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White Star Capital - Canadian Venture Capital Landscape 2018

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White Star Capital - Canadian Venture Capital Landscape 2018

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In this second edition of our report, we aim to reiterate our enthusiasm for the Canadian Tech and Venture Capital ecosystem as well as touch upon a few additional topics.
In addition to sharing our excitement about Canada and expressing our belief that the ecosystem is stronger than ever, we look at a few new topics. We examine a few subsectors, larger round dynamics, VCCI and regional programs. We are also pleased to further explore one of Canada's key strengths: it's diversity and talent. Finally, we end with an updated deep dive on VC's and other investors making up the space.

In this second edition of our report, we aim to reiterate our enthusiasm for the Canadian Tech and Venture Capital ecosystem as well as touch upon a few additional topics.
In addition to sharing our excitement about Canada and expressing our belief that the ecosystem is stronger than ever, we look at a few new topics. We examine a few subsectors, larger round dynamics, VCCI and regional programs. We are also pleased to further explore one of Canada's key strengths: it's diversity and talent. Finally, we end with an updated deep dive on VC's and other investors making up the space.

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White Star Capital - Canadian Venture Capital Landscape 2018

  1. 1. CANADIAN VENTURE CAPITAL LANDSCAPE
  2. 2. TABLE OF CONTENTS 1. What’s New in 2018 Page 5-8 2. Overview: Why We Continue to be Excited About Canada Page 10-15 3. Canadian ecosystem: Stronger than ever Page 17-22 4. Public sector remains focused on growth in VC and Tech Page 24-29 5. Diversity & Talent is Canada’s Strength Page 31-36 6. Deep Dive on Canadian VCs Page 38-42 2
  3. 3. A WORD FROM OUR CANADIAN PARTNER Jean-Francois Marcoux Co-Founder & Managing Partner WHITE STAR CAPITAL Authors/ Contributors Sanjay Zimmermann Associate “Canada still has it all and more. Nothing can’t be built here and the world has been taking notice” Gagan Singh Summer Associate “Within Canada resides every component of what makes a successful entrepreneurial ecosystem” “We are proud to be a partner of choice for Canadian entrepreneurs. The Canadian ecosystem is building some amazing companies with global ambitions, led by hustling founders and talented world-class teams” In this second edition of our report, we aim to reiterate our enthusiasm on the Canadian Tech and Venture Capital ecosystem as well as touch upon a few additional topics. In addition to sharing our excitement about Canada and expressing our belief that the ecosystem is stronger than ever, we look at a few new topics. We examine a few subsectors, larger round dynamics, VCCI and regional programs. We are also pleased to further explore one of Canada’s key strengths: it’s diversity and talent. Finally we end with an updated deep dive on VC’s and other investors making up the space. At White Star Capital, we started investing in Canada in 2007, have made over 12 investments since and are looking forward to many more. We hope you enjoy reading this report! External Data Sources 3 Christophe Bourque Principal “Back in 2010, when I started my career in VC, I spent a lot of time explaining to people what VC was. It is amazing to see how far the Canadian ecosystem has come and we at White Star consider ourselves lucky to be a part of it.”
  4. 4. WHAT’S NEW IN 2018
  5. 5. “TORONTO ADDED MOST NORTH AMERICAN TECH JOBS”* Toronto is the fastest growing tech market- CBRE report. “BDC SPINS OUT 2 NEW INDEPENDENT TECH FUNDS”* One of the funds will focus on CleanTech, while the other’s focus will be Healthcare and IT. “GOVERNMENT ALLOCATES $350M THROUGH VCCI”* 5 fund of funds will receive a portion of this amount. “PAYPAL WILL ACQUIRE HYPERWALLET FOR $400M” HyperWallet will allow PayPal to provide payment solutions to ecommerce platforms. “PURPOSE FINANCIAL ACQUIRES THINKING CAPITAL FOR $200M”* The goal of this acquisition is to create new investment products. “CANADA WELCOMES COLLISION TO TORONTO”* In 2019, the city will be hosting 90,000 executives from the world’s fastest growing startups. “FEDERAL GOV’T REVEALS 5 WINNING SUPERCLUSTERS”* The gov’t hopes to create 50K jobs and grow the economy by $50B over the next 10 years. “CANADIAN GOV’T IS LAUNCHING A $100M PROCUREMENT PROGRAM” The program will increase procurements from startups. “BUDGET 2018 - GOV’T SPENDING BILLIONS TO IMPROVE GENDER EQUALITY”* The budget aims to encourage participation of women in the workforce. *Additional details provided in the report 5 2018 NEWS HIGHLIGHTS Another big year for Canadian Tech
  6. 6. Spin-out fund Stage: Sector: Legend Stage Sector Seed AI CleanTech Series A Fintech Ecommerce Series B Smart City Transportation Series C Mobile Software $232M Stage: Sector: Stage: Sector: Stage: Sector: Stage: Sector: Stage: Sector: Stage: Sector: Growth Fund $72M $50M $715M $25M Stage: Sector: $75M$130M $50M 6Source: Tracxn NEW FUND ANNOUNCEMENTS Over $1.3B in new capital raised by Canadian VC funds this year
  7. 7. ● Created 82,100 tech jobs in the past 5 years- beats SF by 4,270 jobs1 4th best tech talent in North America2 The city was ranked 11th as the top startup ecosystem in the world3 Toronto Startup Passport The city of Toronto is partnering with WeWork to give international entrepreneurs access to WeWork spaces5 Ranked as one of the lowest cost markets for tech companies4 1 Huffington Post, 2 CBRE Report, 3 BetaKit, 4 CBRE Report, 5 BetaKit 7 TORONTO’S TECH TALENT IN THE SPOTLIGHT “Toronto Beats Silicon Valley in Tech Job Creation”
  8. 8. September 19-20 Vancouver October 18 Ottawa November 2-3 Halifax November 28-29 Ottawa October 22-23 Toronto September 19-20 September 24-27 Toronto April 10 Vancouver July 9-13 Montreal June 19-20 Waterloo June 5-7 Calgary June 4-6 Vancouver May 20-23 Toronto 2018 2019 8 WORLD CLASS TECH AND VC EVENTS Notable upcoming events over the next 12 months
  9. 9. OVERVIEW: WHY WE CONTINUE TO BE EXCITED ABOUT CANADA
  10. 10. VC funding in Canada continues to be high VC FUNDING REMAINS STRONG ICT1 and healthcare deals drive growth while larger deals remain a reality in Canada Industry expertise and successful start-up activity in Canada has captured the attention of investors. Canada experienced record VC funding in 2017, and the momentum continues in 2018. Despite a slight slowdown in the first half of 2018 as compared to 2017 VC funding continues to be quite high. The increase in capital available and quality of startups has made it possible to fund larger rounds – something that was previously a challenge in Canada (more on this later in the report). There have however been fewer mega rounds as compared to 2017 which has led to smaller % of top 10 deals. VC-backed funding Total funding allocated to top 10 deals Source: CBInsights Source: CVCA Source: CVCA Note 1: Information and Communications Technology Note 2: YTD refers to data as of 30 June 2018 10 $0m $2m $4m $6m $8m $10m $12m 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Average Deal ($m) Median Deal Value ($m) $1.9B $2.1B $2.3B $3.2B $3.8B $1.7B 2013 2014 2015 2016 2017 2018YTD 34% 35% 23% 31% 40% 29% 2013 2014 2015 2016 2017 2018YTD 2 2 2
  11. 11. % of Canadian deal volume per stage, per year As a greater percentage of total funding value is captured by the largest Canadian deals, Canada has also experienced a 50% increase of the percentage of total deal volume captured by Seed-stage funding over the last 10 years. The total number of exits rising year over year since 2010 is another encouraging sign as it suggests healthy levels of M&A activity in the country. However it is worth nothing that the # of VC backed exits has remained flat in the last few years. The number of Canadian exits has been steadily rising year-over-year since 2010 Source: CBInsights 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Seed Series A Series B Series C Series D+ 11Source: CVCA Newsletter 12 21 24 25 35 45 30 35 16 59 165 233 291 444 471 517 703 466 2010 2011 2012 2013 2014 2015 2016 2017 2018YTD Number of exits in Canada (VC Backed) Number of exits in Canada (Total) 50% INCREASE IN SEED STAGE DEALS In the last decade, seed stage deals as a % of Canadian deal volume increased by 50% and exits grew steadily
  12. 12. U.K. Canada Germany France Israel $3.4B $1.8B $2.0B $1.1B 145 262 175 97 Region Total Deal Amount (H1 18) Total Deal Volume (H1 18) Source: CBInsights CAGR Deal Volume (H1 16 – H1 18) +27.1% +23.7% +75.4% +20.7% *Western Hemisphere only, VC deals Angel round through Series E+ U.S $52.1B 2,224 +9.8% 12 $1.7B 125 +35.9% SIZING UP CANADA IN A GLOBAL CONTEXT Canada sits with top regions for venture deals and is maintaining double digit growth
  13. 13. Series B share of deals Series C share of deals Series E share of deals Seed/Angel share of deals Series A share of deals Series D share of deals Source: CBInsights 49% A lower % of investments in the seed stages indicates a maturing ecosystem. Canada is starting to gravitate towards later-stage investments. The Canadian ecosystem has become stronger as indicated by the increased number of Series B investments: only 3% lower than the U.S. Canada’s smaller proportion of Series C+ investments is in part due to the younger nature of the ecosystem and the lack of VC funding available at the C+ stages. (More on this on the next slide) 24% 13% 7% 3% 3% 49% 24% 13% 7% 3% 3% 49% 28% 11% 6% 3% 2% 62% 22% 10% 4% 1% 1% 69% 18% 8% 3% 1% 1% 71% 19% 6% 2% 1% 1% 13 DEAL SHARE BY STAGE; PAST 3 YEARS Early evidence of Canada’s maturing ecosystem
  14. 14. FLAT VOLUME OF $20M - $100M ROUNDS: A clear symptom of the growth stage funding gap Source: Tracxn • The # of $20 - $100m rounds since 2015 has been flat despite the general activity in rounds close to doubling over the same period (growth apparently coming from sub $20m or over $100m rounds) • Few Canadian funds are positioned to lead $20m+ funding rounds and international / CVC interest seems to come in more at the $100m+ round size (see p. 22) Source: Tracxn 3 3 3 2 1 Top funds that led $20-$100M rounds 17 16 18 18 2015 2016 2017 2018E # of $20-$100M rounds-since 2015 14
  15. 15. Artificial Intelligence Ecommerce IoT Fintech Deal volume Examples Strong growth – doubling in deal volume Deal volume Examples Strong 2018 – following success of Shopify, Hopper etc. Deal volume Examples Return to growth after slowdown in 2017 Deal volume Examples Steady strong volume 27 35 46 20 30 40 50 60 2016A 2017A 2018E 26 16 32 0 20 40 2016A 2017A 2018E 31 27 46 15 35 55 2016A 2017A 2018E 47 46 52 20 30 40 50 60 2016A 2017A 2018E * * *White Star Capital portfolio companies Source: CBInsights * * 15 CANADIAN SUBSECTORS A snapshot of Canada’s strongest subsectors over the past 3 years
  16. 16. CANADIAN ECOSYSTEM: STRONGER THAN EVER
  17. 17. Tech Giants are acquiring Canadian startups from coast to coast Tech Giant acquisition presence per province over the last 10 years Cloud Computing • Google built its first Canadian cloud computing facility in Montreal • Amazon Web Services has opened a cluster of data centers near Montreal Artificial Intelligence • Google DeepMind opened its first ever international AI research office in Edmonton • Google Brain has expanded to Montreal and Toronto • Adobe Systems Inc* plans on opening an AI lab in Canada • Samsung* launches an AI lab in Montreal and Toronto • Facebook* hires an AI expert to head its first research lab in Montreal • Microsoft* hires a a new director – AI professor from Carnegie Mellon University – for its Montreal research lab • NVIDIA* is opening an AI Research lab in Toronto Europe Canada And are financing Canadian ventures at an accelerated pace • Tech firms have not limited their activity in Canada to expanding their operations, they have also invested in Canadian ventures. • Microsoft Ventures and Amazon Alexa Fund have invested in an equal or greater number of deals in Canada as in the entirety of Europe over the last 5 years (YTD)s Google Ventures 9 1 Microsoft Ventures 6 2 Amazon Alexa Fund 0 7 US Giants are expanding their R&D and Operations teams in Canada Source: Tracxn Source: CBInsights *Partnerships announced in 2018 17 Tech Giant Venture Capital Financing over the last 5 years FAMGA & CO’S IMPACT ON CANADA Industry leaders have been increasing their Presence in Canada
  18. 18. Luxury Retreats Founded in 1999 Luxury Villa Rentals Montreal Sand vine Founded in 2001 Intelligence web traffic optimization Waterloo Maluuba Founded in 2011 Deep learning/machine learning Waterloo Cambridge Global Payments F Founded in 1992 I Internet Software & Services Toronto Thinking Capital Founded in 2006 Internet Software & Services Montreal Acceo Founded in 1988 Internet Software & Services Montreal $263m $562m $900m $230m2 $392m1 2017 2018H1 1 Based on CVCA reported exit value of C$392m 2 The Maluuba deal value was undisclosed. However, the value is estimated to have been of approximately $230m Source: Tracxn Mitel Founded in 1973 Telecom Services Ottawa $2.6b $264m $521m Hyper wallet Founded in 2000 Fintech Vancouver *New companies since 2017 report 18 CONTINUED LARGE TRANSACTIONS IN H1 2018 ICT sector Dominates VC-backed acquisitions
  19. 19. Note: Excludes funds raised during an IPO Source: CBInsights 468 462 378 363 286 272 264 221 215 211 198 191 176 170 159 153 New additions in 2018 Total funding $m 19 TOP FUNDED CANADIAN COMPANIES Companies which received funding over the last 10 years
  20. 20. Canadian VC-Backed IPOs have seen continuous growth in the size of the largest IPO per year over the same period until 2018. Due to expectations of rising interest rates at the start of 2018, companies stalled their IPOs in hopes that the market would stabilize. This has led to higher anticipation for tech IPOs in the second half of 2018. Companies such as Spacey, Electra Mechanical, Nerds on Site, Hootsuite and Vision are expected to IPO in the near term. Legend: ICT Sector Other Sectors Note: There were no Canadian IPOs in 2012 or in 2016, Does not include Reverse Takeovers (RTOs) or Reverse Mergers $101m1 $46m2 $42m1 $131m2 $97m2 $5m2 $157m1 $87m1 2014 20152011-2013 2017 $58m2 $25m1 Canadian VC-Backed IPOs from 2014 to 2018 1 CVCA Infobase, 2 CBInsights 2018H1 No VC-backed IPO’S 20 NO VC BACKED IPO’S IN 2018 TO DATE VC-Backed IPO's experience a slower start in the first half of 2018
  21. 21. Series D $216m 2005 Mobile Software & Services Montreal Series C $102m 2007 CleanTech Calgary Series E $260m 1999 Quantum computing and superconducting electronics Burnaby Series A $134m 2016 Launches and Incubates advanced AI Solutions Montreal Series C $111m 1995 Integrated EHR platform for long term providers Toronto 2018H1 Series D $186m 1995 Integrated EHR platform for long term providers Toronto Series C $127m 2007 Consumer Electronics Toronto <$100m >$100m LEGEND 201720162015 Series C $95m 2007 Predicts airfare Montreal Series C $77m 2007 Digitalization of circulars/flyers Toronto Series C $61m 2005 SaaS Retail Management Montreal Series D $60m 2004 Residential Appraisal Platform Markham Source:Tracxn Series B $140m 2012 Wearable Technology Kitchener Series C $103m 2005 Precision agriculture and data- management Winnipeg Series E $130m 2005 Internet Software & Services Quebec City *New companies since 2017 report 21 LARGEST FUNDING ROUNDS OVER LAST 4 YEARS Canada experienced record VC funding in 2017 and the momentum continues in 2018
  22. 22. 3x the number of $100m+ rounds compared to 2016 Source:Tracxn 0 2 5 6 2015 2016 2017 2018H1 2 rounds 1 round • Canadian Funds • International Funds 1 round 2 rounds • Amongst Canadian funds, domestic pension funds and sovereign funds such as CDPQ, Investissement Quebec and PSP have been quite active (i.e. CDPQ invested in Lightspeed’s and Hopper’s latest round) • Amongst International funds, corporate VCs such as Amazon, Intel and Hanwha have been quite active in these rounds (i.e. Amazon invested in Thalmic Labs and Ecobee’s latest round) 22 FOLLOWING GLOBAL TREND OF MEGA ROUNDS Evolution of the market; Growing Number of $100m+ rounds
  23. 23. PUBLIC SECTOR REMAINS FOCUSED ON GROWTH IN VC AND TECH
  24. 24. • The Canadian Government Budget 2018 allocated $1.4B over the next three years to finance women-led companies through BDC • The government introduced the Women Entrepreneurship Strategy; empowering women to participate in the growing economy • $0.7B was listed for the Canada Foundation for Innovation, a non-profit agency to ensure researches have access to advanced tools • Budget of 2018 placed $1.7B to support the next generation of Canadian researching through institutes and grants • The Global Talent Stream pilot aims to make Canada a world-leading centre for innovation • The Global Talent Stream will help create more jobs and grow the middle class • Applicants to the Global Skills Strategy will be able to immigrate to Canada as permanent residents with no conditions attached to the success of their business • Budget 2018 allocated $4.6m for the renewal and funding of Canada’s Startup Visa Program Canada Start-Up Visa/ Encouraging Foreign Entrepreneurs Creating Talent Promoting Diversity Innovation Funding 24 CANADIAN PUBLIC SECTOR SPENDING Billions spent to promote innovation; attract & develop talent
  25. 25. Date Program Name Level Amount Purpose Mar-18 Women Entrepreneurship Strategy Federal $1.4bn • Support and invest in women in entrepreneurship with the goal of increasing women-owned businesses • Includes $200m of investments in women-led tech firms July-17 Strategic Innovation Fund Federal $1.3bn • Accelerate innovative projects to ensure its competitiveness • Covers a diverse range of projects; research, expansion, development and collaborations July-17 Venture Capital Catalyst Initiative Federal $0.4bn • Increase the availability of late-stage funding • Higher capital allows for additional talent and for expansion to new markets • Supports the Innovation and Skills Plan by helping innovative firms grow, supporting diversity and promoting gender balance May-17 Innovation Superclusters Initiative Federal $0.9bn • Strengthen the most promising business-led innovation clusters by achieving their greatest potential • Supports partnering with the industry and fostering stronger connections Recent Government Funding for Innovation in Canada INCLUDING INVESTING OVER $4.0B IN BUSINESS INNOVATION AND WORKFORCE EQUALITY 25
  26. 26. VC D VC E VC F VC J VC K VC L VC G VC H VC I VC A VC B VC C VC M VC N VC O Startup 3 Startup 4 Startup 1 Startup 2 Startup 6 Startup 9 Startup 7 Startup 8 Startup 11Startup 10 Startup 5 Startup 12 Startup 14 Startup 13 Startup 15 Government of Canada VCCI $400m* Fund of Funds Canadian VC’s Canadian Startups Startup 16 Startup 17 Canadian Employees Tax Benefit flow back to gov’t from employees FOFs will raise capital from the private sector in multiples of VCCI • The 5 FOFs to receive investments under the Venture Capital Catalyst Initiative (VCCI) were announced in June of 2018 • Stream 1 of the VCCI allocates $350m to FOFs with the objective of maximizing returns through diverse investments • Stream 2 allocates $50m to businesses that “challenge conventional practices” and can provide a financial return to investors Source: Government of Canada *$350m allocated to FOFs while the remaining capital is allocated to profit returning investments Managed by bdc Stream 1 Stream 2 26 VCCI OVERVIEW A top down catalyst for VC investment into startups and job creation
  27. 27. Fund of Funds AUM (CAD) VCCI VCAP Provincial Gov’t Funding* Direct Investments $1.6B QC $850M ON $13B ON $556B $50B ON Source: CVCA Infobase, PrivateCapital Journal, Company websites *Access to provincial funding not necessarily allocated 27 VCCI FUND MANAGERS OVERVIEW A broad selection of experienced Fund of Fund managers
  28. 28. CANADA’S SUPERCLUSTERS 50,000+ new jobs in Canada’s market Increasing Canada’s GDP by $50B+ New partners innovating together Increasing innovation in every corner of Canada Growing regional economies Digital Technology Supercluster Focus: VR, AR, data collection, quantum computing Impact: $5B+ in GDP, 13,500+ jobs Protein Industries Supercluster Focus: Agri-food enabling technology Impact: $4.5B+ in GDP, 4,500+ jobs A.I-Powered Supply Chains Supercluster Focus: AI and supply chain Impact: $16.5B+ in GDP, 16,000+ jobs Advanced Manufacturing Supercluster Focus: IoT, machine learning, cybersecurity Impact: $13.5B+ in GDP, 13,500+ jobs Ocean Supercluster Focus: Digital sensors, energy generation, automation Impact: $14B+ in GDP, 3,000+ jobs “The Innovation Superclusters Initiative is investing up to $950 million to support business-led innovation superclusters with the greatest potential to energize the economy and become engines of growth.” Source: Government of Canada 28
  29. 29. Yukon Alberta Saskatche- wan New Brunswick Nova Scotia ©FreePowerPointMaps.com Opportunity Calgary Investment Fund $100m investment fund to support business growth Saskatchewan Technology Start-up Incentive (STSI) 45% tax credit for startup investment New Innovation Hub $2m will be invested to support and promote the entrepreneurial culture of innovation Entrepreneurship Centre- Saint Mary’s University $11m dedicated to growing the province’s entrepreneurial ecosystem New Brunswick Gov’t Investing in Innovation $54m will be invested in the new innovation agenda (research and development) 29 REGIONAL PROGRAMS Promoting Startup initiatives beyond Ontario, QC and BC
  30. 30. DIVERSITY & TALENT IS CANADA’S STRENGTH
  31. 31. CATERINA RIZZI Co-Founder & CCO EVA WONG Co-Founder & COO ARIEL GARTE Co-Founder & Chief Evangelist TANIS JORGE Co-Founder & Director REBECCA SHORT Co-Founder Kristine Steuart Co-Founder & CEO Thought Leaders in Academia KAREN COLLINS Canada Research Chair ANNE COLLEY Faculty - Singularity University JOËLLE PINEAU Head of Facebook AI Lab $160M $38M $57M $35M $30M$31M Source: Tracxn Source: Inspiring Fifty *Filtered by largest Canadian companies in the ICT sector 31 WOMEN IN LEADERSHIP A few of Canada’s most inspiring women
  32. 32. BDC Women in Tech Fund "We will invest $200 million over the next five years to help bridge the gender gap.”2 DMZ Women Founders Accelerator “Encouraging female leaders to pursue and grow high-potential tech ventures.” 6 Disruption Ventures “Our mission is to be the starting point for the best female founders when early stage capital is required.” 1 Women Founder’s Fund by Startup Canada “We Invest in women- led companies in STEM, by providing them with grants.” 3 Funds Accelerators/Programs StandUp Ventures “This is an important step in the evolution of venture capital and in providing more capital to women-led technology businesses.” 4 Ladies Learning Code “Our mission is to be the leading resource for women and youth to become passionate builders – not just consumers – of technology.” 8 SheEO “Supporting women with $1B in interest- free loans- improving on the low levels of funding that women-led ventures receive.”5 Communitech Fierce Founders Accelerator “Since 2016, the program has grown to include later-stage companies, helping them grow their revenue base & business.” 7 1 Disruption Ventures, 2 BDC , 3 Startup Canada, 4 Financial Post, 5 Forbes, 6 Ryerson, 7 Communitech, 8 Canada Learning Code 32 WOMEN-LED TECH INITIATIVES Several programs are starting to emerge and making a real impact
  33. 33. 20% of the Top 50 companies in Canada are foreign-born founders Thiago Caires Co-Founder Tobias Lutke Co-Founder Matthew Shae Co-Founder Julien Billot Founder Vern Bronwell Founder Valery Tolstikhin Founder George Hadjigeorgiou Co-Founder John T Hargrove Founder Mohsen Shahini Co-Founder Coach Wei Founder 1 2 4 3 5 6 7 8 9 10 33Source: Tracxn DIVERSE TALENT IN CANADIAN FOUNDERS Large proportion of Canada’s top 50 companies are led by 1st generation immigrant founders
  34. 34. • 43% of Fortune 500 companies were founded by immigrants or their children1 • With US’ stricter visa and immigration policies, international talent looking at its neighboring country and locals losing faith • The US will slowly be losing its talent "Shopify (Canada) saw 40% more U.S. applicants in the first quarter of 2017 than [they] averaged in all of 2016”2 • Canada’s growing tech powerhouse has been attracting international talent • Startups want to avoid immigration risk and lower equity holding (required for a visa); rather grow their company in Canada3 • Canada’s acceptance of diversity has made it an attractive market “Canada’s merit based system attracts highly skilled and educated immigrants”4 Canada is providing support systems to new immigrants Over the past 5 years, Canada hired 800,000 immigrants in the job market5 The government allocated $400m to improve their English and French6 $4.6m has been allotted for the renewal and funding of Canada’s Startup Visa Program7 Olivia graduates from a recognized international university and moves to the valley Olivia found the cost of living too high and immigration too difficult Olivia moves to Canada and brings her talent to a Canadian company Exodus of International talent to Canada 1 Forbes, 2 Globe and Mail, 3 Financial Post, 4 CBC, 5 StatCan, 6 34 US’S LOSS IS CANADA’S GAIN The US has become less attractive for international talent
  35. 35. Business & Economics Schools7 Computer Science8 Artificial Intelligence Canada’s World Class Universities Artificial Intelligence 43 53 48 22 19 35 31 11 Over half of the immigrants that have arrived 5 years prior to 2016 have attained a Bachelor’s or higher.5 Canada has the world's highest proportion of adults aged between 25 and 64 with a college or university degree of 54% , compared to the 35% OECD average.1 IMMIGRANTS ATTAINING HIGHER EDUCATION Canada allocates 13.4% of its public expenditure on education, a higher % in comparison to the OECD average of 11.3%.6 POPULATION (%) WITH A DEGREE WORLD TOP BUSINESS INCUBATOR DMZ at Ryerson University has ranked as the world leading university-led incubator.2 #1 #1 Far Ahead OF THE OECD AVG 1 StatCan, 2 UBI, 3 Gov’t of Canada, 4 StatCan,5 StatCan, 6 OECD 7 Times Higher Education, 8 Business Insider, 9 Top MBA Canada attracts more tertiary students from abroad (11.9%) vs. the Canadian students studying abroad (3.4%).4 “With Budget 2018’s focus on investing in people and ideas for a stronger, more prosperous Canada, it will increase diversity in science and help develop Canada’s next generation of research leaders.”3 MBA9 48 66 52 35 EDUCATION IN CANADA Providing unparalleled access to talent
  36. 36. “Thirty-two universities are members of the Canadian Association of Business Incubators, a national association that supports the growth of new and early-stage businesses.”1 ”The student-run fund received $600,000 in October from Real Ventures to invest in 24 student-led startups over the next four years.” 1 CABI *CDL is also partnered with UBC, UCalgary, Dalhousie & New York University 36 * UNIVERSITY INCUBATORS Inspiring students and young professionals to go down the entrepreneurial route out of the classroom
  37. 37. DEEP DIVE ON CANADIAN VCS
  38. 38. Atlantic Ontario Quebec Prairie British Columbia Note: Rankings are per fund, not total AUM per firm LEGEND Fund Size (CAD$m) 300+ 200-300 100-200 < 100 Source: CVCA Infobase 38 SNAPSHOT OF LARGEST VC FUNDS Based on most recent fund size; Most prominent in Ontario
  39. 39. Investments and membership by region in 2017 Top 5 Angel Groups by: 3 4 5 Dollar Amount # of deals Average Deal Size Syndication Partners Source: NACO 1 2 24.6% 10% 74.5% 24.6% 1% .2% 89.8% Number of investments Made in 2017 Member Distribution Value of investments Made in 2017 1231 Investors $145.2 million in 370 investments 2014 $1.229M 2015 $1.16M 2016 $1.731M 2017 $1.908M 30 Investors $.38 million in 5 investments 30 Investors $.38 million in 5 investments 39 ANGEL INVESTOR LANDSCAPE Greatest Angel activity in Quebec & Ontario
  40. 40. Investor State # Deals 500 Startups CA FundersClub CA Uncork Capital* CA Social Capital CA Accel Capital CA Plug and Play Ventures* CA Investor State # Deals Accomplice MA Insight Venture Partners* NY EnerTech Capital PA Rho Ventures NY OrbiMed Advisors NY Braemar Energy Ventures NY Union Square Ventures NY Highland Capital Partners MA VIMAC Ventures* MA NGEN Partners* NY BOLDstart Ventures NY Investor Country # Deals Investor Country # Deals Emerald Technology Ventures Acton Capital Partners Go Capital* Point Nine Capital Investor S.A.R. # Deals Horizons Ventures LEGEND Number of Deals 15+ 10-14 7-9 Source: CBInsights *Recently active / made the list in 2018 40 MOST ACTIVE FOREIGN VCS VCs with Foreign Head Quarters which participated in the most VC deals in Canada over the last 10 years
  41. 41. Investor Investor Type Holding Company Bank Diversified Financial Services Holding Company Asset/Investment Management Bank Asset/Investment Management Advisory Holding Company Investor Investor Type Asset/Investment Management Diversified Financial Services Diversified Financial Services Holding Company Bank Private Public Public-Private Partnerships Investor Investor Type Public-Private Pension Fund Public-Private Pension Fund Source: CBInsights 41*New additions since 2017 report CANADIAN INSTITUTIONAL INVESTORS Most Active Canadian Financial institutions; per direct VC investments over the last 2 years
  42. 42. Corporate VC Sectors Direct Investment Investment in VC fund Select Canadian Investments Automation; CRM; Energy Efficiency; Healthcare; Enabling Technologies X X Cloud computing; CRM; Enterprise Software X ICT X Sustainable vehicles; mobility service; autonomous driving X Voice technology innovation; Hardware for Alexa X ICT X Pharmaceutical; Medical Devices; Consumer Healthcare X ICT; Healthcare; Energy, Lighting and IoT; Manufacturing X Improvements to Agricultures from biotechnology to software X X Transportation; big data; Insurance tech X 1 2 3 4 5 6 7 8 9 10 Source: CBInsights 42*New additions since 2017 report MOST ACTIVE CORPORATE VCS Most Active Corporate venture capital groups in Canada in the last 18 months
  43. 43. GLOBAL PRESENCE AND PORTFOLIO INTRODUCTION TO WHITE STAR CAPITAL White Star Capital We invest in ambitious entrepreneurs on both sides of the Atlantic. We have founded, scaled and sold many successful technology businesses. We leverage our collective experience, expertise and global network to help our startups succeed. www.whitestarvc.com

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