An interview with Christopher Gillam, vice president of operations and strategic initiatives at BDC Capital
How does Ottawa's tech ecosystem compare to others in Canada and abroad? Has it gotten better or worse over time?
Ottawa's tech ecosystem has evolved in recent years, with some amazing success stories of companies that have garnered global attention. Notable examples include GaN Systems Inc., a clean tech company that was recently acquired by Germany-based Infineon Technologies, Ranovus, another clean tech company that attracted U.S. investment, and Solink Corp., a SaaS provider that secured funding from investors around the world. Additionally, the city has been home to several highly successful companies that have gained global recognition, including Shopify, Kinaxis, Assent Compliance, and Halogen Software. As Canada's most active venture capital investor with operations in every province, BDC Capital has watched Ottawa evolve into the country's sixth-largest VC ecosystem based on cumulative VC investments over the past five years and has noticed some positive trends in the city's tech ecosystem in recent years. Ottawa is the third-largest VC ecosystem in Ontario, behind Toronto and Kitchener, with an 8% share. The city's technology companies have raised $1.7 billion across 87 deals over the past five years, accounting for 4% of the total amount invested in Canadian venture capital during that same period. During the 2021 market boom, Ottawa saw a notable surge in average deal size, making it one of the cities with the highest deal sizes in the country for that year. Outside of that peak period, however, the city's average deal size typically sits at $9.4 million, making it the fifth-largest city by deal size behind Toronto, Montreal, Vancouver and Kitchener. A recent PitchBook analysis ranked Ottawa among the top 100 VC ecosystems in the world, ranking 82nd when considering the city's VC market, including its activity level and expansion rate over the six-year period from 2017 to 2023. It is very positive to see Ottawa's VC ecosystem gaining momentum, reflecting the dynamism of the city's tech ecosystem, and it is encouraging to see the city join other major Canadian cities in this ranking, specifically Toronto at 27th, Montreal at 59th, Vancouver at 70th, and Calgary at 74th. BDC Capital is extremely honored to work with Mistral Venture Partners and other incredible network of Ottawa-based VC investors whose contributions enhance the city's global standing and continually fuel the growth of the tech market. Ottawa is home to a rich network of ecosystem enablers such as L-SPARK, SheBoot and Capital Angel Network whose contributions enhance the dynamism of the industry. L-SPARK is a leading accelerator for the connected vehicle (AV) industry, SheBoot promotes inclusivity in the VC ecosystem with the aim of narrowing the funding gap faced by female founders, while Capital Angel Network is one of the most active angel groups in Canada.
How are Ottawa's tech companies doing in attracting foreign and U.S. investment? What's the reason for this performance?
Ottawa's technology companies have been doing well in attracting investment from the United States over the past few years. Looking at the overall trends, U.S. investor interest in Ottawa has remained relatively stable, with early- and late-stage companies operating in the information technology (IT) and healthcare sectors being the primary areas of interest. We have also seen increased U.S. investor interest in the cleantech sector, which mirrors the positive trends seen across the country. On average, Ottawa accounts for 3% of all Canadian VC deals involving U.S. investors, and this level has remained relatively stable over the past five years, although in 2023 Ottawa's share is expected to increase to 4.1%, while cities such as Toronto and Vancouver have seen contractions. Looking more closely, Ottawa attracts U.S. investors interested primarily in early- and late-stage deals. Ottawa's participation in seed-stage deals by U.S. investors is the lowest compared to other cities, at 18%. Other Canadian cities where U.S. investors are active have a more evenly distributed scope of deals across all stages. This can be attributed to low participation rates of U.S. accelerators in Ottawa-based venture capital deals, leading to limited overall participation of U.S. investors in seed deals. Attracting more U.S. accelerators to the city's tech ecosystem would increase exposure of Ottawa-based companies to U.S. investors, resulting in an additional source of capital to help these companies mature from seed to early stage.
From your experience, how are Ottawa tech companies and the Ottawa tech ecosystem perceived internationally and what can Ottawa tech leaders improve/strengthen?
Ottawa is known for its excellent tech talent pool, high presence of knowledge-based businesses, strong research capabilities, deep tech expertise, and a strong network of business incubators and accelerators. Over the years, the city has built a strong reputation and has stood out as a globally recognized technology hub, highly regarded by domestic and international investors. What sets the city apart from other markets is its remarkable concentration of primarily tech talent. According to CBRE's recent “Scoring Tech Talent 2023” report, which ranks each city's ability to attract and develop tech talent, Ottawa ranks 11th in North America. Interestingly, the concentration of tech talent within Ottawa is the highest of all 50 ranked North American markets, accounting for 13.3% of total employment. This is more than double the market average of 5.6%. Given its geographical proximity to other Canadian tech hubs, the city's ability to generate new synergies and collaborations, attract new strategic actors into the tech and venture capital ecosystem, and retain and leverage its highly skilled talent pool will determine its competitive position going forward.
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