Canada’s Private Tech Firms Talk M&A, Talent Shortages and Culture

By Aly Gillani
Published July 21, 2022 | 3 min read

Sky-high IPO valuations and venture capital boom times may be over for now, but Canada’s private technology companies are creating new opportunities to innovate, share ideas and collaborate, says Dave McKay, President & CEO of RBC.

McKay delivered the opening remarks during last month’s Canadian Private Technology Conference, an exclusive, one-day event, hosted by RBC Capital Markets and RBCx that connected industry CEOs, founders, advisors and top-tier institutional investors from across North America.

“Recognizing that conditions have changed, the volatility in the world is affecting private tech valuations and public tech valuations,” says McKay. “That uncertainty and that volatility creates enormous opportunities to share ideas, to partner, to merge and acquire.”

Here are four key themes that emerged from the day’s engaging conversations and company presentations:


Talent shortages are real

Canada may be better positioned than other countries to deal with the tech talent shortage, but many companies1 here are still desperate to attract skilled workers.

“It all comes back to talent,” says McKay. “There's a density of tech talent in Canada, whether it's Ottawa, Toronto, Montreal, Vancouver, Quebec City…but as we move from a physical-assets-centric economic balance sheet to an IP-centric, proprietary balance sheet, it's all about people. How do you build culture? How do you build winning teams?”

In the same vein, how do you fix this global problem using technology itself? Waterloo-based ApplyBoard, one of Canada’s fastest growing tech companies, is working towards a solution with its artificial intelligence recruitment platform that helps international students apply for post-secondary studies abroad. “Opportunities are outgrowing population growth, so we're thinking about what if we can align the labour market, corporate, and universities with students at the time [that they’re studying],” says ApplyBoard co-founder and CEO Martin Basiri. “By doing that, we can get money from the banks, we can get money from corporates, we can just get a lot of people to invest in other human beings, and thus we can create something. We are committed to solve this by the end of 2030.”


M&A is gaining momentum

For private tech firms with strong balance sheets, the recent IPO slowdown has been an opportunity to acquire and consolidate. Anecdotally, RBC continues to see strong momentum in the M&A markets — with the private market for acquisitions ripe for strategic and financial acquirers.

​​Jeffrey Shiner, CEO of 1Password, a global password manager, mentions      the company is receiving a lot of direct pitches from willing sellers and predicts that deals will pan out in the next three to six months as companies set their sights on the path to profitability. “I could be completely wrong but my theory is that they'll come to some realizations pretty soon that they are interested in—I don't want to say that some could become desperate—but certainly they're interested in acquisition.”


AI isn’t just for the big guys

Amid the flurry of M&A activity last year, it was also a record year for private market activity in the artificial intelligence space.

While the tech giants may be fueling public interest in AI assistance, search-engine and e-commerce capabilities, smaller companies are doing a lot to develop the technology across numerous other industries and applications. Toronto-based visual effects studio MARZ (Monsters Aliens Robots Zombies), which worked on the latest Spider-Man and Stranger Things franchises, has been developing AI for VFX solutions to fight the systematic TV industry challenges of capacity, time and budget constraints. When asked why a visual effects studio is the best place to develop AI software, Co-President Jonathan Bronfman says, “We're literally getting paid to create our own data sets, so our realization of dataset supremacy is real.” At MARZ that means merging the expertise of not only visual effects specialists but also PhDs and researchers in engineering, robotics and computer science.


Creating culture while working remotely

How do you create healthy corporate culture and cohesion while you’re a tech start-up that’s scaling rapidly? Along with a workforce that’s increasingly remote? After more than two years of pandemic-induced exhaustion and burnout, building a culture that values mental health as much as productivity is more important than ever to a company’s success, tech executives say.

The whole idea of a “work hard, play hard” culture to justify overtime and lack of boundaries isn’t what people are looking for anymore, says Stephany Lapierre, founder and CEO of TealBook, a software company that harnesses the power of artificial intelligence and machine learning to deliver smarter procurement approaches. The company was recently named one of the Best Places to Work in Canada in 20222 for promoting a continuous learning environment while still fostering a high-performance environment.

TealBook has another culture advantage, too. Lapierre says female founders have an edge on empowering others. “As much of a challenge as it is for female founders to raise capital, I think [being female] is a huge asset to attracting talent.”

But regardless of gender, the takeaway is simply treating people as individuals,” says Lapierre. “People are looking for authenticity and they're looking to be respected, to be treated as a human, and to be able to collaborate.”

At RBC, reimagining culture also means being able to adapt and pivot to rapidly changing market conditions and customers’ needs. This has never been more applicable than in today’s market. It’s clear from the conference that Canadian tech companies have the right capabilities and mindset to weather the storm and come out stronger on the other side. By focusing on talent, technology and culture these companies and their leaders will continue to emerge as market leaders.



Aly Gillani

Aly Gillani
Managing Director, Head of Canadian Tech Investment Banking at RBC Capital Markets

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