After riding many junior miners into the ground, retail investors have realized that diversity is needed on the Venture exchange.
Canadian retail investors, particularly those who love to play the small caps, are demanding more investment options on the TSXV. The big money in Vancouver, that same money which capitalized on the mining boom from 2003 – 2011, by throwing billions at it, has heard this plea, and is shifting into tech. This is a great bellwether for Canada’s startup technology industry.
There’s a burgeoning small cap tech scene in Vancouver, led by many of the city’s more prominent financiers. After watching the mining market collapse over the past three years, a staple of the Vancouver economy, local venture capitalists are throwing their financial weight behind some innovative technologies.
The Road to Liquidity Goes Through Vancouver
While many market professionals back East don’t like to admit it, given Vancouver’s somewhat sketchy past involving penny stock scams, for a venture market to work in this country, and to receive the funding as well as promotion needed to get a sector off the ground, it often requires support from the city’s movers and shakers. And, arguably, no city in Canada has such a plethora of risk taking millionaires.
In Vancouver’s small cap scene, money is in motion and deals get done. I don’t know what it is, but there is a sense amongst many Vancouver financiers that a deal will fade if it isn’t done before the close… that sense of urgency is important.
Dating back to the Wild West days of the VSE, Vancouver has been the place to be to raise capital for, and promote, small cap companies. When the city’s prominent financiers throw their weight behind a sector, positive things usually start to happen.
Since the days of Murray Pezim, risk tolerant Vancouver entrepreneurs have found a home in the high-risk, high-reward Venture market. And the rest of the country knows that in order to get a publicly traded startup off the ground, it almost always involves a flight to YVR.
Becoming a Startup Technology Hub
Given Vancouver’s insatiable appetite for startups and new found interest in technology opportunities, naturally, innovators and tech gurus are starting to flock to the city. After all, businesses go where the money is. And there are some fantastic technology companies forming on the outskirts of Vancouver’s financial district.
Vancouver has a large talent pool for technology. Facebook, Microsoft, Amazon and Hootsuite have been hiring local Vancouver talent by the hundreds in recent years. So, this new found interest in technology, coming from Vancouver’s small cap financiers, is a perfect match.
From applied technologies to a tech incubator that would rival what you would see in Silicon Valley, to 3D printing technology that is gaining global recognition, Vancouver is on the verge of leading a major surge in TSX Venture technology investment. While only a few of the tech startups in Vancouver have gone public so far, rest assured, it is only a matter of time before the majority of them will.
The TSX Venture landscape is changing; and, once again, it is being led out of the trough by Vancouver’s entrepreneurial spirit.
The TSX Venture is a springboard for startup mining companies, as we all know. But it is also becoming an asset for startup tech companies. In 2013 there were 10 newly listed TSX Venture tech companies, compared to just 6 on the TSX.
While that number may not seem like much, the TSX Venture now has 105 listed tech companies, compared to just 64 on the TSX. Furthermore, in 2013, a year when dozens of mining companies closed their doors forever, tech startups on the Venture were able to raise north of $176 million in 87 equity financings. That’s an average raise of just over $2 million. Compare that to the average raise in the mining sector (for TSX Venture issuers) and it’s nearly double. TSX Venture mining equity financings in 2013 averaged just over $1 million.
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