Building Canada’s Next Wave of Public Ventures

30 July 2021 by TMX Group
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We live in interesting times – the pace of information is rapid; technology is not a barrier to entry anymore; and the Canadian capital markets ecosystem is facilitating the rise of more entrepreneur-led companies.

Small and medium-sized companies are an important driver of economic growth and job creation in Canada, representing almost 98% of all employer businesses. The 2021 TSX Venture 50 rankings, which recognize the top 10 companies from each of the five main sectors in the Canadian economy, demonstrate how the public capital markets are providing small and medium-sized companies access to investors and an opportunity to grow and scale their business.

The performance of these companies is comparable, and in many cases higher, than that of larger enterprises. For example, the S&P 500, a market-weighted group of large cap stocks in the US, finished 2020 with a gain of 16.26% and six stocks rising more than 100%. In comparison, 43 of the Venture 50™ winners (86%) had share price gains of more than 100%.

Raising Capital to Grow

Speed is everything and it’s difficult for companies to grow into a world leading company without external financial help. There is currently an abundance of venture and private equity money looking for a home. It’s also a particularly good period to raise money on the public markets. There are two main reasons for that ─ it’s a low yield environment elsewhere and more buying power is being pushed to a greater volume of people due to ease of access through trading platforms like National Bank Direct Brokerage.

In tandem, programs like Venture 50 are driving awareness of high performing companies that perhaps retail investors, including angel investors, venture capitalists and other private investor groups, would not have been as aware of previously. 

The companies listed on TSX Venture Exchange (TSXV) are often at an earlier stage in their growth trajectory with revenues generally anywhere from start-up stage ($0) to $30M per year. Yes, they are public companies, but they are not the multi-billion-dollar enterprises that capture headlines in the financial press. They are public venture companies that are able to raise capital from retail investors in Canada and institutional investors around the world to fuel their growth and development.

TSX Venture Exchange companies think globally

According to TSXV’ CEO survey, the 2021 Venture 50 companies are doing business in, on average, six different countries. The global ambitions of the Venture 50 companies are augmented by the fact that we see many international companies like Else Nutrition (TSXV: BABY), based in Israel, or Nubeva Technologies (TSXV: NBVA), based in California, that have tapped into TSXV as a growth platform, giving Canadian investors a unique opportunity to access and support global growth companies.  

Included in the five industry sectors that the Venture 50 recognizes are the truly global mining and energy sectors. The 10 companies recognized in each of these sectors are doing business and working on projects around the world. 

One of the ways to signify the successful growth of TSX Venture Exchange companies is through their graduation to Toronto Stock Exchange (TSX). Over the last two years, 41 companies have utilized TSXV as a growth platform and have successfully graduated to TSX. As well, close to 20% of the companies in the S&P/TSX Composite Index* are graduates of TSXV, which further illustrates the growth potential and economic impact that this unique platform provides to the Canadian markets.

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