The technology business in Canada is on a roll. Even though venture capital is sparse, Canadian tech firms are growing rapidly with a mixture of innovation and expertise in new, niche areas such as environmental technology, wireless communication and server optimization.
Every year, Deloitte's Fast 50 tracks the progress of the industry by showcasing the 50- fastest-growing tech firms in the country.
Deloitte's head of research in the technology, media and telecoms, field, Duncan Stewart, will explain why the Fast 50 companies are leading the way, which technologies are on the rise, and what the future holds for the industry.
Mr. Stewart, a CFA, has almost two decades of experience in the industry. As an analyst and portfolio manager, Duncan has provided research or made investments in the entire Canadian technology and telecommunications sector. He has written research on names such as Nortel and Celestica, and been a venture capital investor in Research in Motion.
He was a co-founder of Tera Capital, Canada's first high tech and biotech money manager. At Tera he was co-manager of the Venture Capital Fund, where he focused on semiconductors, fibre optics and biotech startups. In the mid 1990s, Duncan managed a $120 million small cap high tech/biotech fund at a large Canadian pension fund manager.
Mr. Stewart was online to answer your questions and comments about the Technology Fast 50. Your questions and Mr. Stewart's answers will appear at the bottom of the page as the discussion takes place.
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Danielle Boudreau writes: Duncan, thank you for taking the time to answer questions from our readers today.
Many of the companies in the tech industry are new - more than two-thirds are less than 10 years old. What lessons have these new players in the field learned from their predecessors?
Duncan Stewart writes:
- Go for sales, revenues and profitability. The Technology Fast50 winners from 2007 are uniformly more profitable and less speculative than those we saw in 1999-2000.
- Diversify. Ten years ago we had too many from the telecom space. And like any excessive concentration, when something bad happened to telecom too many players got hurt. The Technology Fast50 these days is much more diversified across end markets.
- Better sales forces. For years Canada had great technology, but a weakness in following through with distribution. Look at RIM — sure it's a great device family…but the relationships with the carriers who sell and distribute the devices are a key part of RIM's incredible execution and success.
- Patience. In 1997 companies went public too early. More recent winners only listed when they were ready.
Brad Wilson from Toronto writes: What is your long and short opinion of Sandvine Corp. and what is the next most significant accomplishment that you are anticipating from this company?
Duncan Stewart writes: When I was a fund manager or brokerage analyst I often made long or short recommendations.
In my role at Deloitte (Director of Research for Technology, Media and Telecommunications) I don't offer individual stock "picks" or forecasts about share prices.
Sandvine is an amazing company in a very hot space. I have been focusing on the Deep Packet Inspection market for years, and I think that the industry will continue to be important for service providers everywhere. However, Sandvine's share price (like most stocks) is a more complex issue. Some analysts on Bay Street still love it, even after a run up…some think it has gotten too expensive.
I don't know about that — but it is a very well run company with strong technology in one of the few parts of the tech market with hypergrowth.
Joe Ribar from Burlington Canada writes: Hi ! I bought win-t ,,, wi-lan ,,, and am wondering what the situation is with the proprietorship of the wireless networks , with all of the wireless users out there, that are using it ? (Do they have to pay a royalty fee for this technology or not ?)
