CSE making pitches to win over tech startups

Having established itself as a goto market for junior miners, marijuana stocks and the odd Mahjong company, a small Canadian exchange now wants to lure tech startups.

“I would love to see more technology companies,” Richard Carleton, 57, chief executive of the Canadian Securities Exchange, said in Toronto. “But one of the challenges that we’ve got is those kids all watch Silicon Valley, they read all those books, and they think the VC world is the model, that’s how tech companies grow.”

Carleton’s ideal CSE would be like the NASDAQ in the 1970s, rich with patent owners the world hasn’t yet heard of. That won’t be easy: only two Canadian technology firms have raised more than $100 million through initial public offerings in the past three years, Shopify Inc. in 2015 and Kinaxis Inc. in 2014.

Technology startup companies won’t easily give up the relative safety of private capital — “contacts, mentorship, know-how and experience” — for the rough-andtumble world of public markets, said Mike Woollatt, chief executive of the Canadian Venture Capital and Private Equity Association.

“They call private capital ‘patient capital’ for a reason; there are ups and downs that you can ride with private capital,” Woollatt said from Vancouver. “That said, it’s only patient for so long. Venture has a timeline: these funds are raised for 10 years and they need to invest in your company, scale up, and either exit or see big success within that time frame.”

The TSX Venture Exchange, owned by TMX Group Ltd. and the main competitor to the CSE, is also working to win more tech listings. These aren’t the listings the CSE is targeting. It’s a tiny exchange, handling only about two per cent of the value of shares traded in Canada during the past four quarters.

Carleton said listing on the public markets is rare for early stage tech companies in the U.S. but that doesn’t have to be the case in Canada.