It was only a matter of time.
The Globe and Mail said the quiet part out loud on Friday, with new reporting from Sean Silcoff indicating Georgian Partners—Canada’s largest independent VC firm with $5.6 billion USD in assets under management—wrote down 28 investments in 21 companies across five funds, representing a whopping $430-million USD loss in value.
After a quick review of the group chats over the weekend I can confirm no one is happy. With prominent US LPs and a majority of its investments south of the border, Georgian might be the most recognizeable Canadian VC name outside of Canada, and such news tarnishes the collective brand.
More importantly, Georgian’s LPs—BDC, EDC, CDPQ, Kensington, Northleaf, Teralys, etc.—are also prominent LPs in most other Canadian VC firms. Poor performance from Canada’s largest independent venture firm has ripple effects, and might add context to why this year is the worst in a decade for VC fundraising.
So yes, the macro is bad but it should also be completely expected. The collective post-pandemic fever dream that presaged the end of the ZIRP era is well documented. And any firm that secured just under $2 billion USD to deploy right when rounds were closing at 20-25x revenue should expect their book value to drop when those revenue multiples return to reality (ignore AI for the moment).
BDC, Canada’s other largest investor by AUM, just wrote down its VC portfolio last month. I don’t think anyone can reasonably argue that BDC and Georgian are the only two Canadian firms having frank conversations with their auditors right now.
Let’s jump to the micro for a second to connect it to the macro. BetaKit has written previously about VC/LP issues negatively impacting Canadian startups, even contributing to their demise. Our Alex Riehl also dropped new reporting on Friday, which you can read below, about the ongoing struggles of Toronto-based FreshBooks to reach profitability. One source pointed to the pressures of finding revenue growth after securing so much venture capital. The Canadian investor in FreshBooks’ Series A and B rounds? Georgian.
I’m in Vancouver this week for BetaKit’s latest Town Hall (our amazing speaker list is also below). If you’re in town but can’t make the event, drop me a line and we’ll grab a coffee and talk fund performance.
Douglas Soltys
Editor-in-chief
Experience power and comfort with Dynabook Tecra A40 & A50
Advance your business with the Dynabook Tecra A40 and A50, expertly designed for SMBs needing robust performance and reliability. The Tecra A40 and A50 are perfect for hybrid professionals, offering powerful computing capabilities and ergonomic designs for ultimate comfort. Plus these laptops run on Windows 11 to deliver an extraordinary computing experience with top tier security. Trusted by Canadian businesses, the Tecra lineup is built to handle your most demanding tasks.
Visit the Dynabook store to order the Tecra A40 or A50, complete with an industry-leading 3-year warranty.
TOP STORIES OF THE WEEK
Meet the BetaKit Town Hall: Vancouver speakers
BetaKit is happy to announce five BC leaders who will provide a candid pulse check on the opportunities and challenges facing the West Coast tech sector at BetaKit Town Hall: Vancouver this Tuesday.
In addition to the fireside chat and Q&A between BetaKit editor-in-chief Douglas Soltys and Clio CEO Jack Newton, attendees will hear from former East Side Games CEO Josh Nilson, AbCellera VP of Biz Development Anne Stevens, Jane App co-founder Alison Taylor, Topicflow founder Amin Palizban, and Atelier founder Scott Langille.
Make sure to secure your ticket while they’re still available!
Inside FreshBooks’ struggle to reach profitability
“The next five years will be focused on scaling globally,” FreshBooks founder and board chair Mike McDerment told BetaKit in early 2021, eight months before securing a unicorn valuation.
Since that time, FreshBooks has been on a multi-year rollercoaster ride of executive turnover, staff reductions, and office shutdowns. That rollercoaster continued this month, when chief product and technology officer Stefano Grossi became the ninth executive to depart the company since September 2022, as part of new layoffs impacting 140 employees—the company’s sixth known round of staff reductions in the same period. Those totals include the previously unreported departures of CFO and co-interim CEO Jackson and SVP of Global Sales Greg Rodriguez, in addition to the shuttering of FreshBooks’ San Antonio sales office.
Information VP forgoes fourth fund in favour of SPV-style investing
After recently taking a step back to consider its options amid a particularly tough VC fundraising environment, Information VP has decided to invest more selectively in later-stage B2B FinTech and enterprise SaaS startups on a deal-by-deal basis.
“Our plan is not to disappear quietly into the night,” general partner David Unsworth told BetaKit. “We’re still here supporting entrepreneurs, still working hard at making sure we’ve got a robust ecosystem.”
New funding for Kepler and Wyvern headline busy month in Canadian space tech
It’s been an eventful month for Canadian space tech as companies like Wyvern, Kepler Communications, Mission Control, and Volta Space Technologies prepare for take-off with new partnerships and rounds of funding.
SAAS NORTH puts AI’s impact under the microscope
Has artificial intelligence truly made software platforms smarter? What results is it driving for Canada’s SaaS companies? And, most importantly, can it be trusted?
These are just some of the questions SAAS NORTH 2024 will tackle head-on as Canada’s SaaS founders, investors, and teams gather at Ottawa’s Shaw Centre on November 13 and 14 to dig into what’s shaping the future of the country’s software sector.
If you’re late securing your spot, BetaKit still has your hookup. You can save 25 percent on tickets to SAAS NORTH 2024 by using the code BETAKITSN24 at checkout. We’ll see you there!
Mark your calendar!
#MaRSClimateImpact runs Dec 3 & 4. Join us for two days of expert panels, venture showcases, and deep dives into climate innovation and action.
Funding, Acquisitions, and Layoffs
VAN – Hong Kong billionaire purchases $81M CAD stake in Well Health
EDM – Wyvern secures $8.2M CAD strategic investment
ON – Ontario reveals $146 million CAD next phase of life sciences strategy
TOR – Fable raises $33.8M CAD Series B round
TOR – NCC commits $22.8M CAD to 37 cybersecurity projects
TOR – Kepler Communications secures $20M CAD in federal funding
TOR – Round13 Capital to acquire venture debt platform TIMIA Group
MTL – Blockstream raises $289M CAD in convertible note financing
MTL – Deck raises $6.2M CAD seed round
MTL – Trustii raises $2.8M CAD seed round
The BetaKit Podcast
Does Canada have the leverage to regulate Big Tech?
“We just don’t have the clout to be able to successfully push policy on top of these platforms without cooperation or partnership from other countries.”
Former Google Canada and Twitter Canada exec Rory Capern joins to discuss the ongoing US Big Tech antitrust cases, the state of social media and digital advertising, and what recourse (if any) Canada has to move forward effective regulation.
AWS Activate helps startups reduce costs and increase speed to market.
AWS helps startups bring their ideas to life through AWS Activate. As you build and scale your business, Activate credits grow with you to support your changing needs. If you’re an AWS Activate member, you may be eligible for up to $100,000 in credits to help offset your AWS bill.
AWS Credit eligibility for early-stage startups is based on stage and affiliation with Activate Providers, which are thousands of accelerators, angel investors, venture capital firms, and startup enabling organizations around the world. Select the package that’s right for your startup today.
Visit AWS Activate to get started.
Take The BetaKit Quiz
Think you’re on top of Canadian tech and innovation news? Time to prove it. Introducing The BetaKit Quiz, a new weekly challenge dropping every Friday.
This week: industrial espionage, VC shake-ups, and RuPaul’s Drag Race.