Normally, growth rates north of 2,400 per cent would be something to celebrate.
But John Ruffolo knows better.
Given the current state of the North American financial markets, it's not surprising that the average growth rate of Canada's 50 fastest-growing technology companies has slowed considerably.
What's more alarming is that for the first time in the 11 years he has been compiling the Deloitte Technology Fast 50, Mr. Ruffolo has never seen the average growth rates of the country's rising tech stars - a group that is often a bellwether of Canada's broader financial health - plummet so quickly.
"If this is the sector of the future, it's taken a pretty significant dip," says Mr. Ruffolo, head of Deloitte's technology, media and telecommunications group.
"So there is some concern about where Canada is, from this perspective."
In 2007, the average five-year revenue growth rate of the Top 50 was 3,732 per cent; this year it dropped to just 2,457 per cent.
The culprits? A high Canadian dollar, reduced IT spending budgets at many U.S. companies, skyrocketing borrowing costs because of the credit crunch, and the evaporation of accessible domestic venture capital funding.
Macro-economic factors have hammered most areas of the North American economy over the past 12 months.
And because most Canadian technology companies are export-focused and depend on U.S. clients for significant chunks of their sales, when the U.S. economy derailed last year, it sent a particularly powerful shockwave through the tech sector as U.S. firms tightened their belts and slashed their IT budgets.
"The gloomy picture that is starting to come across the border, these companies are starting to feel that impact," Mr. Ruffolo says, adding that the credit crisis in the United States hit large organizations hardest, increasing their borrowing costs.
But it is the lack of venture capital funding in Canada that has had the most profound impact on this country's tech sector, he says.
The rankings show that beginning in 2002, shortly after the burst of the tech bubble, venture capitalists began tightening their purse strings, making it more difficult for companies to secure startup funding.
"Post-2002, you started seeing a massive decrease in Canadian VC financing of these companies," Mr. Ruffolo says. "It takes around five years before you really start to see the signs of actions that occurred in the past, and now we're starting to see it.
"We're seeing their top-line growth slow, largely because with a lack of financing they can't necessarily make the big bets they would have liked to have made in the past."
Although growth isn't as dramatic as in years past - last year Waterloo, Ont.-based Sandvine Inc. led the way with a 42,120-per-cent growth rate - this year's top spot went to Nightingale Informatix Corp., a health-care service and software company based in Markham, Ont., which posted a 23,708-per-cent revenue growth rate over five years.
Sandvine dropped to No. 7 this year, with a growth rate of 3,510 per cent.
Its slump is due, in part, to the way its deep-packet inspection technology was cast in a negative light after it was revealed that U.S. cable giant Comcast Corp. was using the software to identify peer-to-peer traffic on its network and then slow it down. ("The whole net-neutrality supporters found that as an 'evil company' but a cool technology," Mr. Ruffolo says. "I think they've been unfairly vilified. Which is a shame, it's a great technology.")
Canada's software industry is well represented on the list. Thirty-one companies, including six of the top 10 firms and all of the top five, are software companies.
