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Lightspeed's Success Is Proof Canada's Startup Scene Is A Contender

It is the largest technology venture-capital financing deal in Canada since Hootsuite raised their $165-million Series B round in 2013.

10/31/2017 13:54 EDT | Updated 10/31/2017 13:58 EDT

Montreal-based startup Lightspeed POS raised a US$166 million USD (about CA$210 million) Series D round on October 17.

The financing round is a historic moment for the Canadian startup sector. It is the largest technology venture-capital financing deal in Canada since Hootsuiteraised their $165-million Series B round in 2013. It is the second biggest venture capital investment for a Canadian company, after the $225-million round raised by BlueRock Therapeutics in 2016.

THE CANADIAN PRESS/Paul Chiasson
Dax Dasilva, CEO of Lightspeed, is seen in his office Sept. 15, 2015 in Montreal.

The investment was led by Canada's second-biggest pension fund, Caisse de dépôt et placement du Québec. It included investments from Investissement Québec (IQ), iNovia Capital and a credit line from Silicon Valley Bank. The financing deal gives Lightspeed a valuation near $1 billion, and puts the company on track to file an IPO within the next two years.

Dax Dasilva, the company's CEO, started LightSpeed in 2005 out of his Montreal apartment. His goal was to create an inventory-centric point-of-sale systems that would allow retailers to bring the "Apple Store experience" into their stores. Dasilva wanted to provide retail customers access to the benefits of e-commerce including convenience, personalization and rich product information.

Lightspeed now has customers in over 100 countries and processes over $15 billion in transactions annually. They currently have about 50,000 customers using their platform. Customers experience an average growth of 20 per cent in their first year of use. The company plans on using the financing to expand internationally and prepare for an IPO. According to Dasilva, Lightspeed will be spending 2019 preparing their company metrics for an IPO. He mentioned his excitement for Canadian presence in the financing round: "There are many exits and outcomes and options for companies at our stage, and we wanted to stay independent and we wanted to double down on Canadian ownership, as well as achieve greatness as a company."

It is great to see Canada's vibrant and innovative startup community finally getting the attention it deserves.

According to Thomson Reuters, 2016 was a record year for venture capital financing in Canada with a total of $3.7 billion invested in 571 transactions. Canadian venture capital continued at a strong pace in the first half of 2017 with $2.1 billion invested in 237 financing transactions. This financing transaction will likely provide a record year for Canadian venture capital investments. Grit Ventures, an innovation hub providing entrepreneurs with advisory services and access to foreign investment capital has noticed a significant upward trend. The hub received increased demand from foreign investors seeking Canadian investment prospects. It is clear that foreign investors are beginning to take Canadian startups more seriously. It is great to see Canada's vibrant and innovative startup community finally getting the attention it deserves.

Foreign investor interest will strengthen Canada's startup community and the network of support services available. Treadstone Law, a Toronto law firm specialized in cross-border financing transactions has also noticed increased cross-border interest. Treadstone saw a 20 per cent increase in cross-border financing transactions during the third quarter compared to 2016.

Lightspeed's financing round will serve to increase Canadian entrepreneur confidence. Past perceptions meant that many Canadian entrepreneurs felt they had to relocate to global innovation hubs like New York, Silicon Valley or London to have a fair chance at raising investment capital. As Canada's startup economy expands and receives recognition, Canada will be able to retain more entrepreneurs, see bigger venture capital transactions, and shift into a knowledge-based economy.

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