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Technology Fast 50 Companies’ Revenue Growth Takes Off in 2010
Deloitte Canada Survey: 80 Per Cent of Tech CEOs Fear That Domestic VCs Will Become Irrelevant, Affecting Future Tech Companies’ Prospects
TORONTO, ONTARIO–(Marketwire – Sept. 23, 2010) – The winners of the Deloitte Technology Fast 50â„¢ set a record pace in 2010, with an average five-year revenue growth rate of 5,638 per cent, an all time high. Some of this was due to the economic rebound and exciting new technology niches, but some was also due to the small size of these companies five years ago.
In addition, this year’s survey of Canada’s fastest growing technology companies reveals a domestic tech sector that’s been resourceful in bootstrapping its growth, but sees the country’s domestic venture capital industry as in crisis and potentially unable to help sustain future expansion.
“Canada’s tech companies set records for growth in 2010: both the top five companies and the entire Fast 50 roster were at all time highs for five-year growth at almost 43,000 per cent and 5,600 per cent respectively,” said John Ruffolo, National Leader, Technology, Media & Telecommunications Industry Group, Deloitte. “While we take time to celebrate the winning companies’ achievement, we also need to keep in mind that this year’s winners have grown off very small bases and tend to be successful in what are relatively smaller technology niches.”
“Over the last twelve years, there have been some interesting trends (and non-trends) within the Fast 50 list,” said Duncan Stewart, Director of Research for Technology, Media & Telecommunications for Deloitte. “Although the growth rate and the winners change over time, the split between hardware, software, telecom and other technology areas has been fairly consistent. Equally, the regional split of winners hasn’t varied: ten years ago 26 of our winners were from Ontario, and in 2010 we have 27 Ontario winners. On the other hand, reflecting a difficult time for IPOs and the ongoing venture capital crisis, the number of winners who are public companies has fallen from 54 per cent a decade ago to 30 per cent today. Turnover is up too â€“ the five fastest growing companies on this year’s list weren’t even on the 2009 list.”
Richmond Hill-based Clickfree (Storage Appliance Corp), a hardware company specializing in automatic computer backup, has emerged as a strong winner: sitting atop the ranking of this year’s Fast 50 list with a 64,240 per cent five-year revenue growth.
Second and third spots go to Real Matters (40,532 per cent, a Markham-based software company operating in property information solutions, and Varicent Software Incorporated (40,269 per cent), a Toronto-based sales performance management software firm. Rounding out the top five are Toronto-based NexJ Systems (36,128 per cent), an Enterprise CRM Software company, and Avigilon (33,664 per cent), a Vancouver-based high-definition surveillance company.
As happened in 2009, a QuÃ©bec GreenTech company is a winner in multiple categories: Montreal-based 5N Plus Inc. appears on the Fast 50 list and it is present on both the Green technology and the Leadership rankings as well.
Deloitte’s annual survey of Fast 50 Tech CEOs, also released today, provides further causes for concern and some glimmers of hope.
Almost 80 per cent of respondents to Deloitte’s survey of tech CEOs say Canadian-based venture capital firms are in danger of becoming an irrelevant source of financing for the country’s companies and 83 per cent see this development as jeopardising future generations of technology companies in Canada.
This year’s Tech CEO survey showed that the main source of financing was cash flow from operations for 76 per cent of companies, higher than in past years, while angel and VC funding was ranked as less than half as important. “Although this year’s winning companies are doing incredibly well,” added Ruffolo “who knows how much bigger they would be today if they had had access to more growth capital in their formative years?”
“This persistent weakness in the country’s venture capital ecosystem began around 2004, it has now reached crisis levels and it has serious implications for the future of our technology sector and the future of Canada,” said Ruffolo. The ongoing Canadian funding crisis in venture capital continues to have a negative effect on our tech sector, and as a nation we need to rapidly adopt key policy responses that will help build our Innovation Economy, create jobs, and make future Technology Fast 50 lists even better.”
Economic conditions provide both good and bad news
On the job front, more than 53 per cent of CEOs indicate their firms have benefitted from current conditions thanks to the greater availability of skilled labour at a reasonable cost.
Carbon credits and cloud computing strategic factors
“Cloud computing is often seen as a beneficial technology for early stage tech companies,” said Stewart. “But there has been a debate if it helps more because it is cheaper than traditional infrastructure-based computing, or if it was the time-to-market factor. The results, at least for Canada, are in: more than twice as many CEOs said that cloud helped them grow/scale more quickly than those who cited the cost benefit.”
Deloitte Technology Green 15â„¢ Awards
About the Deloitte Technology Fast 50â„¢
For further information, visit www.fast50.ca.
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.
2010 Deloitte Technology Fast 50â„¢