Canadian Tech Exit Leaderboard

Written by OMERS Ventures partner Brian Kobus

Exit. For most people, this word brings to mind images of the red signs above the emergency stairwell in buildings or the last fire drill you took part in. But in startupland, exits are the stuff of legend. The massively successful IPO or having corporate giants fight it out to pay top dollar to acquire the startup which has built the next big thing — exits are what make the startup world go round.

For the Canadian startup scene, the IPO of Shopify in 2015, and the continued success of the company post-IPO, represents a shining example of a world-class success story which has been inspirational for a generation of entrepreneurs and transformative for the careers of many Shopify employees, for investors in the company, and for the communities Shopify has offices in.

In the table below, I’ve pulled together a list of the largest exits for Canadian technology companies post-dotcom bubble to highlight other success stories and to provide a benchmark for entrepreneurs to shoot for. This list only includes companies which had an exit of USD$50M or greater. Achieving an exit above this value is no easy feat. Getting there is almost always the product of vision, strategy, years of great execution and a bit of luck. In most cases the seeds that lead to an exit are planted years before a transaction takes place (see this post on creating exit optionality by my OMERS Ventures colleague Jim Orlando). Finally, navigating the exit process itself can be extremely stressful, with many sleepless nights for those involved.

Here are the criteria I used in determining which companies would be eligible to be included on the list:

  • Companies which were founded in Canada and retained their headquarters in Canada and/or a majority Canadian presence.
  • Companies with a core focus on information technology, communications or digital media; companies focused on life sciences or cleantech are not included.

Here are the criteria I used in determining which transactions to include and the value for each transaction included:

  • Transaction date occurred in 2002 or later.
  • Transactions in which a company is valued at USD$50M or greater (excluding IPO proceeds).
  • Only the first IPO or M&A sale for any given company is included. So for instance, if a company went public and was subsequently acquired, the only transaction included in the list below is the IPO transaction.
  • IPOs are valued using the price of the initial offering, not the price at which the shares subsequently traded at in the public markets. Its not uncommon for shares to trade up significantly from the IPO price, but I’ve used the IPO price to simplify the analysis.
  • Pitchbook is the source for transaction values unless otherwise noted.
  • I’ve only included transactions where Pitchbook or a public source provides a transaction value.

I realize that an IPO may not be an “exit” for the founders or the senior executives of a company because they may choose to retain their shares indefinitely to participate in post-IPO share price appreciation. But for venture capital investors (who may be required to sell or distribute publicly traded shares) and for many employees with stock options, the IPO does represent a liquidity event.

No doubt I have missed several transactions. If you feel there’s a transaction that should be on this list but isn’t, please let me know with a comment here or on twitter @briankobus. As new exits happen, I’ll update this list periodically and add any transactions I’ve missed.

A couple observations:

  • The average age of companies at time of the exit transaction is 10.1 years (median = 9.0 years).
  • Salesforce.com is the most active acquirer on the list, having purchased three companies (Radian6, GoInstant, Rypple).

Taking a look at how the transactions on the list are distributed by year:

  • Things were pretty dry around the time of the Financial Crisis, with only one transaction in each of 2008 and 2009.
  • Post-2009, M&A has been a more common form of transaction vis-a-vis IPO.

From a geography perspective, Toronto accounts for almost half of all exit transactions greater than USD$50M, with 28, but 7 different provinces are represented on the list.

It is important to call out the fact that any analysis of exit transactions is a rear-view mirror look at startup activity in any given ecosystem. As the data above highlights, it’s not uncommon for the time between a company’s founding and an exit transaction to take a decade or longer. Anyone who has been around the startup scene in Canada over the past few years has probably felt the tangible momentum that is building. Venture capital investment continues to rise (particularly the number of large financings >$50M) and Canada is playing a prominent role in exciting new areas of technology such as Artificial Intelligence, a tremendously disruptive technology with far-reaching potential. Simply seeing the growing crowds at startup- and tech-related events is further evidence that technology firms are making up a growing proportion of the economy.

I believe this momentum will lead to a steady stream of new companies being added to the list above in the coming years. So keep on thinking big and aiming high. With a lot of hard work and a bit of luck, your company could end up at the top of this list.