Smart thermostat pioneer ecobee is the latest Canadian company to be snapped up by a foreign buyer. The deal, worth U.S.$770 million with Wisconsin-based Generac Holdings, is one of the biggest takeovers of a Canadian technology company this year.
Foreign acquisitions of Canadian companies are often painted as a negative. The reality, however, is often more complex, a recent report from the Innovation Economy Council (IEC) found. While the ideal outcome for startups is to become commercially successful and remain owned and headquartered in Canada, acquisitions by foreign buyers don’t necessarily spell a loss for our economy. These acquired companies tend to remain in Canada, the IEC found, and are run like stand-alone businesses that receive new capital to invest, do research and add jobs.
In the case of ecobee, for instance, Stuart Lombard intends to stay on as CEO, and says that the company is committed to both maintaining its Toronto office and expanding it — plans are to boost the number of employees in Canada, the U.S. and the U.K. from 500 to 600 by June of next year.
The company had explored several options, including an IPO, Lombard says, but ultimately decided that the takeover route was its best opportunity for growth. “Generac brings assets to the table that we don’t have,” he says. “This deal allows us to accelerate our road map significantly and integrate our products to provide even more value to homeowners by creating our vision of a net-zero home.”
Similarly, Sheila Singh, neurosurgeon and scientist at McMaster University, found that a foreign acquisition created new opportunities. After failing to find Canadian investors, she sold her therapeutic cancer drug company Empirica Therapeutics to U.S.-based Century Therapeutics in 2020. The model of acquisition was more like a merger. Century created a Canadian subsidiary to act as the company’s brain-science research arm; the subsidiary is currently hiring 20 cancer researchers.
“If a bigger U.S. company acquires a smaller Canadian company to build out the program as originally envisioned by the Canadian company, it can be a true win-win for both companies,” says Singh.
Ransomware attacks on the rise
Another day, another cybersecurity problem. From the Toronto Transit Commission’s (TTC) ransomware attack to the cyber attack on Newfoundland’s health network data centre, data breaches are adding up. In fact, 65 per cent of Canadian organizations polled in a recent Canadian Internet Registration Authority (CIRA) cybersecurity survey experienced up to 10 attacks in the last year, with 19 per cent seeing more than 10 attacks.
Ransomware attacks, in particular, have become increasingly popular among hackers because of how easy it is to disrupt a victim’s operations and the high reward associated with a successful hit, says Mark Sangster, vice president of Industry Security Strategies at eSentire, a Waterloo-based cybersecurity platform.
“The move from simple, single-device lockdowns to pervasive, crippling attacks has moved the revenue needle from hundreds to millions, or tens of millions in extorted fees. It’s a solid model,” says Sangster. “The reality is any time a critical business has the money to pay ransoms, through coffers or insurance policies, they make for good prey.”
So where does Canada stand when it comes to preparedness? Experts say that although Canada has a long history of embracing advanced cybersecurity measures, more needs to be done.
“Many companies in Canada don’t see themselves as a target,” says Sangster. “They think they have nothing worth stealing.”
The 2021 CIRA cybersecurity report reveals 70 per cent of Canadian organizations that faced a ransomware attack over the last year paid the demands. This kind of response could further incentivize hackers, resulting in ransom demands actually getting bigger.
“Attacks will get increasingly complex, fast and expansive. It will also get extremely expensive,” says Raj Munusamy, head of security product marketing at OpenText, which announced this week that it will buy U.S.-based Zix Corporation for U.S.$484 million as it works to increase its small business cybersecurity offerings. Canadian organizations should therefore prioritize and invest in cybersecurity. As Manusamy says, “companies should employ a mentality of ‘we have been breached,’ which allows for consistent threat hunting.”
Alex Cowperthwaite, advisory research director at Security Compass, a cybersecurity firm providing advisory services, points out that there is no one-size-fits-all solution to protect organizations against cyber threats, but companies need to ensure that backups and recovery plans are tested and ready.
Canadian cleantech shines at COP26
It is a big win for RUNWITHIT Synthetics. The Edmonton-based company won the UNIDO Global Call 2021 award in the Decarbonizing Growing Urban Environments category, giving them an opportunity to showcase their synthetic cities at COP26.
RUNWITHIT Synthetics uses artificial intelligence to model urban environments, assessing environmental risks via digital twins of buildings, utilities and even entire cities. The company’s synthetic modelling can help decision makers use data to tackle important issues.
“This prestigious international award adds to our market credibility, a key factor in accelerating our growth and participation in critical decarbonization strategies and design initiatives around the world,” says Myrna Bittner, founder and CEO of RUNWITHIT Synthetics.
The company is looking to hire key personnel, and is gearing up to raise strategic capital in the early part of 2022.
In other news:
- Ikea is investing $115 million in Toronto tech-enabled delivery startup Bolt Logistics. The company plans on expanding beyond Canada.
- Toronto venture Peak Power has launched a new pilot program with Hydro One to test the ability of using electric vehicles as a way of providing backup electricity.
- Canadian technology companies are lining up IPOs, despite lacklustre trading debuts recently. Last week, enterprise software business Coveo Solutions filed to go public on the Toronto Stock Exchange. The Quebec City–based company has set a price range of $13 to $15 per and plans to raise $215 million.
- Tech giant Amazon is bringing its cloud computing division Amazon Web Services (AWS) to the Calgary region. This is the second Canadian location for AWS (the other is in Montreal) and is slated to open in late 2023.
- Vancouver-based insurance tech startup Owl.co has raised U.S.$30 million in its Series B funding round as it seeks to tackle fraud in the insurance industry. Owl.co plans to increase its full-time staff in the U.S. and Canada by 20 per cent by the end of the year.
- The Coordinated Accessible National (CAN) Health Network, a federally-funded program focused on growing domestic health tech solutions, has announced a partnership with Communitech. The goal is to cut red tape and address the challenges in health care procurement.
- Kitchener-Waterloo-based startup EnPowered has announced $12.75 million in seed financing to fuel the growth of its newly launched payments platform, which aims to boost the rate of cleantech project adoption.
Disclaimer This content was produced as part of a partnership and therefore it may not meet the standards of impartial or independent journalism.