Some pundits are saying the Venture is in a crisis right now. We see things somewhat differently, and recognize a massive opportunity within the exchange: Canadian tech stocks.
While the small-cap, speculative market of the TSX Venture, primarily consisting of resource plays, continues to experience an unprecedented decline, tech stocks remain rather isolated from the carnage and have been a bright spot for the exchange in 2014.
Falling commodity and precious metal prices have cast a dark shadow over the resource sector and put a choke hold on available capital flowing into many mining assets listed on the Venture. Nearly 60% of the companies on the TSXV are in the mining sector. However, money has a very difficult time sitting idle, and the mining sector’s downfall has been a blessing for publicly traded Canadian tech companies seeking funding.
Below is an excerpt from our recent Volume titled Which Canadian Small-Caps are Fundable?:
“If you evenly spread out all the money raised by tech companies on the Venture among its 253 issuers, that’s an average of just over $3.2 million raised per company. Do the same for mining, and there is roughly $950,000 per company. What a difference…”
Our report continued,
“Tech companies (Clean Tech & Renewable Energy, Life Sciences and general technology companies) make up approximately 12% of all issuers on the Venture. However, they were responsible for roughly 24% of all the money raised from Jan. 1 to Aug. 31st 2014, according to the recent MiG report.”
The above quotes tell us two very important things about the Venture:
- There is plenty of potential for growth in listed tech stocks.
- More capital is flowing into tech-related equities, on a per company basis, than mining (which makes up nearly 60% of the Venture).
When broken down in that manner, it’s easy to understand why tech has outperformed in 2014.
While we strongly expect this overall trend to continue, as innovation and access to capital drive tech advancement, certain niche markets within the technology space are likely to outperform others.
Small-cap tech stocks in Canada: 3D imagery, 3D printing, augmented reality, big data and the new virtual internet lead tech sector
3D imagery, augmented reality, big data and the new virtual internet have dominated headlines and helped drive tech stocks in North America to incredible valuations during the past year.
3D printing was exceptionally hot late last year and earlier this year, while augmented reality tech and the new virtual internet have been on fire throughout 2014. The buyouts and investment in these respective spaces have been nothing short of astounding.
3D printing company Stratasys, which trades on the Nasdaq, has a $5.1 billion market cap. Its stock rallied from below $20 per share in late 2011 to a high of $138.10 in January of this year.
Facebook acquired Oculus, a virtual reality company, for $2 billion in early 2014.
Google invested more than half a billion into augmented reality startup Magic Leap in October. Google’s investment gave Magic Leap a valuation of roughly $2 billion on October 21st, making it the latest success story in augmented reality and 3D imagery. The company has yet to generate revenue, nor does it have any products on the market…
NB: Augmented reality is when a technology manipulates what a person sees using real world or artificial imagery by computer generated sensory input such as sounds, video, graphics etc.
Imagery technology, augmented reality and anything 3D have been central to recent buyouts and responsible for driving massive amounts of capital into startup innovations.
We believe the next wave of speculation and investment in the tech sector will be focused on holographic technology.
A private company, Bleen Inc., for example, is behind one emerging hologram technology. The company’s CEO, Bogdan Shevchuk, began discussions with scientists at the Institute of Holography in Kharkiv, Ukraine in 2011. The company’s products have yet to go mainstream, but they provide a glimpse into what is coming down the pipe.
Just imagine what the combination of lifelike holograms could do with cutting edge artificial intelligence…
Now that artificial intelligence (AI) technology has gone mainstream, thanks in part to the rapid advancements in big data technology, it has become feasible for startups to incorporate AI in various disruptive technologies – holography being no exception.
Lars Hard of Expertmaker stated
“With these new exiting players have come new opportunities: this time particularly for small and mid-size businesses, which now have the chance to invest in AI [artificial intelligence] technologies and compete with the larger enterprise players.”
On October 26th, we published a Weekly Volume titled Three E’s of Tech Investing. Below is an excerpt:
“The investment community in 2014 has been rewarding technology start-ups that can deliver, at minimum, one of what we have dubbed the Three E’s:
2. Efficiency improvement
3. Enable (the enablement factor adds a new technology to an old which allows it to perform tasks that would otherwise be impossible)”
3D imaging and holography technologies fit into the Three E‘s criteria perfectly. They both have the ability to impact entertainment and enable higher education, particularly in the medical, mobile and military fields.
Holography technology can form the basis of a substitute for real objects, things and even people. It seems the only limitation for the technology, from an entertainment, economic or educational standpoint, is mankind’s imagination.
Robin A. Walker published a paper titled Holograms as Teaching Agents for the 9th International Symposium on Display Holography in 2013.
Walker is the Program Coordinator/Interdisciplinary Doctoral Student, at Columbia University in New York. Below is a short excerpt from his report:
“As teaching agents, holograms can be considered substitutes for real objects, (human beings, organs, and animated characters) as well as agents (pedagogical, avatars, reflective) in various learning environments using many systems (direct, emergent, augmented reality) and electronic tools (cellphones, computers, tablets, television).”
Walker also shines light on the field of healthcare and biosciences, noting that “Holograms of human organs and other figures can be used to teach adults and children simple dissections and health protocols as well as instruct medical students and physicians with the latest surgical techniques, innovative tools and environments.”
The advantages of utilizing 3D-imagery and holographic technology for the purpose of instructional tools appears endless.
3D Holograms and Holography Technology set to impact small-cap tech stocks
The privately-held LLC, Holorad was founded in 2005 to commercialize highly-accurate holograms for medical imaging.
Today, the Salt Lake City-based company is in a wide array of industries and sectors. Holorad lists its three key sectors and submarkets on its website:
- Hospitality, which includes hotels, casinos, bars and restaurants.
- Entertainment, which includes theaters, theme parks and sports venues.
- Retail, which includes malls, department stores and boutique shops.
Holorad notes that,
“Holographic ads will be particularly valuable in promoting 3D movies, both at the movie theater and at DVD and Blu-ray sales and rental locations.”
Use Your Imagination in Holography Technology
Think of every digital sign, billboard or advertisement. Imagine replacing it with a 3D hologram. Imagine one that can dance and, with modern AI, interact with you. Imagine a humanlike hologram that can look you in the eyes and explain a product in a conversational manner. These types of innovations are coming to a city near you, very soon.
The potential impact holography can have on the medical industry is massive. Israel-based RealView Imaging Ltd, a private holography company, has created a compelling technology. Take a look at the company’s video presentation by clicking on the image below – this could be game changing.
According to Global Industry Analysts, Inc. the global holography market for industrial applications is projected to reach US$19.1 billion by 2020.
2D is the past. 3D is the present. Interactive 3D holograms are the future. Tech companies around the world are racing to develop and patent technologies in the 3D and holography space that will provide consumer and industrial markets with transformative potential. This is a sector investors simply can’t ignore.
All the best with your investments,
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