With the amount of venture capital deals in Canada increasing, investors say they’re more confident this year than they've been in a while.
By Jacob Serebrin
A total of $378 million in venture capital was invested during the first quarter of 2014, up from $369 million during the same period the year before, according to Canada’s Venture Capital and Private Equity Association.
That’s good news for the organization, whose three-day annual conference in Ottawa wrapped up on Thursday afternoon.
“Compared to four years ago, there’s a bit more optimism in the room,” said David Adderley, general partner at Ottawa’s Celtic House Venture Partners.
While venture capital investment hasn’t reached the levels of the late-’90s and early 2000s, it’s “definitely on the uptick,” he said.
Ottawa isn’t being left out. Celtic House closed a $100-million fund in May 2012 and three of the first four investments from that fund have been in Ottawa.
“There’s no lack of deal flow in Ottawa,” Mr. Adderley said.
While some of Ottawa’s software-as-a-service companies, like Shopify, which raised $100 million in VC in December, and Halogen Software, which went public a year ago, have drawn a lot of attention, Mr. Adderley said there’s also a lot of activity in “Ottawa’s traditional areas of expertise,” like networking.
One of those companies, which Celtic House has invested in, is Diablo Technologies, which develops flash memory for enterprise applications such as servers.
“They’re providing the Internet infrastructure,” Mr. Adderley said. He describes this as an “enabling technology,” and he sees a growing need for it with the “increase in memory-intensive applications like virtualization, search, big data and video streaming over the Internet.”
For Mr. Adderley’s company, that’s an opportunity.
“Celtic House has always invested in deeper technology,” he said.
But not all of this enabling technology is hardware-based. There’s also an increasing role for software-based enabling technology with things like software-on-chip.
With the increased focus on building an innovation-based economy in Canada, Mr. Adderley said venture capital will play an important role.
Since Canada can’t compete with lower-wage jurisdictions on the cost of labour, “we have to be competing with them on brain power.”
But he warns, “none of that happens without venture capital.”