Patrick Wood (Uoft BA ’94)
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.