Alberta Venture Capital Investment Set to Break Record Again

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In Canada’s largest oil and gas-producing province, investors enriched by the energy sector are beginning to open their pockets to a booming local tech industry.

For years, Alberta’s tech startups have complained about a lack of access to local venture capital. Alberta tech entrepreneurs have always had better luck seeking funding in Silicon Valley than trying to raise funds locally.

But that is starting to change. Alberta’s tech sector broke an all-time high for venture capital investments in 2020, closing $455 million in deals.

And while full-year numbers won’t be released until March, Alberta government figures show that by September 2021, the province had already surpassed the 2020 record for venture capital dollars invested. 5.5%.

“We are awaiting final results for all of 2021, but it looks like it will be a significant increase, with a new record high,” said Doug Schweitzer, provincial minister of jobs, economy and innovation. .

Whatever the final dollar figure, at least half of that funding is likely to come from outside the province, particularly from U.S.-based investors, said Zack Storms, founder of Startup TNT — an organization without Edmonton-based nonprofit that works to drive investment in the tech sector.

But Storms said a growing share of the investment capital flowing into startups in the province is generated locally.

“We’re starting to see more Alberta investors,” Storms said.

“There are also a lot of new venture capital funds popping up. Grassroots, grassroots and other Alberta venture capital funds – I think there are more than I’ve ever seen. “

David Edmonds – who sits on the board of The A100, a Calgary-based non-profit whose goal is to help the next generation of tech entrepreneurs thrive in Alberta – said that for many years wealthy people in the province were hesitant to invest in the technology sector, preferring to invest in oil and gas and other more familiar industries.

But he said that changed dramatically in a short time.

“It started a few years ago with some family offices, as the next generation comes along,” Edmonds said. “Three or four years ago you could see there was a shift in sentiment towards big companies – Amazon, Apple, etc. If you’re a trend-watching investor, you can see that you want to be part of it. . And to be a part of that, you have to do a portfolio mix.”

“Untapped” technology market

“Technology is an untapped market. And in the past, [Alberta investors] got scared,” said Ashif Mawji, an Edmonton-based Rising Tide VC partner. “It was a bit like, ‘I see it, but I don’t understand it.’

Mawji, who also invests privately, will launch a new Alberta-based venture capital fund next month. He said it was significant that this time around much of the capital came from people without a technical background.

“These are people who made their money in construction, in real estate, in oil and gas. But they have confidence now,” Mawji said. “They don’t want to invest directly in a technology company yet, but they are confident enough to go into a fund, where the risk is diversified.”

If confidence in Alberta’s tech sector is growing, it’s likely due, at least in part, to a series of high-profile success stories.

Calgary-based software company Benevity earned enviable “unicorn” status last year when UK-based Hg Capital LLP acquired a majority stake in the company in a deal valued at $1. .1 billion US dollars.

Other companies, like Edmonton-based Jobber and Calgary-based Symend, which have raised more than US$60 million and US$100 million respectively in recent funding rounds, have also caught the eye.

“When people start to see these companies in Alberta that are showing significantly high valuations and raising significant funds, I think they start to say ‘there’s something here,'” Mawji said. “And the VCs started taking notice.”

While Mawji said technology is currently booming all over the world, Alberta industry has benefited from public and private sector efforts to encourage diversification during a series of years of a downturn in the oil and gas economy. traditional in the province.

But even with another spike in oil prices, boosters say technology in Alberta will continue to attract ever-increasing amounts of investment capital.

Schweitzer pointed out that some of the companies currently attracting seed and start-up funds will grow into larger, more mature companies capable of attracting larger amounts.

“We expect that in the years to come, the number of venture capitals in Alberta will grow quite exponentially as more companies reach these later stages.”

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