Canadian tech community braces for possible downturn as stocks fall, inflation rises

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Members of Canada’s tech sector say that anxiety is being felt across the industry as rising interest rates and 30-year inflation highs weigh on businesses

At the very least, observers believe these conditions will contribute to a market correction, though some are predicting worse: a recession.

“We are going into a down cycle when a lot of the founders and a lot of the venture investors have never seen a down cycle in their professional careers,” he said.To help young founders understand the potential gravity of the situation, Communitech paired them with more seasoned executives who can share how they navigated past recessions. Albinson is also telling startups to amass enough cash to keep the company running for 18 months.

They consider the current climate to be part of a course correction, which most companies deal with at some point. “Understand that the poor public market performance of tech companies significantly impacts VC investing,” the note said. “VCs will have a much harder time raising money and their limited partnerships will expect more investment discipline.”

“People are becoming more cautious and defensive as investors, and it’s fear driven because everybody’s telling them to be,” said James Lochrie, managing partner at Alberta investment firm Thin Air Labs.

 

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globebusiness Growth/tech stocks have proved to be inversely correlated to interest rates - especially so during the pandemic - but only now are we seeing the direct effects to the companies themselves

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