Q-News
March 2009
Posted in Mike's Commentary
At times like this, it’s easy to understand how Henry Blodgett could step out and make his infamous October 1998 $400 buy recommendation on Amazon. It looked as though share prices had nowhere to go but up and analysts and market pundits were climbing all over each other to be the first on CNBC with the most outrageous positive pronouncements on the market. Certainly if you adhere to the old maxim, “the trend is your friend”, it’s not too difficult to make a call that Canada’s Venture Capital industry is closing in on a market bottom. Hey, with only six reported transactions during the month we really don’t have that much further down to go. I guess the only real question is how long it will be before we begin to see any signs of recovery. The six reported deals last month is the lowest number of monthly transactions since we began tracking announcements in January 2002, but trying hard not to be just another Chicken Little we can say that one of the positives last month was that ten different firms made investments.
Mark McQueen, one of Canada’s most prolific and well read bloggers on Canada’s private equity and venture capital market penned another good blog today citing a piece written by Geoff Taber and Chad Bayne at Osler. Taber and Bayne’s piece is an excellent synopsis of the current and impending problems in the LSIF space, and of course the trickle down (or should I say, flood) affect that these developments will have on the future VC investment environment and the ability of technology companies to raise growth capital.
Interestingly enough, we are seeing plenty of activity and with the dearth of venture capital we are busy with numerous M&A mandates. We’re pretty confident that this activity is only going to increase as more technology companies find themselves unable to raise follow-on financing, but challenges continue as entrepreneurs struggle to come to grips with the realities of current valuations.
Despite all of the doom and gloom there continues to be positive events taking place. Canada’s leading web conference, Mesh 2009, scheduled for April 7th and 8th in Toronto should be another excellent event. We are also seeing growing interest and participation at Mobile Monday which will be held at MaRs on April 6th. The next event should be an interesting one with Lucas Skoczkowski, the CEO of Redknee speaking. For those of you who don’t know Lucas, this is bound to be a very entertaining and insightful evening.
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