After last week’s rumours that Shopify is planning a $100 million dual-listing in Canada and the U.S., investors are wondering whether other promising Canadian tech startups are ready to follow suit.
One of those startups is Toronto-based ad tech firm Chango. It calls eBay, Disney and Lego clients, it brings in $55 million a year and it’s raised $18.6 million in cumulative funding from Canadian and Silicon Valley investors (though that’s only a seventh of the funds behind Shopify).
What’s impressed investors the most is its incredible revenue growth: over the past five years its revenue has grown an average of 4,736%, making it the fastest-growing Canadian technology startup according to Deloitte’s 2014 Fast 50.
But in a recent interview with the Wall Street Journal, Chango founder and CEO Chris Sukornyk said anyone betting on an IPO still has some waiting to do. Although Chango is probably large enough to IPO in Canada, he said, it doesn’t want to rule out a simultaneous IPO in the U.S., similar to what Shopify is planning. To do that, it will need to be a lot bigger still.
Chango launched in 2008 as a retargeting platform, which enables marketers to message consumers that have recently visited their sites. Since then it’s expanded into a well-rounded DSP, with capabilities for cross-device targeting, brand safety and dynamic, but maintaining its focus on targeting users based on their past behaviour.
Despite this success, it’s no surprise that the company is hesitant to go public, given the current downturn ad tech has been facing in U.S. stock markets. The last two years have seen big ad tech companies like Rubicon, Rocket Fuel and Tremor Video get battered on the NASDAQ, which analysts blame on a lack of understanding of their complex business models. Last summer, when TubeMogul went public, it drew in $44 million, just over half of the the $81 million the company had initially hoped to raise. Since then there’s been a curious lack of ad tech IPO announcements.
On the Toronto Stock Exchange, tech firms don’t typically do a U.S.-style IPO, but rather join the TSX Venture, a smaller exchange for emerging companies, and later graduate to the TSX. Ad tech competitors like EQ Works and Acuity Ads are at various stages of this process. Technically, a Canadian ad tech IPO has never happened before, so if Chango takes that path, it will be hard for anyone to predict the result.
