Stamped's Five Takeaways from Inovia's Canadian 2023 State of SaaS Report

According to Inovia Capital's latest annual report on the State of Canadian SaaS in 2023, Venture Capital is roaring back in Canada. Canada, like much of the rest of the world, was affected by monstrous valuations in 2021, rampant inflation in 2022 and 2023 and the aggressive rate hikes that ensued yet bounced back in Q4 in terms of Venture Capital funding, showcasing the strength of the Canadian Software ecosystem.  

As a software company, we wanted to dive into the report and tell you about our key takeaways from our perspective in the trenches.  

Canada has Created a World-Class Software Ecosystem

Since 2019, Canadian venture Capital firms have deployed nearly $30B in total funds to start-ups and received almost as much in exit proceeds, showcasing the success of these investments. This is primarily due to the diverse pool of LPs (Limited Partners) Canada has within its borders, such as Pension Funds (amongst the largest investors in the world), Banks, and Family Offices. In addition to a wide range of LPs, Canada's government is very pro software investment with various funding programs such as the SR&ED tax credit program that provides tax credits to businesses investing in new technologies and scientific research.  

Funding aside, Canada also has the fastest-growing pool of AI-related talent in the entire G7. Two of the fastest-growing AI markets in North America, Vancouver and Calgary, have seen an increase of 69% and 61%, respectively, since 2017. In Ontario, we've witnessed Companies like Shopify and Wealthsimple emerge as global leaders in their respective industries. Last but not least, in Quebec, where we are based, Montreal has made a name for itself as a world leader in AI-related research through MILA, Montreal Institute of Learning Algorithms, and many other institutions such as Universities and other research labs. If you need support, the Canadian start-up ecosystem also boasts one of the strongest accelerator networks in the world, some of which we've been a part of such as CDL and Founder Fuel. The support provided by these accelerator networks is much needed in such a highly competitive field and offers a lot of support to young pre-seed and seed-stage start-up companies in Canada.  

Capital Efficiency Over Growth

Start-ups across Canada felt the hard effects of decreased funding and higher interest rates, meaning runway periods had to be extended. Companies that expected to raise lofty Seed or Series A rounds had to reset expectations and alter their course of action. This meant slowing growth and rethinking capital allocation decisions for the limited capital they had available to them. Like many start-ups in Canada, Stamped revisited its capital allocation throughout the year and shifted the focus to bolstering margins and streamlining operations. By focusing on more efficient capital allocation, Companies extended their cash runways, increased margins and became less reliant on external funding.  

Inovia's report highlighted that while growth slowed marginally, Companies that successfully emerged from a tough 2023 came out with much higher FCF (Free Cash Flow) margins and were energized to take on challenges with a more efficient business model, just like Stamped!  

Generative AI Supercycle  

Funding for generative AI-related start-ups has grown at an alarmingly rapid pace since the first release of Chat GPT by Open AI in November 2022. Implementing AI into your business is no longer a question of whether you should do it but how quickly you can implement it. For example, Shopify developed a tool powered by Large Language Models (LLM) that simplifies the process for employees to access content from the company's internal knowledge base, driving increased efficiency for internal tasks. In 2023, generative AI funding saw a 5.2x increase to US$22.4B, some raises which you may recognize, such as Open AI's US$10B round with Microsoft and Cohere's US$270M round. As a start-up or SMB, what can we take away from the rapid progress of Gen AI?  

It's clear that this technology has evolved from simple text generation and can now complete large and complex tasks, increasing the ways in which it can benefit your business. Depending on your business, you can either opt to be an implementer or developer of this technology. In either case, you’re participating in a booming industry entering a Supercycle of innovation, and Canada is at the forefront of it. At Stamped, we're committed to our roadmap of continually developing our year-end financial statement certification software to drive significant efficiency gains for CPAs, and that means incorporating elements of Artificial Intelligence.  


Looking to the future, Inovia projects continued growth in the software space as Canada continues its market-leading positioning both from a funding and talent perspective. Inovia’s report goes further into depth into many other themes rising across Canada in the Software space, so we highly recommend you check it out. If you're interested in trying AI-augmented certification services and a new, more efficient way of doing year-ends, check out our services and book an appointment with one of our expert onboarding specialists.

Alexandre Ouellet, Copywriter/Rédacteur

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