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Weekly Cache

Weekly Investment News and Analysis

Please see what we’ve been reading in technology and ESG related investing this week. Please feel free to send us what you’ve found interesting.

Latest Invesment News

July 03, 2022: A Brutal First Half Of 2022

H1 2022 was a brutal start to the year — the Nasdaq was down almost 30%, for its worst first half on record, the Dow Jones Industrial Average declined 15%, for its worst first-half performance since 1962, and the S&P 500 closed down over 20%, for its worst first half since 1970. US markets climbed a bit on Friday, but the major indices were still down for last week, after having posted weekly losses in four out of the last five weeks. At a time when U.S. venture dollars are slowing down, CIBC Innovation Banking is announcing $1.5 billion in growth capital commitments, dubbed “Unicorn Fuel,” to focus on later-stage companies across software, life sciences, healthcare and clean tech industries. Sophic Client UGE (UGE-TSXV, UGEIF-OTC) secured $25 million to deploy six community solar projects in Maine. Sophic Client Clear Blue Technologies (CBLU-TSXV, CBUTF-OTC, 0YA-FRA) announced a $4-million non-dilutive Government of Canada financing. Draftkings was fined $100,000 in Ontario for advertising violations. EToro seems likely to abandon its deal to go public via SPAC merger. Short video app Triller confidentially filed for a U.S. IPO. Klarna will raise cash at a US$6.5 billion valuation, in dramatic 85% down round. Nio shares slid Wednesday after a short seller accused the Chinese electric vehicle maker of artificially inflating its financial figures. Chinese electric vehicle maker Li Auto will raise US$2 billion from U.S. investors in a new stock offering. Tesla lays off nearly 200 Autopilot workers, and shutters its San Mateo office. Facebook warns of engineer job cuts, and a sharp downturn ahead. The FCC Commissioner writes to Apple and Google about removing TikTok. FTX says it is not in active talks to buy Robinhood. Crypto hedge fund Three Arrows Capital plunges into liquidation. Crypto broker Voyager Digital (VOYG-TSX) suspends withdrawals.

Invesment News in the Past Weeks

October 17, 2021: Record U.S. VC Exits In 2021

October 17, 2021: Record U.S. VC Exits In 2021

Thinkific Labs Inc (THNC-TSX), filed a preliminary and short form base shelf prospectus for up to an aggregate of $300 million. D2L filed to go public on TSX, the company expects to raise a nine-figure sum at valuation of more than US$1 billion through its IPO. We attended the company’s investor day a few years ago – and it’s great to see another iconic Canadian tech company go public on the TSX. We counted well over $100 million in funding for private Canadian innovation companies last week, and saw announcements totalling nearly a billion dollars towards VC funds. We published on Clear Blue Technologies’ (Sophic Client, CBLU-TSXV, CBUTF-OTC, 0YA-FRA) ability to automate and digitize day-to-day operations for providing clean wireless power off-grid, while collecting data as a competitive advantage. With over 400 customers, including Orange and Telefonica, it’s Clear Blue sky for the Company. In the USA, venture capital-backed companies completed initial public offerings, reverse mergers and acquisitions worth a record US$582.5 billion so far this year, according to new data from PitchBook. This is the first time U.S. VC exit value has surpassed US$500 billion. Magic Leap, the troubled augmented reality company that underwent mass layoffs and a CEO change last year, has raised US$500 million at a valuation of close to US$2 billion. Stock chart website TradingView was valued at US$3 billion. GitLab jumped 35% in its Nasdaq debut after the code-sharing company priced IPO above expected range. Bitcoin once again hit record highs even as Coinbase wants SEC blocked from crypto and Jamie Dimon called bitcoin ‘worthless’, while Vladimir Putin sees value in cryptocurrencies – but says it’s too early to tell if they can settle oil trades and Stripe is building a crypto team.

October 10, 2021: Good Canadian Public Markets Activity After A Few Quieter Weeks

October 10, 2021: Good Canadian Public Markets Activity After A Few Quieter Weeks

SUMMARY: After a few weeks of public markets volatility dampened new public company transactions, last week saw a bit of an uptick. Nuvei (MEI-NASDAQ, NVEI-TSX) closed an upsized US$425 million initial public offering in the United States. Quarterhill (QTRH-TSX) announced the filing of a preliminary $200 million base shelf prospectus. Dye & Durham (DND-TSX) announced a recapitalization of its credit facilities totalling $1.8 billion, ending a strategic review process that commenced in May. Q4 Inc. announced the resumption of plans to go public on the TSX. At Sophic, we published a piece on Clear Blue Technologies’ (Sophic Client, CBLU-TSXV, CBUTF-OTC, 0YA-FRA) core business of providing clean, wireless power solutions serving the multi-billion dollar off-grid market. In the USA, there was positive movement towards public markets debuts by Rent the Runway, Udemy, GlobalFoundries, AvidXchange, HireRight, GitLab and Genesys. Year-to-date, penny stock trading volume hit a record US$548 billion, soaring past 2020 totals as retail investors poured into the market. NFT sales surged to US$10.7 billion in Q3 .Snapchat and Telegram benefited from Facebook’s long outage.

October 03, 2021: OK Public and Private Capital Markets Activity Given Recent Volatility

October 03, 2021: OK Public and Private Capital Markets Activity Given Recent Volatility

Last week, more than $2-billion was shaved off Lightspeed’s (LSPD-NYSE, LSPD-TSX) market cap in response to a short-seller report. Fintech Propel filed a preliminary prospectus for an IPO. Sophic client, HIRE Technologies (HIRE-TSXV) strengthened its balance sheet by closing a $2.8 million second tranche non-brokered private placement for a total of $4.8 million oversubscribed financing. The company has been growing at higher than market growth rates, a stronger balance sheet should help the company accelerate growth. Canadian tech talent scored another win as Stripe announced its first Canadian office in Toronto. In light of recent market turbulence Allvue Systems postponed its IPO in the USA. However, on Friday, electric vehicle maker Rivian filed for its IPO. Earlier in the week, EV company Polestar announced it would merge with Gores Guggenheim SPAC in a US$20 billion deal. Amazon unveiled a new robot, updated devices, and also revealed it was expanding into the fitness market, putting itself in competition with Apple more directly. TikTok reached 1 billion monthly active users, and also made its first foray into NFTs. The Fed has ‘no intention’ to ban cryptocurrencies, Jerome Powell told Congress. At Sophic Capital, we published notes on GameSquare Esports (GSQ-CSE) as Esports influencer TimTheTatman recently announced that he would join Complexity Gaming and GameSquare Esports and Body and Mind Inc. (BAMM-CSE, BMMJ-OTC), which has a strong brand presence in Nevada and could benefit in that state.

September 26, 2021: Quiet Week in Canadian Capital Markets, But Plenty of Industry Developments

September 26, 2021: Quiet Week in Canadian Capital Markets, But Plenty of Industry Developments

This past week was relatively quiet in Canadian capital markets, in the face of global market volatility, however there were multiple developments in various innovation sectors globally. In Canada, Shopify (SHOP-TSX, SHOP-NYSE) reportedly surpassed Amazon in online traffic. Vancouver-based Dapper Labs raised US$250 million led by Coatue. These two developments, once again highlight how the tech ecosystem, and investing opportunities in Canada have expanded in recent times. CEO of Sophic Client Clear Blue Technologies (CBLU-TSXV, CBUTF-OTC, 0YA-FRA), Miriam Tuerk, showed how Clear Blue’s power innovation for MNOs in Africa unleashes The Green New Deal that pays for itself in an interesting industry discussion. In the USA, Toast and Freshworks had strong public market debuts, and WeWork set Oct. 21 as the date of its public listing. DraftKings stock dropped after a CNBC report of a US$20 billion cash-and-stock buyout bid for U.K.’s Entain. China said all crypto-related transactions are illegal, and the SEC’s Gary Gensler criticizes stablecoins amid call for tougher crypto regulation.

September 19, 2021: A few interesting US new listings, and a Canadian cleantech investment idea

September 19, 2021: A few interesting US new listings, and a Canadian cleantech investment idea

Last week saw a complementary $600 million notes offering by (GIB.A-TSX, GIB-NYSE) following a US$1 billion notes offering the week before. Neo Financial is furthering its push to become a full-stack digital bank: the three-year-old startup closed a $64 million Series B round this summer led by Peter Thiel-backed Valar Ventures, which also led Neo’s Series A financing. We published a piece on Sophic client UGE (UGE-TSXV, UGEIF-OTC) highlighting that the company’s solar project backlog continues to be undervalued compared to mid scale project transactions. The stock is trading at an implied US$0.44/W, which represents about a 43% discount to the average US$0.77/W peer transactions, before accounting for any additional project wins. In the USA, Toast, GitLab, and Forge Global could be some interesting new listings to add to your screens. There was also a fair amount of news in the crypto space, with both bullish and bearish takeaways.

September 12, 2021: Major Canadian notes offering, strong VC and M&A activity

September 12, 2021: Major Canadian notes offering, strong VC and M&A activity

With a major unsecured notes offering announced by CGI (GIB.A-TSX, GIB-NYSE) seeking to raise US$1 billion, and funding for another couple hundred million dollars announced by private VC backed Canadian companies, September is of to a good start by the Canadian innovation sector in capital markets. In addition M&A, remains an active theme, with a major acquisition and exit announced in the space this past week. Stripe is discussing a 2022 public listing, which could be an interesting stock to look out for, as well as Sportradar, which could go public soon. SoftBank announced a Deutsche Telekom share swap deal, and in addition will borrow against its remaining T-Mobile stock, which could aid global VC funding as SoftBank’s Vision Fund 2 is trying to invest more in European tech companies. On the regulatory front, a judge just ruled a massive blow against Apple’s App Store business. With a Japanese acquisition, PayPal gains a buy now, pay later (BNPL) service platform, even as some US data suggested credit risk in this segment. In the ESG space, we saw ambitious long term US solar plans, per a NY Times article, which could move the US towards producing almost half of its electricity from the sun by 2050 and a major investment into car battery tech by Toyota.

September 05, 2021: Relatively light Canadian innovation public markets funding ahead of a short week, but high expectations for the fall

September 05, 2021: Relatively light Canadian innovation public markets funding ahead of a short week, but high expectations for the fall

While this past week was relatively quiet in Canadian public markets, EMERGE Commerce (ECOM-TSXV) announced a $24 million acquisition funded with cash on hand. Consensus expectations call for a busy fall, with regards to “risk-on” driving public capital markets activity in Canada. Private Canadian VC backed companies announced a couple hundred million dollars of funding last week, which appears to be lower than the past few weeks. In the USA, despite lower SPAC activity leading to fewer IPOS in Q2 2021, more companies continue on the path to being public. Last week, Allbirds, Reddit, Samsara, Binance, and NordicTrack were amongst companies that announced plans to go public. Intuit could be in talks to buy Mailchimp for more than US$10 billion, and Robinhood’s stock fell after Securities and Exchange Commission Chairman Gary Gensler told Barron’s that banning the controversial practice of payment for order flow is “on the table” and PayPal is exploring a stock-trading service for US customers amid a boom in retail investing, CNBC first reported Monday.

August 29, 202: Over $600 million of Canadian innovation funding announced last week, not a bad week for the seasonally slow last week of August

August 29, 202: Over $600 million of Canadian innovation funding announced last week, not a bad week for the seasonally slow last week of August

Last week, we saw an upsize raise announcement from Converge Technology Solutions Corp. (CTS-TSX), raising $225 million, before its greenshoe option. Private innovation companies announced financings of around $400 million. Shopify’s (SHOP-NYSE, SHOP-TSX) integration with Tik Tok garnered widespread attention. In the ecommerce space, on Friday afternoon, Affirm shares soared on news of an Amazon partnership for buy now, pay later. Recall, Affirm also partners with Shopify, which also had a stake in the in Affirm at the time of Affirm’s IPO. In August, Square jumped into the space with a US$29 billion deal to buy Australian fintech Afterpay. The week also saw announcements pertaining to public market entrances by Rivian, drawing a response from Elon Musk. As well as news of Warby Parker, Toast, Virgin Orbit, and Forbes going public.

August 22, 2021: Decent Canadian M&A and VC funding week

August 22, 2021: Decent Canadian M&A and VC funding week

We witnessed a decent level of Canadian public company M&A last week, with over $300 million of transactions in the past week. Recall, Sophic Capital has previously suggested that M&A could be a positive catalyst for small to mid cap innovation companies in the fall. At the same time, private companies saw over $300 million of VC funding as well. GlobalFoundries Inc has filed confidentially with U.S regulators for an initial public offering (IPO) in New York that could value the chipmaker at around US$25 billion, we could see an allocation of capital to hard tech, such as semiconductors, owing to recent geopolitical tensions, according to some industry watchers. Tencent warned on its second-quarter earnings call that China’s regulatory crackdown on internet companies will continue, as Asian tech stocks stumbled again after a series of volatile weeks. Topps trading cards terminated its SPAC merger and Michael Burry, of the Big Short fame, unveiled a new short bet against Cathie’s Wood’s innovation ETF.

August 15, 2021: Healthy capital markets activity all around this week

August 15, 2021: Healthy capital markets activity all around this week

Last week saw a major financing by Lightspeed (LSPD-NYSE, LSPD-TSX), raising almost a billion dollars in equity. In addition, in Canada, Freshbooks attained unicorn status. In the USA, car sharing platform Turo has filed confidentially for an IPO. Neobank Chime raised US$750 million at a US$25 billion valuation, the company was valued at US$14.5 billion last fall. Brazilian digital bank Nubank, which has a multimillion-dollar investment from legendary investor Warren Buffett’s company, is planning an initial public offering of more than US$2 billion in the US stock market, according to a Bloomberg report. The regulatory overhang on China tech investments continues, with SoftBank Group CEO Masayoshi Son saying his company will take a wait-and-see approach with new investments in China. CATL, the Chinese lithium battery giant that counts Tesla and other electric vehicle makers as its customers, plans to raise as much as US$9 billion in a private share placement to expand its battery production. In the gaming space, Entain will acquire esports platform Unikrn for £50 million, which we believe could represent a lower valuation from the company’s private valuation. While Golden Nugget spiked 55% after DraftKings agrees to buy it for US$1.56 billion.

August 08, 2021: Accelerating M&A could be positive for small cap Canadian innovation stocks in the fall

August 08, 2021: Accelerating M&A could be positive for small cap Canadian innovation stocks in the fall

M&A appears to have been a major theme this past week. At Sophic, we believe M&A could be a positive catalyst for small cap Canadian innovation stocks in the fall. Additionally, consensus expectations are for capital markets activity to accelerate in that period. In Canada, theScore, a pioneer in sports media and now the sports betting space, which we covered as equity analysts on the sell side, announced it was was being acquired for US$2 billion in a cash and stock deal. Sophic client, Nanotech Security Corp was acquired by Meta Materials for approximately $90 million, and HIRE Technologies, also a Sophic client announced it was acquiring, Leaders and Co., along with a loan facility and concurrent financing. In the USA, Square will acquire Australia’s Afterpay for US$29 billion, Marvell Technology will acquire Innovium in all-stock deal valued at US$1.1 billion. At the same time, U.K. is considering blocking Nvidia’s US$40 billion Arm deal on national security grounds.

August 01, 2021: Compelling Canadian tech VC financings, during a busy week for public companies’ Q2 earnings season

August 01, 2021: Compelling Canadian tech VC financings, during a busy week for public companies’ Q2 earnings season

Toronto based 1Password’s $125 million raise at a $2.5 billion valuation received a lot of interest this past week. While public markets saw a large number of tech companies report their Q2 financials. In the USA, popular trading app, Robinhood dropped 12% in its trading debut, while investor interest in fintech stocks has remained elevated these past few months. Regulatory overhangs on US listed Chinese stocks persisted, as SEC has stopped processing registrations of US IPOs and other sales of securities by Chinese companies. While Trevor Milton, the founder of electric truck maker Nikola, has been indicted on charges of making false and misleading statements to investors, the US Department of Justice said on Thursday. In Canada, Shopify (SHOP-NYSE, SHOP-TSX) now allows merchants to sell NFTs directly through their storefronts.