$600M flurry of VC deals lifts Ottawa out of funding funk

Fellow founders
From left, Aydin Mirzaee, Sam Cormier-Iijima and Amin Mirzaee are the founders of Fellow Insights, an Ottawa software firm that recently landed US$24 million in venture capital. File photo

Barely three months ago, the National Capital Region was languishing in a venture capital desert.

The city known for producing dynamic tech startups such as Shopify and Assent Compliance that raised eye-popping private equity deals was nowhere to be found on the list of Canada’s top-10 centres for VC funding in the first half of 2021.

Despite being home to a vibrant startup scene and an array of business incubators aimed at scaling the next generation of software giants, Ottawa was left in the dust in CPE Analytics’ Canadian Venture Capital Report by the likes of Saskatoon, Fredericton and Halifax – smaller cities with far less storied tech pedigrees.

While CPE’s report might have prompted some hand-wringing at the time, it’s safe to say the capital’s great venture capital drought of 2021 is now over.

In a funding flurry unlike anything Ottawa has seen in years, private equity firms have invested more than half a billion dollars in local tech enterprises in the past four weeks alone. With deals suddenly coming fast and furious, Techopia is taking time out to review the latest transactions in order of their value in Canadian dollars.

Fullscript ($300 million)

The Ottawa-based online health-care platform closed one of the largest venture capital rounds in the city’s history earlier this month to fuel its North American expansion push amid surging demand for natural wellness products. 

Led by U.S. firms HGGC and Snapdragon Capital Partners, Fullscript’s latest round eclipses major deals such as Assent Compliance’s $160-million raise three years ago and Shopify’s $100-million series-C round in 2013. It comes as Fullscript is riding a wave of growth that’s seen revenues skyrocket from $40 million three years ago to a projected $300 million in fiscal 2021.

Health-care practitioners across Canada and the U.S. use Fullscript’s software to dispense products such as vitamin supplements as well as track inventory, automatically refill patients’ orders and create treatment plans. 

Co-founder and CEO Kyle Braatz says the company is addressing a growing market as the North American health-care industry shifts its focus from curing illnesses to preventing them. 

“There’s so much opportunity,” Braatz recently told Techopia. “We believe very strongly that integrative medicine will simply be medicine in the future, and Fullscript is going to be the platform that powers that.”

GaN Systems ($190 million)

This Kanata firm that makes high-speed semiconductors that help electric cars and consumer electronics run more efficiently has raised more than $250 million in VC funding since 2015. Fidelity Investments led its most recent round announced last week. Other contributors included Vitesco Technologies, a European manufacturer of power-train equipment, and BMW i Ventures, which led GaN Systems’ previous round valued at more than $40 million in 2018.

GaN’s secret sauce is its semiconductor technology that uses gallium nitride rather than traditional silicon. The cutting-edge transistors are faster, lighter and bleed less energy in the form of heat than their silicon-based cousins – attributes which make them particularly attractive to an automotive industry that’s rapidly shifting production to electric vehicles.

But the Kanata firm has more than just EVs on its radar. GaN sees big upside in the consumer electronics industry as manufacturers of everything from air conditioners to flat-screen TVs seek smaller and more energy-efficient power sources.

Threekit ($45 million)

Ottawa’s Ben Houston, who founded this 3D imaging venture in 2014 after quitting his career as a Hollywood special effects guru and putting his skills to work in the software business. Since then, Threekit has attracted more than $80 million in private equity from a high-powered list of investors that includes NFL Hall of Fame quarterback Steve Young.

The company, which is headquartered in Chicago but does most of its R&D in the National Capital Region, recently raised US$35 million in a series-B round led by Leaders Fund, a VC firm based in Toronto and Atlanta. 

Threekit’s software creates ultra-realistic online 3D images of everything from couches to diamond rings, giving e-commerce customers a much better idea of what they're about to buy.

As online shopping has surged during the pandemic, so have Threekit’s revenues. The company’s sales have tripled in the past year, and its growing customer base includes furniture retailer Crate and Barrel, golf equipment giant TaylorMade and camera manufacturer Nikon. The firm has more than 150 employees, about 30 of whom work for its Ottawa-based product development hub.

Knak ($32 million)

This Ottawa startup recently received US$25 million from New York-based venture capital firm Insight Partners – the same company that led Shopify’s $100-million series-C round in 2013.

Knak’s drag-and-drop software system simplifies the process of creating mass email marketing campaigns, which is typically a costly, time-consuming endeavour that often requires weeks of rewriting code to make even minor changes.

The firm’s codeless campaign creation software has become the go-to technology for dozens of enterprise customers, including two of the world’s three largest pharmaceutical companies. Previously bootstrapped, Knak now has 42 employees, half of whom are based in Ottawa, and plans to more than double its headcount as demand for its products continues to grow.

Fellow Insights ($30 million)

This Ottawa startup’s meeting management software aims to make everything from one-on-ones to quarterly reviews more efficient by suggesting topics, crafting more focused agendas and offering feedback to help future gatherings run smoother. 

Last month, Fellow announced it raised a US$24-million series-A round led by San Francisco’s Craft Ventures. The firm co-founded by serial entrepreneur Aydin Mirzaee says it plans to use the new funding to double down on product development and boost its sales and customer support teams.

“We were already the leading player in this space, but we really saw an opportunity to just go out and become the category owner,” Mirzaee said in a recent interview.

Fellow is closing in on 1,000 customers, which include Shopify and Chick-fil-A restaurants. Meanwhile, its revenues are on pace to quadruple this year compared with 2020, and its customer count has more than tripled. Now at 40 employees, the company expects that number to double over the next 12 months.