An interview with Christopher Gillam, vice-president, operations and strategic initiatives, BDC Capital
How does Ottawa's tech ecosystem compare to others in Canada and abroad? Has it changed for the better/worse over time?
Ottawa’s technology ecosystem has evolved in recent years and some incredible success stories of companies receiving global interest have emerged. Notable examples include: GaN Systems Inc., a cleantech company that was recently acquired by Germany-based Infineon Technologies; Ranovus, another cleantech company that attracted U.S. investment; as well as Solink Corp., a SaaS provider that secured capital from global investors.
Additionally, the city has seen several runaway successes that have gotten global recognition, including Shopify, Kinaxis, Assent Compliance and Halogen Software.
As Canada’s most active venture capital investor, with activities spanning all provinces, BDC Capital has seen the evolution of Ottawa to become the sixth-largest VC ecosystem in the country, based on the past five years of cumulative VC investment, and noticed some positive trends in the city’s technology ecosystem in recent years.
Ottawa is the third-largest VC ecosystem in Ontario, with a share of eight per cent, after Toronto and Kitchener. Its technology companies have raised $1.7 billion across 87 deals over the past five years, reflecting a share of four per cent of the total amount invested in Canadian VC for that period. During the market boom in 2021, Ottawa experienced an impressive surge in average transaction size, positioning it among the highest in the country for that year.
However, outside of that peak period, the city typically sees an average deal size of $9.4 million, making it the city with the fifth-highest transaction size after Toronto, Montreal, Vancouver and Kitchener.
According to a recent PitchBook analysis, Ottawa made its way to the Top 100 global VC ecosystems, positioned 82nd when considering the city’s VC market, including its activity levels and the rate at which it has expanded over a six-year period, from 2017 to 2023. It’s been very positive to witness Ottawa’s VC ecosystem gaining ground, reflecting the dynamism of its technology ecosystem, and encouraging to have the city join other prominent Canadian cities in this ranking, specifically Toronto in 27th position, Montreal at 59th, Vancouver at 70th, and Calgary at 74th.
BDC Capital is extremely privileged to collaborate with a remarkable network of VC investors such as Mistral Venture Partners and others based in Ottawa, whose contributions enhance the city’s global standing and continuously fuel the growth of its technology market. Ottawa has a rich network of ecosystem enablers like L-SPARK, SheBoot and Capital Angel Network, whose contributions augment the dynamism of the industry. L-SPARK is a leading accelerator for the connected cars (AV) industry, SheBoot helps promote inclusivity in the VC ecosystem by aiming to narrow the funding gap faced by women founders, while Capital Angel Network is one of Canada’s most active angel groups.
How do Ottawa tech companies fare when it comes to attracting foreign/U.S. investment? What are some of the reasons for this performance?
Ottawa technology companies have fared well over the past few years when it comes to attracting U.S. investment. If we look at overall trends, we notice that interest from U.S. investors in Ottawa has remained relatively stable, with early- and later-stage companies operating in information technology (IT) and health-care sectors as main areas of interest. We’ve also observed the increasing interest of U.S. investors in the cleantech sector, mirroring a positive trend we’re observing across the country. On average, according to a PitchBook analysis, Ottawa accounts for three per cent of all the Canadian VC transactions that include a U.S. investor, and this level has remained relatively stable over the past five years, except in 2023, when Ottawa’s share increased to 4.1 per cent, while cities like Toronto and Vancouver saw a contraction.
If we examine closely, Ottawa primarily attracts U.S. investors interested in early- as well as late-stage deals. Seed-stage deal participation by U.S. investors in Ottawa is the lowest compared to other cities, at 18 per cent. Other cities across Canada where U.S. investors are active have a more evenly distributed span of transactions across all stages. This could be attributed to a lower share of participation by U.S. accelerators in Ottawa-based VC deals, which is contributing to limited overall participation of U.S. investors in seed deals. Attracting more U.S. accelerators to the city’s technology ecosystem would increase the exposure of Ottawa-based companies to U.S. investors, consequently bringing some additional sources of capital for these companies to mature from seed to early stages and so on.
From your experience, how are Ottawa tech companies and the Ottawa tech ecosystem perceived internationally? What can Ottawa tech leaders do better/more of?
Ottawa is recognized for its impressive technology talent pool, high presence of knowledge-based businesses, strong research capabilities, and deep-tech expertise, as well as its strong network of business incubators and accelerators.
Throughout the years, the city has built a strong reputation and stands out as a globally recognized technology hub and is well-regarded by investors, both internationally and domestically.
What sets the city apart from other markets is mainly its remarkably high concentration of technology talent. Per CBRE’s recent Scoring Tech Talent 2023 report, which ranks each city’s ability to attract and grow technology talent, Ottawa ranks 11th in North America. Interestingly, the concentration of technology talent within Ottawa is the highest across all 50 North American markets that were ranked, comprising 13.3 per cent of total employment. This is more than double the market average of 5.6 per cent.
Considering its geographical proximity to other Canadian technology hubs, the city’s ability to create new synergies and collaboration, bring in new strategic actors in its technology and VC ecosystem, as well as retain and leverage its highly skilled talent pool will determine its competitiveness in the years to come.
https://issuu.com/greatrivermedia/docs/techopia_insights_2024
