Shopify, the Ottawa-based ecommerce platform that is one of the biggest success stories in the Canadian technology sector these days, announced that it is acquiring San Francisco-based Kit, which offers an online marketing assistant for ecommerce portals. Terms of the deal were not disclosed.
Kit was founded in 2013 and had raised an undisclosed amount of seed capital from Technicolor Ventures and Visionnaire Ventures in 2014. Its tools allow online retailers to utilize Facebook to market their products and communicate with customers.
Shopify has been around since 2004 and is regarded as one of the leading Canadian tech companies. Its platform offers a simple way to set up and maintain an online store with a full suite of ecommerce tools that enable things like payment processing and inventory management. The company went public last year on the NYSE and TSX, raising over $130 million. This is the company’s third acquisition but its first since becoming publicly-listed.
To read more about the transaction, click here.
CB Insights recently published its list of private, venture-backed technology companies with valuations over $1 billion. It identified 56 such companies, many of which will be familiar to those who follow the tech sector, including Uber ($17 billion), AirBnB, and Dropbox (both $10 billion) along with some upstarts that receive a lot less press. There is also a name on the list that will be familiar to those who follow the Canadian tech sector: Shopify was listed with a valuation of $1 billion.
We are of course pleased to see a Canadian company on a list like this but we were also a little perplexed by the absence of another well known Canadian tech company: Hootsuite. Shopify received its billion-dollar valuation following its $100 million Series C round of financing in December 2013, bringing its total funding to $122 million. Hootsuite has raised nearly $285 million in funding, including a $60 million Series D one month ago. That level of funding would point towards a billion-dollar-plus valuation given current market conditions, so we were surprised to see it excluded from this list.
Regardless of whether or not Canadian companies make it onto a list like this, we remain very pleased to see our country’s tech start-ups raising significant rounds of capital. This includes Desire2Learn, which raised an $85 million Series B this past August, bringing its total capital to $165 million; BuildDirect, which has raised over $62 million through four rounds of fundraising; and Vision Critical, which has raised $42.5 million to date. We hope that this trend continues and that it is a sign of good times ahead for Canada’s tech industry.
The numbers are in and they look pretty good. Over the past year Canadian companies raised over $1 billion in venture capital financing. This is a very encouraging sign for the health and viability of Canada’s technology sector. We are not only starting innovative companies, we are increasing able to get them the funding they need to grow and prosper.
There are some interesting insights in the latest figures. The volume of deals grew in almost every category of investment, with strong growth in the number of investments from Seed/Angel rounds through to Series C venture capital financing, a category that grew by 33% from the preceding year with an average deal size of over $16 million.
Most impressive was the tremendous growth in the amount of Series E and later stage financing, which grew by over 200% from the previous year with an average deal size of $21.3 million. This is a crucially important category because these deals provide the capital that companies require to make the leap outside of Canada or North America, gain international attention, and become leaders in their respective industries.
There were five large and noteworthy deals in this category that received a large share of the attention and capital this past year: Hootsuite, Shopify, Enerkem, Anaergia, and Wattpad. Collectively, these companies raised over $400 million or 40% of the total venture capital during this period. While it might be troubling to see such a small number of companies capturing such a large share of the venture capital investment in Canada, these companies are poised to become emerging tech powerhouses and we should be encouraged by the fact that they were able to raise significant amounts of capital to help them in this process, especially with so much of it being provided by large, well known VC firms outside of Canada.
We at Q1 Capital are very pleased by these numbers and what they mean for the growth prospects of Canada’s tech community. For more insight into the numbers, please click here.