Reviewing My 2020 Canadian Venture Capital Predictions

At the beginning of each year, I try to spend some time looking backwards and forwards at trends shaping the Information, Communications and Technology (ICT) startup sector here in Canada. My year-ago review of my 2019 predictions is here (I scored 9 out of 16), and my guesses as to what 2020 would bring are here. I didn’t predict a global pandemic so I am guessing I will be off base on much of what happened; here are the results from my actual predictions from a year ago:

Canadian Venture Capital Financing Environment Predictions

My two main 2020 venture financing predictions were that:

  • Funding of later-stage companies would increase. Wrong.
Source: Pitchbook, Crunchbase, Wittington Ventures Estimates
  • As the impact of COVID made its way into funding announcements in the latter half of the year (announcements lag the actual impact), the pace and amount of investment dropped.
  • This COVID-driven drop affected all stages, but as the following diagram shows, seed- and early-stage investments were particularly impacted in the latter half of the year. Seed-stage investment dollars dropped almost in half, whereas late-stage investments largely held constant throughout the year.
Source: Pitchbook, Crunchbase, Wittington Ventures Estimates
Source: Pitchbook, Crunchbase, Wittington Ventures Estimates
  • I also thought we would see a Canadian startup that raised $100m+ in venture capital face difficulty raising further capital, or otherwise pivot or restructure in some way. Correct. COVID unfortunately helped me on this one, as media coverage of a few different companies pointed to a challenging market and fund-raising environment for several well-financed high-profile companies.

Political Predictions

Wading into the Canadian political domain, I thought that 2020 would see:

  • No changes to gig economy worker classifications (as had been done in California in late 2019). Correct.
  • An announcement on a partial ban of Huawei 5G equipment. Wrong. I think the government has strongly signalled to telecom carriers that they risk having to pull Huawei equipment out should they install it, but no formal announcement one way or the other came in 2020.
  • A tax on video streaming services. Correct. Although more broad than just streaming services, the government announced a new tax on digital services a few months ago.

Technology Trends

My technology predictions for 2020 focused on our Wittington Ventures active investment areas.

  • At least one Canadian startup in the healthcare data sector would raise a $20m+ round. Wrong. Closest that I’m aware of in this area is that OnCall raised $8m. (Cyclica announced $20m raise in June, and it clearly works with biotechnology data, but my prediction was referring to personal healthcare data.)
  • A Canadian Bitcoin / Blockchain company would emerge as a platform in the industry. Correct. I’ll go with Dapper Labs various offerings on this one — I think their blockchain-powered digital collectable NBA cards represent an exciting new product on their overall blockchain platform, and represent a strong brand beside their Cryptokitties products.
  • Earpods would become a platform for mobile voice-based assistants. Wrong. COVID kept earpod users at home, and I didn’t find any evidence of a surge in mobile voice-assistant usage.
  • There would not be much investment activity in the device (silicon chips, optical technologies, etc) sector in Canada. Correct. Outside of the financing in the summer, I couldn’t find other significant device investments in the sector during the year.