In his 2019 Canadian venture and startup predictions, OMERS Ventures Managing Partner Jim Orlando laments the lack of big exits of VC-backed tech companies in 2018.
Orlando argues the market should be generating more “top 10-in-10” exits — liquidity events large enough to be counted among the top 10 during the past 10 years. To qualify, the valuation should be about $250 million, he said.
The market in Canada appears to be doing a better job on this front this year.
For example, Aeryon Labs, a Waterloo developer of commercial drones, was acquired in January by FLIR Systems for $200 million (C$265 million). Previously, Aeryon was financed by Summit Partners and MaRS Investment Accelerator Fund.
February saw an even bigger M&A: Clementia Pharmaceuticals, a Montréal maker of treatments for rare bone disorders, agreed to be bought by Ipsen in a $1.3 billion (C$1.7 billion) deal.
Clementia already achieved an exit when it made its public debut on the Nasdaq in 2017. But several VCs, including BDC Capital, New Enterprise Associates and OrbiMed Advisors, stayed on and are now backing the sale to Ipsen.
After a nearly two-year hiatus, the market is also seeing a return of VC-backed IPOs.
In March, Lightspeed, a Montréal retail and restaurant POS and e-commerce solution, went public on the TSX, raising C$276 million. The IPO, which valued Lightspeed at C$1.5 billion, was the largest by a VC-backed company in Canada in several years.
Going into the public launch, Lightspeed was backed by Caisse de dépôt et placement du Québec, which led its $166 million Series D financing in 2017. Backers also include Inovia Capital and others.
A second IPO, this one for Milestone Pharmaceuticals, a Montréal cardiovascular-drug maker, occurred in May. The company listed on Nasdaq, raising $82.5 million (C$111 million).
Milestone’s investors include BDC Capital, Domain Associates, Fonds de solidarité FTQ, Forbion, GO Capital, MSBi, Novo Holdings, Pappas Capital, RTW Investments, Tavistock, Tekla Capital and Venrock.
While not in the top 10-in-10 bracket, Milestone’s IPO is significant, coming so soon after Lightspeed’s. That’s because it indicates exchanges may be more receptive to late-stage Canadian tech companies.
This could alter the exit plans of a number of companies that recently closed major growth financings, such as Toronto food-ordering app Ritual and Toronto restaurant POS software provider TouchBistro.