Shopify’s recent success in securing $100 million in venture capital should help Ottawa step out of the shadows of more-hyped technology centres such as Waterloo when it comes to landing capital investment in IT, local observers say.
The darling of a cluster of software startups located in the ByWard Market, Shopify announced in mid-December it had received the second-largest venture capital investment ever made in a Canadian software company.
That vote of confidence in a local firm will hopefully open the eyes of investors around the world to the city’s resurgence as a tech mecca, said Ron Warburton, the Ottawa managing partner in the Business Development Bank of Canada’s $150-million IT Venture Fund.
“Good things are beginning to happen,” he said, noting downtown companies such as Fluidware and Privacy Analytics are also making a name for themselves in the enterprise software space.
Mr. Warburton said Ottawa tends to fly “a little under the radar” in the investment community, but believes news such as Shopify’s $100-million windfall and Halogen Software’s wildly successful initial public offering in May will go a long way toward changing that.
“It can only help Ottawa’s image in the Canadian landscape and, more importantly, in the North American and world landscapes,” he said. “This is not just a Canadian thing. All of these companies, Shopify, Halogen … they’re competing on a worldwide basis. To have world-class companies like Halogen and Shopify here in town doing their thing, that’s awesome. To be able to grow that and put Ottawa back on the map, I think that’s good.”
Invest Ottawa president and CEO Bruce Lazenby agreed Shopify’s latest VC round could be a harbinger of what’s to come for local firms.
“We’re seeing an increase already in investment,” he said, noting the $60 million in venture capital secured by local tech startups through September of last year was more than for the same period in 2012.
Mr. Lazenby suggested that “people who might not have been thinking about Ottawa in the past might start thinking about Ottawa now. The world is a huge place, so (capital investors) have a tendency to focus on areas where they have had success in the past.”
The city’s business leaders have to do a better job of telling the world the capital is a great place to invest, he said. “We want to see more Ottawa success stories getting out there,” said Mr. Lazenby, who will be going on a “road tour” of several northeastern U.S. cities, including New York, Boston and Philadelphia, in the spring to promote the region to investors. “We need to deepen the pool beyond Shopify.”
Mr. Warburton said many people in the tech community still have a tendency to think of Silicon Valley North as a telecom hub while ignoring the city’s burgeoning software and apps sector.
“I think the IT sector in Ottawa … is really overshadowed by the telecom sector out in Kanata. There’s a strong, viable technology sector out in Kanata really focused on the telecom and semiconductor world, but there’s a lot of interesting things happening in the IT and software world downtown.”