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Tech Roundup for March 2023

Zippy ride

March was a rollercoaster of a month – some exhilarating highs, a few hair-raising drops and just enough straightaways to catch your breath.

Let’s start with the highs.

Shareholders of Waterloo-based Magnet Forensics voted in favour of a CDN$1.8-billion takeover proposal that ranks as the biggest exit in the history of Waterloo Region tech.

The deal still needs court and regulatory approval, but the digital-investigation company expects the sale to take effect in early April.

The new owner, U.S. private-equity giant Thoma Bravo, plans to merge Magnet with Grayshift LLC, an Atlanta-based company with complementary digital-investigation products.

Also in Waterloo, content-management company Shinydocs Corp. managed to raise CDN$16.25 million in a tight market.

The deal, a mix of equity and debt financing, will help the company boost its sales and marketing resources.

Founded in 2013, Shinydocs currently employs 86 people and plans to add another 20 by the end of 2023.

Rounding out the money news, Waterloo-based VueReal received a combined $10.5 million from the federal and provincial governments to scale its cleantech approach to micro- and nano-display fabrication and printing technology.

The funding is part of an overall $40 million that VueReal plans to spend developing and expanding its manufacturing solution for microLED display and other semiconductor applications.

The overall project will create 75 jobs and increase VueReal’s workforce to 105 employees.

IP sale

Smartphone pioneer BlackBerry is selling 32,000 patents and applications – the bulk of its intellectual property – to Malikie Innovations, a newly formed subsidiary of Dublin-based Key Patent Innovations. The deal includes US$170 million up front, with potential royalties boosting that to US$900 million over time.

Waterloo-based BlackBerry led the smartphone revolution in the early 2000s before losing ground to the Apple iPhone. The company’s rise and fall is the subject of a new feature film called BlackBerry.

Deal dip

While there are still plenty of success stories in Canadian tech, the sector continues to struggle against harsh economic headwinds.

A report from Communitech’s Briefed.in deal tracker found that the Waterloo Region tech ecosystem saw total investment of $28.4 million in the fourth quarter of 2022, a drop of 75 per cent from Q3 and a drop of 95 per cent from Q4 of 2021.

Looking at yearly comparisons, total investment in Waterloo Region tech companies in 2022 dropped to $856.4 million from $1.4 billion in 2021. But 2022 total investment is still higher than 2020 ($707.9 million) and 2019 ($532.1 million).

The pattern is similar across Canada. Total investment in Canadian tech companies dropped to $9.7 billion in 2022, down from $14 billion in 2021. Total 2022 investment is still higher than 2020 ($4.4 billion) and 2019 ($5 billion). 

Bank bust

The shockwaves are still rippling through the global financial sector following the collapse of Silicon Valley Bank, a California-based institution that provided services to many VC and tech companies in the U.S., Canada and abroad.

Communitech and other Canadian tech leaders leapt into action in early March to assess the impact on Canadian companies and to offer assistance to affected founders. They also made a number of proposals to the federal government.

Communitech CEO and President Chris Albinson estimated the exposure of Canadian tech companies at more than CDN$1 billion.

Earlier this week, U.S. regulators announced that North Carolina-based First Citizens Bank is buying most of SVB’s assets at a discounted price. SVB’s Canadian branch, which was not part of the deal, remains in the hands of a court-appointed liquidator. 

Robot power

The pandemic has disrupted a lot of industries and caused a lot of pain. But it has also given birth to new opportunities. Just ask Matt Rendall, the CEO and co-founder of OTTO Motors and its parent company, Clearpath Robotics.

In an interview with Tech News, Rendall explained how two global trends – a disruption of supply chains and a shortage of warehouse and manufacturing labour – have generated demand for OTTO’s line of autonomous mobile robots, which move stock, parts and other materials around industrial settings.

The company has been growing steadily and increasing revenue year over year. While Rendall is bullish on his company, he’s also optimistic about the future of the Waterloo Region tech community.

“I think we’re about to enter into a golden era, a really important stage in Kitchener-Waterloo and, more broadly, in southern Ontario,” he said. “I’m thrilled that we’re part of it and I’m excited to see what the community is able to produce in this cycle.”

AI worries

Generative AI tools like ChatGPT, Bard and Bing Chat have garnered a lot of attention over the past few months for their impressive ability to create written, visual and audio content.

But a number of tech leaders – including the CEO of OpenAI, which created ChatGPT – are voicing concern about the potential for harm, disinformation and misuse.

An open letter has been signed by more than 1,700 people – including Elon Musk and Apple co-founder Steve Wozniak – calling for a short pause in the development of AI systems that are more powerful than GPT-4 until the implications are better understood and safety protocols can be agreed on.

Healthy innovation

The Communitech-led Future of Health 2022 collaborative wrapped up with a final speaker-and-panel event.

The year-long initiative brought together health-care providers, government officials and tech founders to seek ways to address health-care challenges through Canadian-made innovation.

A key achievement was the nationwide call for solutions, which attracted 163 submissions from 88 companies. Ten of the companies were chosen to connect with health-care organizations across the country for potential collaborations.

The next iteration of the health initiative will begin in May. 

Procurement progress

Ontario Treasury Board President Prabmeet Sarkaria chose Waterloo Region and the Communitech Hub to kick off a series of consultations about how to use the power of government purchasing to support businesses, create jobs and encourage innovation.

The province has taken a number of steps to strengthen supply chains and provide Ontario businesses with more access to the nearly $30 billion spent each year by the government, municipalities, hospitals, universities and other members of the broader public sector (BPS).

One key step is the creation of Supply Ontario, a new agency that will centralize the procurement of goods and services by the BPS.

The agency’s new CEO, Jamie Wallace, said he’ll be seeking public input on two key questions: “How do we make the system better?” And “How can we land at a place where, as a matter of course, Ontario companies go to the front of the line and they get a shot – a very fair, transparent, competitive shot – to procure?” 

Monte McNaughton, Ontario’s Minister of Labour,Training and Skills Development, also visited Communitech in March. He dropped by to announce legislative changes that will give remote workers – many of whom work in tech – the same rights to severance notice and payments as those who work in offices and on-site settings.

First retirement

When women-in-tech champion Dinah Davis announced her retirement from cybersecurity scale-up Arctic Wolf earlier this year, a lot of people asked her the same question: Why?

After all, she’s only 43, she’s been a great mentor to women, and she had a fantastic job as Vice-President of R&D Operations at one of the fastest-growing companies in the region.

“I’m calling it my ‘first’ retirement,” Davis told Tech News. “There might be many, many more in the years to come.”

Check out our feature story to find out more about what Davis plans to do in the coming months.

Crossing borders

Your product may be a hit at home, but how do you pitch it to customers in another country?

Columnist Melanie Baker walks us through the difference between “translation” and “localization,” and why it’s essential to know how to engage your customers on their terms.

In another piece, Baker confronts the fact that pretty much everything we do online is tracked, recorded and analyzed. This absence of privacy (and collection of our data) has become the basic business model for most of the tech we engage with. But Baker asks: Does it have to be that way?

Meanwhile, Tech About Town columnist Alex Kinsella tells us about the new season of She is Your Neighbour, a podcast series launched by the Women's Crisis Services of Waterloo Region (WCSWR).

In other news

  • Daily Blends, a graduate of Communitech’s Fierce Founders program that provides smart vending machines with healthy food options, raised US$2 million in a round co-led by San Francisco-based Hustle Fund and New York-based 2048 Ventures. 

  • Jay Judkowitz, VP of Product at robotics-maker OTTO Motors, has been acknowledged as one of Supply & Demand Chain Executive’s “Pros to Know” for 2023. 

  • Kitchener-based ApplyBoard, an online platform for international-student recruitment, has appointed David Borecky as Chief Financial Officer and Rajesh Uttamchandani as Chief People Officer.

  • Kitchener-based Robotics company Avidbots confirmed that it has laid off about 50 employees, or about 14 per cent of its workforce.

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"Communitech helps tech-driven companies start, grow and succeed. Communitech was founded in 1997 by a group of entrepreneurs committed to making Waterloo Region a global innovation leader. At the time it was crazy talk, but somehow this community managed to pull it off. Today, Communitech is a public-private innovation hub that supports a community of more than 1400 companies — from startups to scale-ups to large global players. Communitech helps tech companies start, grow and succeed in three distinct ways: - Communitech is a place – the center of gravity for entrepreneurs and innovators. A clubhouse for building cool shit and great companies. - Communitech delivers programs – helping companies at all stages with access to capital, customers and talent. We are here to help them grow and innovate. - Communitech partners in building a world-leading ecosystem – making sure we have all the ingredients (and the brand) to go from a small startup to a global giant."

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