Alberta’s budding tech sector overcame a tricky 2023 to nearly match 2022’s record levels of venture capital and private equity investment, featuring an increase in megadeals and a more conservative investor approach to early-stage startups, early numbers show.
And as the province charts its path toward maturity, players in the sector are hoping to see growing interest in budding companies that lack the same investor market as the heavy hitters.
Alberta posted about $1.17 billion in investment from venture capital and private equity over 2023, according to early figures from Start Alberta, stacking up closely to the approximately $1.2 billion of investment the year before.
“We’re gaining ground when other places are slow,” said Terry Rock, president and CEO of Platform Calgary, a collaboration network for Calgary’s tech sector. “(Tech is) emerging as a stronger pillar for our economy at a pace that we haven’t seen before.”
Early numbers show Alberta overperformed in a year in which most tech hubs continued to see lower investment compared to the mid-pandemic highs. At the end of the third quarter, Canada’s overall tech sector has posted 494 deals — close to pre-pandemic numbers but well behind the pace needed to reach the 926 total deals in 2021.
(Start Alberta’s 2023 figures are likely undercounted, with some deals still not reported in the database. Precise figures are expected in February.)
Megadeals valued at $100 million or more are taking up an increasingly large bulk of overall investment dollars in Alberta, with about $585 million worth of deals valued at or higher than that mark.
Among those were Entropy Inc., which scored a $200-million carbon contract with the Canada Growth Fund (CGF), geothermal company Eavor Technologies Inc.’s $90-million investment from the CGF and Edmonton-based Jobber closing a $100-million Series D funding round.
But Calgary still has a distance to travel to become a peer with matured tech markets such as Toronto and Montreal — specifically when it comes to investment in early-stage startups, said Jacques LaPointe, co-founder and director of Metiquity Ventures, an early-stage growth equity fund.
Early-stage companies are often those with an idea that hasn’t achieved proven results but intend to build the foundations for a launch.
Lapointe said many Alberta-based early-stage startups are continuing to find it difficult to land the funding needed to interest larger investors. Mature markets such as Toronto and Montreal comparatively have investors for every stage of company, said LaPointe, also former president and co-founder of Attabotics, one of the city’s high-profile tech firms.
“We can have a record year of venture capital investment, but it’s hard to sort of say, ‘OK, that’s happening across the ecosystem across different stages of companies,’” LaPointe said.
“The expectation of what you already proved in your business was higher,” he said. “There was less risk-taking on early-stage and more going toward proven companies.”
But pulling back from the mid-pandemic spending craze and major layoffs in the tech sector, LaPointe said many companies have slimmed down and become more investable as a result, putting Alberta and Calgary into what he calls “vintage years” — meaning it’s a good time to invest.
“Companies have become leaner, meaner, stronger to survive, which means they’re much more investable, and so the hype stories are disappearing. The ‘no growth at all, doesn’t matter if you’re profitable’ . . . that doesn’t resonate anymore,” LaPointe said.
With a handful of major deals often making up a significant portion of overall investment, Alberta’s sector may begin to experience years in which investment is “lumpy,” Rock said, saying investment is a trailing indicator of multi-year growth that leads to major deals happening in one fell swoop.
Cities on a path of maturation, he said, often begin to see less variance.
Platform, with a National Bank of Canada investment of $380,000 over four years, recently launched an “investor hub” that intends to improve connections between investors and tech startups in Calgary — a key to bringing in traditional oil and gas and real estate investors, Rock said.
Alberta Enterprise Corp. (AEC), a venture capital firm started by the Alberta government, notably announced five investments in 2023, and three of those venture capital funds moved to the province because of those investments, said Alan Campbell, director of industry development for the AEC.
Platform currently has nearly 400 members, many from small tech companies, Rock said. Heading into 2024, he’s hopeful the sector will “start to emerge again” internationally.
“I think everybody needs to be nimble in 2024 and be ready to double down on things that are working.”
NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.
Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.
“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”
Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.
Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.
Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.
Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.
In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.
The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.
And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.
Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.
The stock is now showing a 16.1% gain for the year after rising the past two days.
The Canadian Press. All rights reserved.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
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