Highlights from the Observation Deck #8
Joshua Seerattan
Global Tech & Venture Ecosystem Builder | Principal Sr. Investment Analyst @ Wesley Clover | Web3 North | Candid Capital Podcast Host | VC, Startups & Digital Assets"
October 2024
This Edition of the Tech Ecosystem Watchtower shares periodic highlights on tech news and research related to the Innovation Economy being followed in the world of Venture Capital & Entrepreneurship.
What I'm Reading
Innovation Highlights:
Tech Adoption Road Map 2024
The latest Gartner Tech Adoption Roadmap (TAR) 2024 shows an increase in technology deployment, with 52% of technologies in deployment this year—a 12% rise from last year. However, according to Gartner cybersecurity concerns dominate as the top risk factor for tech adoption, impacting 54% of technologies, followed by technical complexity and high costs (both at 25%).
For organizations prioritizing tech adoption, agility and speed have overtaken resilience as primary goals, with 40% of leaders now focusing on enhanced speed and agility compared to 33% last year. Additionally, I&O (Infrastructure & Operations) leaders are optimistic about generative AI's potential. They see AI driving improvements in helpdesk support, task automation, operational response, and security measures, with 45% expecting significant benefits from AI in augmenting day-to-day workflows.
These insights suggest a strong shift toward agile, AI-driven operations with a careful eye on cybersecurity and cost management. See the image below for the category mapping.
Insights:
From the 2024 Tech Adoption Roadmap data, several key insights can be drawn for startup founders and investors:
Build A Tech CEO Strategy House
The concept of a strategy house serves as an invaluable framework for founders to improve resource allocation, strategic alignment, and risk management within their companies. By organizing key elements like mission, vision, and critical goals, tech CEOs can maintain a clear direction and consistently align their teams around their evolving strategic objectives.
Regularly evaluating and shifting resource allocation according to the company’s stage is critical for maintaining momentum. For instance, during the early phase of achieving problem-solution fit, resource emphasis is placed on R&D and talent acquisition for technology development. As the company progresses to achieve product-market fit, leaders should pivot resources toward marketing efforts and scaling operational capacity.
However, when faced with major platform or technology shifts, success is challenging. According to the 2023 Gartner Tech CEO Survey, only 27% of tech CEOs achieve successful outcomes aligned with their expectations during such pivots.
When is the last time you reviewed your own strategy house to ensure it is aligned with your business’s current goals and growth stage?
Next Generation Nuclear Fission Overview
As global energy demand increases, nuclear energy is once again in focus as a potential solution to the world's clean and sustainable power needs. This resurgence is driven by both the energy-intensive requirements of modern technologies, such as AI and blockchain, and the broader global need for reliable, carbon-free energy sources to support modernization and development. Tech giants like Google have taken steps to explore nuclear-powered solutions for their energy-hungry data centers; an example of this is Google’s recent agreement with Kairos Power to procure electricity from small modular reactors (SMRs).
Key Trends and Technological Advancements in Nuclear Energy
Small Modular Reactors (SMRs) and Microreactors
Emerging Technologies in Nuclear Power:
These advancements aim to overcome historical safety and security concerns, potentially paving the way for broader adoption of nuclear energy.
Market Potential and Opportunities
Data Center Growth The rapid expansion of data centers presents a major opportunity for advanced nuclear reactors to provide clean and reliable power within a concentrated footprint.
Global Decarbonization Targets The International Energy Agency (IEA) estimates that nuclear capacity will need to double by 2050 to help achieve net-zero emissions targets.
Opportunities in Nuclear Energy:
Key Challenges Facing Nuclear Energy Adoption
Economic Considerations:
Regulatory Hurdles:
Technical Barriers:
Risks to Consider
In summary, while the challenges are significant, the opportunity for next-generation nuclear technologies to transform global energy markets and meet modern demands is compelling. A balanced approach addressing economic, regulatory, and technical concerns could enable nuclear energy's potential as a critical component of the clean energy future. See the quantitative investment deal flow perspective below from pitchbook:
For more detail:
领英推荐
Investment Trend Highlights:
Is Canada Undergoing a Venture Correction?
Canada’s venture capital market is showing signs of a potential correction. Georgian, the nation’s largest independent VC firm with $5.6 billion USD in assets under management, recently announced a significant write-down of 28 investments across 21 companies in five different funds. This adjustment represents a substantial $430 million USD loss in value. The firm, which deployed nearly $2 billion USD at a time when valuations were often closing at 20-25x revenue, is now facing the reality of corrected, more conservative revenue multiples.
Georgian is not alone. BDC, another of Canada’s largest venture investors by assets under management, also wrote down some of its venture portfolio recently, reflecting broader market adjustments and the recalibration of inflated valuations across the sector.
Despite these challenges, there are promising developments in the Canadian venture Capital Landscape:
The Canadian VC landscape is recalibrating, but it is also pivoting towards targeted growth and resilience amid changing market dynamics.
For more detail:
Startup & Entrepreneurship Highlights:
Some thoughts on the Betakit Zombie Company Articles: (Opinion)
Over the past year, both investors and founders in Canada have faced significant challenges, including a rise in capital gains tax, more risk-averse capital allocation practices (with funding going only to the strongest contenders & AI), and limited resources for seed-stage startups. According to a Quebec-based venture capitalist, however, these issues cannot solely be attributed to macroeconomic market conditions. The comment, "The ecosystem of living dead doesn’t last too long in the Valley, whereas in Canada, they last too long,” highlights a fundraising landscape that remains difficult and a startup ecosystem heavily reliant on public funds. Consequently, many Canadian founders and venture capitalists are turning to the U.S. market to find growth opportunities.
CEO of Clio, suggested SR&ED credits as a problematic form of government support, suggesting that such incentives can be counterproductive. Meanwhile, Tom Birch, CDPQ’s global managing director of venture capital and technology, echoed the sentiment, emphasizing that Canada’s persistent "living dead" startup culture stems from cultural differences with the U.S. and a lack of large-scale domestic enterprises that could acquire struggling ventures and provide much-needed exits.
Startups thrive on a culture of fail fast and rapid iteration. The critical question is whether such a pace of innovation can coexist with a culture that prioritizes safety and risk-averse R&D, where intellectual property (IP) might be valued over successful commercialization. This raises broader concerns about whether Canada serves more as a nearshore R&D hub, subsidized by government programs to the benefit of large foreign multinational corporations, than as a true startup ecosystem. Despite boasting high IP filings and exceptional talent, Canada remains relatively weak in commercialization as is often cited.
The situation is further underscored by a drop in private funding sources, which decreased from 60 percent before 2022 to 52 percent from 2022 to 2023, reflecting a decline in overall funding and smaller average fund sizes. Conversely, American interest in pre-seed rounds reached a peak of 27 percent in the first half of 2024 and it is expected to climb as Canada is still a good deal for foreign investors and shoppers looking for tech & talent.
Nevertheless, optimism remains key in this industry. There is still hope for the growth of a robust entrepreneurial culture and mindset in Canada, and the potential for transformation persists. Finding a way to keep domestic private capital here working, attract outside capital to stay and maintain the economic benefits of startups succeeding to remain in the economy is still the goal to building a robust tech ecosystem regardless of public funding and tax disincentives on productivity.
For more detail:
Community & Events:
October 1 Tech Tuesday: Emerging Technologies Transforming the Web Event:
On Tuesday, October 1, I had the privilege of moderating the Emerging Web Technologies event, featuring insightful discussions with Michael-Anthony Clement from the Gatineau Innovation Institute, alongside startup founders Kate Withers Hess of FunctionLand and Patrick Dunlop of Jackal Labs.
October 8 CEO Tuesday: Modern Finance & Banking Event:
The panel discussion dived into the groundbreaking impacts of blockchain, cryptocurrency, and fintech on the global economy. The panelists included Lucas Matheson, CEO of Coinbase Canada, Liz Samson, a seasoned expert in fintech and wealth management from Wealthsimple, and Scott Hendry, a researcher and fintech expert from the Bank of Canada.?
October 29 TechExit 2024:
Attended TechExit.io for the second year, and it proved to be an invaluable experience for founders and investors focused on exploring liquidity opportunities.
SaaSNorth 2024:
Next on my agenda for the year is SaaSNorth the largest annual national B2B SaaS conference in Canada. I will be hosting an investor session as per usual and look forward to connecting with the investor & startup? Community in November.
For more details:
Candid Capital Podcast Highlights:
Live Stream Playback:
November Episode Release: Blueprint for Traction: The Art of Market Engineering
Stay tuned you can learn more about Candid Capital on the LinkedIn Page Candid Capital