Bill Gross talks about analyzing his 100 startups and others from the marketplace around him.
In conclusion he says:
Timing for us is product market-fit and demand.
Aligned with our investment thesis, we’ve scored some of the investment deals we know about in 2018, to give you our top 10 to watch in 2019. We reviewed 213 seed-financings this year in Ontario. Each deal has been graded in 3 areas (rounded to the nearest whole number while the score weighs each area as 1/3 of the total and combines the fractions with a score of 100 being best):
| Rank | Start-Up | Score | Team | Backing | Opportunity |
| 1 | DarwinAI | 96 | 5 | 7 | 4 |
| 2 | SkyWatch | 93 | 4 | 8 | 4 |
| 3 | Zoom.ai | 90 | 4 | 7 | 4 |
| 4 | Green Tank Technologies | 90 | 5 | 5 | 4 |
| 5 | Acerta | 88 | 5 | 7 | 3 |
| 6 | Avro | 87 | 4 | 8 | 3 |
| 7 | Jiffy | 87 | 5 | 6 | 3 |
| 8 | Cinchy | 86 | 5 | 6 | 3 |
| 9 | Hostaway | 83 | 5 | 6 | 3 |
| 10 | NorthOne | 82 | 5 | 6 | 3 |
DarwinAI, Skywatch, Acerta, and Avro are from K-W, while the rest are from Toronto.
| DarwinAI is the next evolution in A.I. development. Based on distinguished scholarship by an award-winning team led by a Canada Research Chair in A.I., DarwinAI takes the guesswork out of building better A.I.
Through our patented Generative Synthesis™ A.I.-building A.I., DarwinAI enables A.I. to work in the real world by making deep learning faster, portable, scalable, and understandable. Making A.I. work for anyone, anywhere, anytime. |
| SkyWatch provides a digital infrastructure for the distribution of Earth observation data and derived intelligence providing application developers with a single access point to the world’s best Earth observation data and advanced processing algorithms.
SkyWatch EarthCache is a cloud-based platform with comprehensive APIs to facilitate machine-to-machine integration, informative dashboards to monitor usage, and an easy-to-use code builder to rapidly develop associated applications. Adopting EarthCache into your development environment eliminates the need for multiple integration points, legal contracts, pricing and payment models, and costly multi-point searches. Instead, EarthCache allows the development teams to focus on the business application and in delivering actionable intelligence to the end-user. |
| Productivity is wasted as employees juggle time-consuming admin tasks between priority work. Zoom.ai is a chat-based productivity tool that helps employees to offload and automate everyday tasks including searching for files, scheduling meetings, generating documents and much more. Get back to your higher value work by using Zoom.ai — all within your favourite chat platform. |
| A global leader in vaporizing hardware and product design, they are committed to shaping the industry by developing innovative technologies. At Green Tank Technologies, they know that producers and extractors spend years and tons of money developing their quality bud and oil. They set out on a mission to provide quality devices that deliver full flavor and the ultimate user experience. Green Tank designs, develops, and produces industry leading quality vaporization hardware with True-Taste Ceramic Core Technology for full flavor and maximum terpene profiles. |
| Acerta provides a platform that uses machine learning and AI to detect malfunctions and predict failures in real-time for vehicles and their systems (eg. engines, transmission, pumps, motors, etc.). Acerta is a unique platform in that it is able to leverage the data from across the vehicle lifecycle, starting from development and testing, to manufacturing and on-road driving. We are thus ensuring quality throughout the vehicle life.
We have started making an impact for manufacturers today by applying our platform and analysis during assembly. In our most recent deployment we were able to reduce warranties by 30% by identifying complex patterns in testing data that were indicative of defects. We also saved the engineers from having to inspect 4,000 plots per failure – our models automatically identified just 10 that engineers used for troubleshooting. Our recent projects with autonomous vehicle manufacturers are also already bearing fruits! We are introducing important safety features for braking and steering, as well as passenger comfort features. |
| Avro Life Science is developing skin patches for generic drug delivery, focusing on therapeutics for children and the elderly. The core of our technology is a novel biopolymer which is used as a platform for passive transdermal drug delivery of small molecules and drugs. |
| Jiffy is an online platform that connects homeowners with home service providers in real time, based on proximity and availability. These professionals are all pre-vetted. |
| Cinchy is the leading provider of enterprise data collaboration technology, the revolutionary alternative to data sharing. |
| Hostaway is an easy-to-use channel manager for vacation rental hosts that want to increase their client base. It uses existing listings and creates new ones for all the sales channels the host wants to use. |
| Our purpose is to make you and your business more successful by bringing business banking into the 21st century.
We’re building Canada’s first mobile-first API-based banking platform that helps startups and small businesses bank, manage their finances, and integrate all of their financial tools in a simple and intuitive way. Join us and our growing community at www.northone.io |
A smaller list of IPOs in November 2018 compares with the 41 of November 2017 to spell a slight slowdown in the IPO markets this year. Renalytix AI was founded as a special purpose venture this year from the outset and was expecting to go public (so don’t try this at home).
| Company | Categories | Years from Founding | Valuation |
| Babytree | Baby, Child Care, Parenting, Social Media | 12.9 | $1,500,000,000.00 |
| Weidai | Financial Services, Lending, Payments | 7.4 | $699,000,000.00 |
| Vapotherm | Biotechnology, Health Care, Medical Device | 19.9 | $233,800,000.00 |
| Eton Pharmaceuticals | Biopharma, Biotechnology, Health Care, Pharmaceutical | 1.9 | $101,500,000.00 |
| Renalytix AI | Artificial Intelligence, Health Care, Health Diagnostics | 0.8 | $85,396,334.00 |
| Shekel Brainweigh | Point of Sale, Retail Technology | 47.9 | $35,110,712.00 |
| Nanoveu | Electronics | 6.9 | $19,381,185.00 |
| SecureMetric Technology | Security | 11.9 | $14,512,093.00 |
[OPINION]
We are not economists. We do follow a few market indicators that help us decide relative states of health of the investment market and relative states of health of the economy.
One indicator that tells us that there may be less long-term money in the investment markets is the 2-10 US Treasury spread. This is signaling lean times ahead. You can find more about this online. When there is a spread inversion there is a strong market to a near-term recession.
The indicators we follow show that there are either fewer ideas in the marketplace now or less money. Here’s the information that is forming our opinion:
Canadian companies publishing getting seed rounds.
| Year | Period | Number of Published Seed Rounds |
| 2016 | Jan-Nov | 223 |
| 2017 | Jan-Nov | 198 |
| 2018 | Jan-Nov | 162 |
You can see for the same period in the past three years there is a steady decline in companies publishing their seed rounds. This may be that we’ve decided this is not important, or it may also suggest fewer ideas, or it may suggest less money available.
Canadian companies being acquired:
| Year | Period | Number of Canadian Acquisitions |
| 2016 | Jan-Nov | 370 |
| 2017 | Jan-Nov | 403 |
| 2018 | Jan-Nov | 361 |
There is a drop from last year in this time period and we are also less than 2016, which isn’t a clear trend but it does show a drop in the activity of the marketplace.
Finally,
Global IPOs:
| Year | Period | Number of Global IPOs |
| 2016 | Jan-Nov | 45 |
| 2017 | Jan-Nov | 238 |
| 2018 | Jan-Nov | 247 |
This seems great. Companies are going public at an astounding rate.
But if we look at the IPO activity before the last recession we see
| Year | Period | Number of Global IPOs |
| 2005 | Jan-Nov | 20 |
| 2006 | Jan-Nov | 20 |
| 2007 | Jan-Nov | 37 |
Almost as if the financiers taking companies public really wanted to get to the markets before the recession.
If we look at recession years that followed we see:
| Year | Period | Number of Global IPOs |
| 2008 | Jan-Nov | 8 |
| 2009 | Jan-Nov | 17 |
So basically there isn’t enough money in the market to finance all the companies, or perhaps a company is hit by the recession and it’s decided to wait for a better balance sheet.
Regardless, recessions are bad for the investment environment and we feel one is coming. The goal at TheMIN is to discuss what we can do to stay winners.
The Software and Information Technology categories represent 50% of the acquired companies in November. Cannabis made it back into the list!
| Acquired Organization | Categories | Buyer |
| AIworx | Aerospace, Artificial Intelligence, Industrial, Software | Bentley Systems |
| Baffin | Manufacturing, Sports | Canada Goose |
| Bartek Ingredients | Chemical, Food and Beverage, Manufacturing | TorQuest Partners |
| Canopy Labs | Analytics, Big Data, Lead Generation, Marketing Automation | Drop |
| Chirpi | Apps, Social Network | HubConnect |
| Cimtel | Information Technology, VoIP | APPx Group Holdings |
| Clarity Medical Centre | Alternative Medicine, Cannabis, Medical | Choom |
| Custodela | Computer, Network Security | Checkmarx |
| Demac Media | Advertising, E-Commerce, Social Media, Software | Bounteous |
| DV Systems | Machinery Manufacturing | Gardner Denver |
| DXA | Health Care, Information Technology, Software | Dialogue |
| EhEye | Public Safety, Security, Software | Patriot One Technologies |
| Endy | Furniture, Manufacturing | Sleep Country Canada |
| Geosoft | Geospatial, Software | Seequent |
| GrowForce | Cannabis | MJardin Group |
| Halo Management Consulting | Consulting, Management Consulting, Professional Services | EY |
| HTBASE | Cloud Infrastructure, Computer, Information Technology, Software | Juniper Networks |
| IntraGrain Technologies | Agriculture, AgTech, Information Technology | Calian |
| JUICE Mobile | Advertising, Advertising Platforms, Mobile, Mobile Advertising | Curate Mobile Ltd. |
| Microcel Corp | Audio, Computer, Electronics | Atar Capital |
| Mission Management | Property Management, Software | Aspira |
| MoneySense Magazine | Finance, Personal Finance | RateHub.ca |
| MP3 Disques | Music | Quebecor |
| N8 Identity | Identity Management, Software | Data443 Risk Mitigation |
| NerdEMR Services Ltd. | Health Care, Software | WELL Health Technologies Corp. |
| Onstream Engineering | Energy, Oil and Gas | McIntosh Perry |
| OrderDynamics | E-Commerce, Enterprise, Retail, Software, Supply Chain Management | Tecsys |
| Proteus Performance Management | Consulting, Financial Services | HUB International |
| SureWerx | Machinery Manufacturing | The Riverside Company |
| Telmetrics | Advertising, Information Services, Information Technology, Marketing, Marketing Automation, Telecommunications | Marchex |
Complete sweep this month of Toronto getting all the published seed dealflow! Only 4 deals, and if we compare with the November 2017 deals of 20, and the November 2016 deals of 16, we see a big drop for this time of year. Most groups we have contact with have said there has been a drop in the number of Companies and Business Plans to knock on their does. So this drop may be because of a lack of ideas more than a lack of money.
| Company | Funding Type | Money Raised Currency (in USD) | City | Prov |
| Kamazooie Development Corporation | Seed | $377,540.00 | Toronto | ON |
| EnergyGeeks | Seed | $1,000,000.00 | Toronto | ON |
| Hostaway | Seed | $1,420,000.00 | Toronto | ON |
| Synapse | Seed | $2,000,000.00 | Toronto | ON |
Ontario keeps its lead in total size and number of companies this month with 5 companies receiving over 6 million dollars.
| ON | QC | BC | NB |
| $6,604,112.00 | $3,932,150.00 | $2,730,587.00 | $1,500,000.00 |
| 5 companies | 2 companies | 2 companies | 1 company |
Blockthrough has an interesting premise: help companies recover revenue when people viewing their sites are using Adblocking Software.
| Company | Funding Type | Money Raised Currency (in USD) | City | Prov |
| Voiceflow | Seed | $383,700.00 | Toronto | ON |
| Sun Pharm Investments | Seed | $422,000.00 | Surrey | BC |
| Backyard Media | Seed | $422,990.00 | Toronto | ON |
| Entr | Seed | $867,517.00 | Montreal | QC |
| Foxquilt | Seed | $917,485.00 | Toronto | ON |
| Beauceron Security | Seed | $1,500,000.00 | Fredericton | NB |
| Cinchy | Seed | $2,279,937.00 | Toronto | ON |
| fantuan | Seed | $2,308,587.00 | Vancouver | BC |
| Blockthrough | Seed | $2,600,000.00 | Toronto | ON |
| Optina Diagnostics | Seed | $3,064,633.00 | Saint Laurent | QC |
We found the 44 biotechnology companies that published information about their IPO, founding date and valuation in the period January 1 – October 31, 2018.
The averages look like this:
| Ave Yrs to IPO | Avg Valuation at IPO | Time-Value Correlation |
| 8.2 | $494,223,935.16 | -39% |
One conclusion is that the longer a company takes to reach an IPO the lower its valuation at IPO time. If we split the cohort into two pieces and group the fastest to IPO with the slowest to IPO we see a few other interesting things.
| Ave Yrs to IPO (Fastest) | Avg Valuation at IPO | Time-Value Correlation |
| 3.8 | $603,441,194.77 | 5% |
and
| Ave Yrs to IPO (Slowest) | Avg Valuation at IPO | Time-Value Correlation |
| 12.5 | $385,006,675.55 | -58% |
There is no real correlation for the fastest to IPO group. The slowest to IPO group is highly negatively correlated to time to IPO. So the longer they take the lower the IPO value becomes. Based on this fastest to the market group, and if things continue, there would be 2 companies every month being founded that will eventually IPO in about 4 years. Let’s explore how these companies got to the IPO:
The full list is below:
| Company | Categories | Years to IPO | Valuation |
| BioXcel Therapeutics | Biotechnology | 1.2 | $167,000,000.00 |
| Allogene Therapeutics | Biotechnology, Health Diagnostics, Pharmaceutical | 1.8 | $2,074,000,000.00 |
| Equillium | Biopharma, Biotechnology, Life Science | 1.8 | $234,000,000.00 |
| resTORbio | Biopharma, Clinical Trials, Medical | 2.1 | $410,000,000.00 |
| Evelo Biosciences | Biotechnology, Medical, Therapeutics | 3.4 | $509,000,000.00 |
| MeiraGTx | Biotechnology, Health Care, Therapeutics | 3.4 | $407,000,000.00 |
| Aptinyx | Biopharma, Biotechnology, Medical | 3.5 | $520,000,000.00 |
| Magenta Therapeutics | Biotechnology, Medical, Therapeutics | 3.5 | $515,000,000.00 |
| Avrobio | Biotechnology, Genetics, Health Care | 3.5 | $440,000,000.00 |
| Forty Seven | Biotechnology, Clinical Trials, Health Care | 3.5 | $479,000,000.00 |
| Gritstone Oncology | Biotechnology, Health Care, Natural Resources, Therapeutics | 3.7 | $432,428,295.00 |
| Orchard Therapeutics | Biotechnology, Genetics, Health Care, Health Diagnostics | 3.8 | $1,176,000,000.00 |
| Eyenovia | Biotechnology, Manufacturing, Pharmaceutical | 4.1 | $99,000,000.00 |
| Solid Biosciences | Biotechnology, Genetics, Manufacturing, Medical | 4.1 | $546,000,000.00 |
| UNUM Therapeutics | Biotechnology, Health Care, Therapeutics | 4.2 | $355,000,000.00 |
| Autolus Limited | Biopharma, Medical, Pharmaceutical | 4.5 | $657,000,000.00 |
| LogicBio Therapeutics | Biotechnology, Genetics | 4.8 | $219,377,990.00 |
| Eidos Therapeutics | Biopharma, Biotechnology, Pharmaceutical | 4.9 | $608,000,000.00 |
| Tricida | Biotechnology, Health Care, Pharmaceutical | 5.5 | $763,000,000.00 |
| Rubius Therapeutics | Biotechnology, Health Care, Therapeutics | 5.5 | $1,778,000,000.00 |
| Arvinas | Biotechnology, Health Care, Pharmaceutical, Therapeutics | 5.7 | $514,500,000.00 |
| Twist Bioscience | Biotechnology, Chemical, Health Care | 5.8 | $372,400,000.00 |
| Evolus | Biotechnology | 6.1 | $283,000,000.00 |
| Allakos | Biotechnology, Health Care, Therapeutics | 6.6 | $728,000,000.00 |
| Guardant Health | Biotechnology, Health Care, Health Diagnostics | 6.8 | $1,587,000,000.00 |
| Translate Bio | Biotechnology, Genetics, Medical, Therapeutics | 7.5 | $582,000,000.00 |
| ASLAN Pharmaceuticals | Biotechnology, Medical, Pharmaceutical | 8.3 | $1,120,000,000.00 |
| Genprex, Inc. | Biopharma, Biotechnology, Pharmaceutical | 9.2 | $65,000,000.00 |
| UNITY Biotechnology | Biotechnology, Health Care, Medical | 9.3 | $712,000,000.00 |
| Kodiak Sciences | Biotechnology, Health Care, Therapeutics | 9.8 | $365,000,000.00 |
| Crinetics Pharmaceuticals | Biotechnology, Pharmaceutical, Therapeutics | 10.5 | $391,000,000.00 |
| Principia Biopharma | Biopharma, Biotechnology, Life Science | 10.7 | $386,000,000.00 |
| Inspire Medical Systems | Biotechnology, Health Care, Medical Device, Therapeutics | 11.3 | $323,000,000.00 |
| Adial Pharmaceuticals | Biotechnology, Health Care, Pharmaceutical | 11.6 | $32,690,000.00 |
| Xeris Pharmaceuticals | Biotechnology, Health Care, Pharmaceutical | 13.5 | $296,000,000.00 |
| Liquidia Technologies | Biopharma, Nanotechnology, Therapeutics | 14.6 | $166,000,000.00 |
| Neuronetics | Biotechnology, Medical Device, Therapeutics | 15.5 | $284,000,000.00 |
| Aridis Pharmaceuticals | Biotechnology, Content Discovery, Health Care, Pharmaceutical | 15.6 | $102,573,796.00 |
| BioNano Genomics | Biotechnology, Genetics, Health Diagnostics, Medical | 15.6 | $58,182,478.00 |
| Sutro Biopharma | Biotechnology, Information Technology, Medical | 15.7 | $342,000,000.00 |
| PhaseBio Pharmaceuticals | Biotechnology, Medical, Medical Device, Pharmaceutical | 16.8 | $119,000,000.00 |
| Vaccinex | Biotechnology, Clinical Trials, Health Care | 17.6 | $137,700,588.00 |
| Gamida Cell | Biotechnology, Medical Device, Therapeutics | 20.8 | $165,000,000.00 |
| Sol-Gel Technologies | Biotechnology | 21.1 | $225,000,000.00 |
Multiple companies in the Software and Biotech category help us see the average years to IPO from founding of:
| Software Years to IPO | Biotech Years to IPO |
| 11.4 | 8.0 |
And the remaining public companies:
| Company | Categories | Years from Founding | Valuation |
| SolarWinds | Cloud Management, Enterprise Software, Information Technology, IT Infrastructure, IT Management, Management Information Systems, Network Security, Software, Virtualization | 19.8 | $4,649,000,000.00 |
| PINTEC | Financial Services, Information Technology, Software | 6.8 | $3,115,000,000.00 |
| Elastic | Cloud Computing, Open Source, Real Time, Search Engine, Software | 6.7 | $2,501,000,000.00 |
| Livent | Battery | 27.8 | $2,431,000,000.00 |
| Shurgard Self-Storage | Self-Storage | 24.8 | $2,362,948,960.00 |
| Allogene Therapeutics | Biotechnology, Health Diagnostics, Pharmaceutical | 1.8 | $2,074,000,000.00 |
| Neoen | Energy, Finance, Renewable Energy | 10.8 | $1,610,174,462.00 |
| Guardant Health | Biotechnology, Health Care, Health Diagnostics | 6.8 | $1,587,000,000.00 |
| Upwork | Freelance, Marketplace, Peer to Peer | 19.8 | $1,561,000,000.00 |
| YETI Coolers | Outdoors, Sporting Goods | 12.8 | $1,505,000,000.00 |
| Anaplan | Enterprise Software, Information Technology, Sales | 12.8 | $1,400,000,000.00 |
| Orchard Therapeutics | Biotechnology, Genetics, Health Care, Health Diagnostics | 3.8 | $1,176,000,000.00 |
| WestWing | E-Commerce, Home Decor, Home Renovation, Interior Design, Retail, Retail Technology | 7.8 | $607,763,520.00 |
| Axonics Modulation Technologies | Health Diagnostics, Medical Device, Software | 6.8 | $400,000,000.00 |
| Twist Bioscience | Biotechnology, Chemical, Health Care | 5.8 | $372,400,000.00 |
| Kodiak Sciences | Biotechnology, Health Care, Therapeutics | 9.8 | $365,000,000.00 |
| Osmotica Pharmaceutical | Pharmaceutical | 18.8 | $360,649,968.00 |
| Equillium | Biopharma, Biotechnology, Life Science | 1.8 | $234,000,000.00 |
| LogicBio Therapeutics | Biotechnology, Genetics | 4.8 | $219,377,990.00 |
| Gamida Cell | Biotechnology, Medical Device, Therapeutics | 20.8 | $165,000,000.00 |
| PhaseBio Pharmaceuticals | Biotechnology, Medical, Medical Device, Pharmaceutical | 16.8 | $119,000,000.00 |
| Valuenex Japan, Inc. | Information Technology, Intellectual Property | 12.3 | $93,386,817.00 |
| Straker Translations | E-Learning, Language Learning, Software | 19.0 | $56,152,202.00 |
| PINCHme | Consumer Goods, Retail, Shopping | 6.8 | $44,637,780.00 |
| Wiseway Group | Freight Service, Logistics | 13.8 | $42,883,347.00 |
| identitii | Financial Services, Information Technology, Payments | 4.0 | $40,000,000.00 |
| Security Matters | Consumer Software, Software | 10.8 | $14,271,819.00 |
| Stealth Global | Logistics, Supply Chain Management | 4.8 | $13,654,810.00 |
Another healthy 32 companies this month. With Software and Information Technology being the largest component of acquisitions. Surprisingly no Cannabis buys.
| Acquired Organization | Categories | Buyer |
| Sierra Systems Group Inc. | Information Technology | NTT Data |
| FMAV | Events | PSAV |
| CBIX | Analytics, Bitcoin | Bitbuy |
| Digital Monarch Media | Media and Entertainment | Unity Technologies |
| Symbility Solutions, Inc. | Cloud Computing, Enterprise Software, Mobile | CoreLogic |
| Chef’s Plate | Food and Beverage, Food Processing, Restaurants | HelloFresh |
| B+H Architects | Architecture, Interior Design | Surbana Jurong Private Limited |
| eVision Industry Software | Computer, Service Industry, Software | Wolters Kluwer |
| Tapped Mobile | Ad Network, Advertising, Mobile | EQ works |
| gShift | Analytics, Content Marketing, SaaS, Search Engine, SEO, Software | Mintent |
| SIMSOLID | CAD, Software | Altair Engineering |
| Crafted Stories | Advertising, Content Marketing, Marketing | McMillan Agency |
| High Line | Software | NEOGOV |
| Marcato Digital Solutions | Event Management, Music | Patron Technology |
| X2 Games | Blockchain, Gaming | Global Blockchain |
| Daishowa-Marubeni International | Forestry | Mercer International |
| Viau Foods | Food Processing | Maple Leaf Foods |
| MostFunGames | Online Games, Online Portals | DOIT Software |
| Alert Labs | Commercial, Information Technology, Sensor | Watsco |
| STAT Search Analytics | Analytics, Digital Marketing, SEO | Moz |
| PNG Equipment Ltd. | Oil and Gas, Sales | Fuelled |
| Delom Group | Industrial Engineering, Mechanical Engineering | Wajax Ltd. |
| Office Document Consulting | Information Technology, Software | ECi Software Solutions |
| Coreworx | Cloud Computing, E-Commerce, Enterprise Software, SaaS | Vela Software |
| Canadian Insurance Top Broker | Insurance, Publishing | Newcom Media Inc. |
| Acenzia | Consumer Goods | LiveWell Foods Canada |
| Cooper’s New Reality Garage | Computer, Software | Truly Social Games |
| THP | Media and Entertainment, Online Portals | Williams Lea Tag |
| GLyPharma Therapeutic | Health Care, Medical, Therapeutics | Therachon |
| Somabec | Publishing | Transcontinental |
| Solufy | Computer, Software | Prometheus Group |
| Powervision Software | Document Management, Electronics | Cortex Business Solutions |