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Is it better for a tech company to have gone public and raised big money at heightened valuations – only to see its stock subsequently tank – or to have held off, raised less privately and kept its options open?

The Globe and Mail spoke to chief executive officers of several Canadian tech companies that either went public last year or considered it and passed. Perhaps unsurprisingly, those that didn’t go say they dodged a bullet, while those that did are trying to put on a brave face despite the poor performance of their stocks.

“I think right now, being a public company in our industry is not an easy place to be,” Brett Belchetz, CEO of Toronto telemedicine provider Maple Corp., said in January, months after his company shelved IPO plans. Rival Dialogue Health Technologies Inc. closed Monday at $6 a share, half its IPO issue price last year.

Brendan King, CEO of Saskatoon’s Vendasta Technologies Inc., a seller of digital tools to small businesses, said his company’s decision to drop its $100-million IPO last May “seems like … the best decision ever in my life.” Vendasta instead raised $120-million privately and has made two acquisitions.

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Charles Boulanger, CEO of Quebec City sensor technology maker LeddarTech Inc., likewise said he was happy his company decided not to go public via a merger with a special-purpose acquisition company. Other light-detection and ranging technology makers took that route, and most have since seen their shares plummet. Instead, Leddartech raised US$140-million privately to fund its growth as automakers bring vehicles to market with its software embedded in their collision avoidance systems. By waiting, Leddartech should be in stronger financial health when it does go public. “We have more control on what’s going on and happy investors, not unhappy people watching every quarter,” he said.

Some companies that went public are still content, despite their stocks’ disappointing performance. “We got what we needed – acquisition capital,” said Nolan Bederman, chairman of LifeSpeak Inc., a Toronto provider of online mental-health content. The company has bought four companies since raising $125-million in its TSX IPO last July, and its public listing has served as a branding exercise, CEO Michael Held said. “I wouldn’t change a thing, other than where our stock is at” – nearly 50 per cent below its $10 issue price – he added.

But Thinkific Labs Inc.’s sharp selloff since its highly oversubscribed IPO a year ago has been a rude awakening for a company that grew fast in the pandemic. Chairman Fraser Hall, whose Rhino Ventures is the largest investor, acknowledged it has been hard to watch the stock fall to $3 from the $13 issue price a year ago. “If we knew inflation would go through the roof, that there would be a potential war and that multiples were going to absolutely fall through the floor, I probably wouldn’t have signed on for an immediate down-the-roller-coaster ride,” he said.

Rick Nathan, a managing partner with Toronto’s Kensington Capital Partners, said that, in many cases, companies that did go public in 2020 and 2021 probably raised much more than they would have had they raised privately. “From a balance sheet perspective, they’re much stronger. But the distraction of being public, the compliance, it becomes an issue of recruiting talent if all your stock options are under water … and you’ve got disappointed investors. Plus, in many cases, companies go public in part so they have currency for acquisitions, but they don’t want to use that currency when their stock goes down like this.”

With a report from Clare O’Hara

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