Techopia Talks: How COVID-19 is changing the funding environment for Ottawa tech firms

The fundraising environment has rapidly and dramatically changed for Ottawa’s technology sector. High levels of economic uncertainty, an ongoing health crisis and changes in the way we work are raising new questions for local startups and tech ventures looking to access capital.

In this episode of Techopia Talks, OBJ publisher Michael Curran assembled a panel of financing experts to provide practical advice for startups looking to continue to grow their business amidst the COVID-19 pandemic. They included:

  • Jennifer Francis, chair of the Capital Angel Network;
  • Pablo Srugo, principal of Mistral Venture Partners;
  • Susan Richards, co-founder of numbercrunch, a Techopia sponsor; and
  • Tim McCunn, a lawyer at Perley-Robertson, Hill & McDougall, a Techopia sponsor.

This is an edited transcript of the panel discussion. To hear the full interview, please watch the video above. 

CURRAN: Pablo, we're going to start with you. From a venture capitalist perspective, what are you seeing right now?

SRUGO: Back in April, every VC I spoke with was essentially on pause. Everything was frozen, they weren’t taking any new calls or looking at any new deals. We were really just concerned with helping our current portfolios. 

Come May, at least for us, it’s kind of back to business as usual. I don’t want to overstate that – we are, of course, aware the pandemic is still ongoing – but at the same time most of us still have funds and we are looking to deploy them. Some firms are actually looking at this situation and thinking this is a great time to invest, whether that’s because there are better deals to be had or because technology seems to be coming up quite strong right now. 

CURRAN: Jennifer, you play a different role in the ecosystem. Tell us about Capital Angel Network and what type of response your team is seeing. 

FRANCIS: Angel money is personal money and is frequently the first money into companies, or just after a friends and family round. In a typical year we invest a little over $4 million into the local economy. 

We did a check-in with our angel group early on, and we saw the majority of angel investors are still prepared to invest, which is really good news for Ottawa. There is a preference to help existing portfolio companies get through this tough time. However, one thing for founders to consider right now is how you present yourself on Zoom, how you build that relationship and how you reach out to people since we aren’t able to meet anyone in person right now. We have closed deals since the pandemic, but it is more difficult to build that relationship over the computer. 

CURRAN: Tim, in a preamble to this conversation, you said you’re really busy. What’s going on?

MCCUNN: There are companies that are raising money. On a micro level, this has helped some companies. This pandemic is really highlighting the importance of technology and biotechnology. A lot of them are raising a lot of money. Anybody who is trying to raise money is going to have to have a new slide saying, “This is how COVID affects our world.”

On a macro level, the big question is whether we’re getting into a big recession or not. Recessions, generally speaking, are not great for the investment environment. Market multiples for the big public companies drop, more unemployment and less cash in the system. Everyone hunkers down.

CURRAN: Susan, I don’t want to diminish the pain and suffering caused by COVID-19. But there are economic opportunities. What are you seeing?

RICHARDS: We’ve seen a number of cases of pivoting. Having that nimble attitude, looking to see what the needs are, having that fast cycle time and keeping that iterative approach will help capture those opportunities.