ments. Rather than fo­cus­ing on the grow­ers, we are look­ing at

all the ver­ti­cals that go around that. In my view, in­vestors should be a bit skep­ti­cal about the rapid rise of Cana­dian cannabis com­pa­nies, be­cause meet­ing ex­pec­ta­tions will likely be a big chal­lenge for many of them. There’s a lot of chat­ter on Bay Street and Wall Street about that right now. The U.S. is a much more ma­ture mar­ket: Colorado and Wash­ing­ton have been le­gal­ized for sev­eral years now, and as a re­sult, soft­ware, brand­ing, dis­tri­bu­tion — all the key things that are miss­ing in the Cana­dian mar­ket space — have re­ally been per­fected there.

We’re re­ally ex­cited about Blockchain right now, and we’ve brought com­pa­nies like Delphx to Canada through the list­ing process. It’s one of the pure-use cases of Blockchain and smart con­tract technology. Not many of th­ese com­pa­nies have been rep­re­sented in Canada yet, so we’re ac­tively seek­ing them, par­tic­u­larly in the U.S., which is gen­er­ally a much more ma­ture mar­ket by virtue of economies of scale. In terms of other high­growth in­dus­tries, crypto had a good run, but it was brief and based purely on spec­u­la­tion, and it of­fi­cially ended re­cently. Soft­ware will con­tinue to be a clear win­ner, and we’re happy to be pre­sent­ing smaller, lesser known com­pa­nies to the Cana­dian mar­kets.

With re­spect to Blockchain and AI com­pa­nies, Cana­dian op­por­tu­ni­ties carry with them a lot more risk than their U.S. coun­ter­parts. We’re re­ally far be­hind what is hap­pen­ing in the U.S. AI is a part of ev­ery com­pany we work with, but we have yet to come across a strong enough pure-play AI start-up that would make us ex­cited about tak­ing it through the process of list­ing, in­tro­duc­tions to in­vest­ment banks, in­sti­tu­tional in­vestors, etc. Some of the larger com­pa­nies like IBM and Mi­cro­soft have re­ally taken over that space be­cause they were there from the start. From a smaller com­pany per­spec­tive, we’ve con­sid­ered a few op­por­tu­ni­ties, but noth­ing that would jus­tify us want­ing to go deeper. We are cer­tainly look­ing out for th­ese com­pa­nies. Hope­fully, they will emerge soon.

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.