Canadian Tire has said Roller Labs, its venture capital arm, will back startups focused on data management and analytics that can better inform its marketing and merchandising decisions.Jonathan Hayward/The Canadian Press
General Motors Co., GM-N Canadian Tire Corp. CTC-T and BCE Inc. BCE-T are joining the rapidly expanding ranks of corporate giants looking to invest in Canadian technology startups, despite mounting economic concerns hitting the sector.
GM’s Detroit-based venture capital arm added its first financier in Canada this year with an eye toward expanding investments here. Canadian Tire chief executive officer Greg Hicks said at the retailer’s annual meeting in May the company would launch an innovation investment arm called Roller Labs Ventures, that would “continuously collaborate with and invest in cutting-edge, early-stage growth companies seeking venture capital in Canada” that could “accelerate our strategic capabilities.”
Meanwhile, sources in the domestic technology financing sector say Bell Canada parent BCE Inc. – which spun off its venture capital unit in 2007 – is exploring whether to return to the space.
“I think it’s great that they’re entering the fray,” said Kim Furlong, CEO of the Canadian Venture Capital and Private Equity Association. With many companies looking for innovative ways to meet environmental, social and corporate governance goals “and using the potential of a venture capital-backed company to transform their trajectory, I think they’re all thinking about the future differently.”
Canadian corporations were more active venture capital investors early in the internet age, but had largely retreated by the end of the 2008-09 recession. Through the 2010s, Canadian corporations with venture capital arms were rare – the few examples included Telus Corp. T-T, Power Corp. of Canada POW-T and Intact Financial Corp. IFC-T – and the country lagged others where big companies more actively backed young ventures.
The billionaire Weston family started a venture capital firm in 2019, and Shopify Inc. SHOP-T and Alimentation Couche-Tard Inc. ATD-T began funding startups during the pandemic. Others such as Cadillac Fairview Corp., Magna International Inc. MG-T and several Canadian financial services giants made some early-stage investments in recent years.
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Meanwhile, broadly adopted technologies including cloud-based software, smartphones and machine learning infiltrated all corners of the corporate world, bringing widescale disruption and a recognition by traditional companies that they need to innovate and evolve. Canada’s revitalized technology sector attracted global attention and record amounts of private and public investment in recent years.
The big shift at the Canadian corporate level started last fall, as Thomson Reuters Corp. TRI-T, Spin Master Corp. TOY-T, Quebecor Inc., Themis Solutions Inc. (known as Clio), Constellation Software Inc., and Deloitte LLP announced plans to start venture capital arms. Canadian Imperial Bank of Commerce earmarked $300-million to invest mostly in venture capital and growth equity funds.
GM has moved to back more Canadian startups 12 years after the auto giant started a venture capital arm with a global mandate. GM Ventures has made 55 investments, including three in Canada prior to 2022 – deep learning startup Maluuba Inc., bought by Microsoft Corp. in 2017, autonomous vision software maker Algolux Inc., and chipmaker Untether AI Corp.
Now, it plans to step up the pace in Canada, Ted Graham, who was appointed GM Ventures’ first Canadian-based investor in February, said in an interview. “I would estimate three to five deals in Canada is not going to be hard for us to hit,” said Mr. Graham, who joined the auto giant in 2016 as head of open innovation with its Canadian technical centre, a job he will keep along with his role as principal with GMV.
Mr. Graham said GMV has made two undisclosed investments in Canada this year, and that the country is “punching above its weight” producing startups in the four areas that interest GMV: vehicle electrification and charging infrastructure, connected vehicles, autonomous driving and digitization of the enterprise.
While valuations for technology companies have crumbled this year, Mr. Graham said a pullback by other venture capital firms means “there may be more deal opportunities for us.”
Canadian Tire, meanwhile, has embraced innovation as one of its core values. The name of its venture capital arm, Roller Labs, is a nod to its historic innovations, including the early installation of rollers in its warehouse and roller-skating clerks at its flagship Yonge Street store decades ago.
The company said in an e-mail that Roller Labs would invest alongside Canadian venture capital firms in early-stage companies it believes can help bring digital improvements to its business, contributing $1-million to $5-million per deal for stakes of 10 per cent or less. Canadian Tire declined to say how much it will commit in total or who will oversee Roller Labs or make investment decisions; details are expected this fall.
Canadian Tire has said Roller Labs will back startups focused on data management and analytics that can better inform its marketing and merchandising decisions. Roller Labs will also back companies it believes can improve customer experience in store or through digital channels and those that can deliver operational improvements using technology. Roller Labs made its first investment this year in Vancouver’s Sanctuary Cognitive Systems Corp., which is trying to develop general-purpose robots with human-like intelligence.
BCE also invested in Sanctuary and has partnered with Tiny Brain Robotics Inc., a food-delivery robot startup that operates miniature “Tiny Mile” vehicles over Bell’s 5G network. BCE also invested in Toronto venture capital firm ScaleUP Ventures in 2017 alongside other Canadian corporations.
Now, BCE is looking to step up its startup funding efforts. Since May, Erin Basarsky, Bell’s Calgary-based director of corporate strategy and mergers and acquisitions, has talked to dozens of venture capital players, three sources in the sector say. A BCE spokeswoman declined to comment.
The sources who have spoken with Ms. Basarsky say BCE is considering investing through Canadian venture capital firms and directly in startups that could bring more business to Bell’s broadband and wireless networks. But they stress BCE has not made any final decisions, including its investing approach or the size of its commitment. The Globe is not identifying the sources as they are not authorized to discuss the matter.
Ms. Furlong said she welcomed the venture capital newcomers but cautioned there has been “a traditional reflex of corporations to step away” when the economy slumps. “Will they stay the course? I hope so. As we go into a correction, this market needs not less, but more, capital.”
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