Your Business News

Access to capital remains abundant for the technology sector

April 14, 2021

Authored by RSM Canada LLP

Ian L. FitzPatrick, CPA, CA, CBV shared this article

Archived Article Please note that this article is reflective of the relevant legislation, regulations, and information at the time of publishing and does not contemplate any changes that have occurred since that time.


The appetite for investments in the technology sector has grown stronger than ever throughout the last year. Similarly, the amount of dry powder within this sector continues to increase, indicating strong market demand for capital investments. From booming venture capital investments to the increasing popularity of special purpose acquisition companies, we don’t expect tech to cool off anytime soon.

Below, we look at some of the latest numbers and trends among the main avenues companies are taking to make deals and generate capital.

Venture capital

In 2020, venture capital firms deployed approximately $150 billion in capital, making it a record year, according to data from PitchBook. In the technology sector specifically, venture capital firms deployed more capital last year but across a smaller number of technology companies than in 2019. Venture capital-backed technology companies were resilient in 2020 even amid the COVID-19 pandemic, and some technology verticals, such as cybersecurity and health tech, received tail winds as a result of the pandemic. Late-stage investing (Series C and beyond) performed particularly well in 2020, and we anticipate that will continue into 2021. According to CB Insights, there were 515 unicorn startups globally in 2020, many of which will be prime targets for exits in the coming year. Some unicorns will choose to exit through initial public offerings, where they hope to achieve success similar to the exits we saw from companies like Snowflake, Airbnb and DoorDash in 2020.

Private equity

Private equity has had an increased appetite for doing deals in the information technology sector. According to PitchBook, more than one in five private equity deals in 2020 was in the information technology sector, representing the greatest percentage in the last decade and an increase from 17.5% in 2019. Private equity firm Thoma Bravo continued to be very active in the technology sector, completing more than three dozen deals during 2020—four of which were in excess of $2 billion. We anticipate an increasing number of private equity groups to become active in the information technology sector as the asset class continues to perform well during the COVID-19 pandemic.

Mergers and acquisitions

The>largest cloud M&A deal in 2020 was the Salesforce acquisition of Slack at a purchase price approximately 25 times the company’s forward revenue. In 2021, we expect there to be increased regulation by the U.S. Department of Justice of the acquisition of middle market technology companies. For M&A deals receiving regulatory approval, healthy valuations coupled with the low cost of credit will enable technology companies to structure deals with a combination of stock and debt. According to Bloomberg, a record number of M&A deals was announced in the last two weeks of December 2020, and we predict that the technology sector will continue to be a target for M&A in the first quarter of 2021.

Special purpose acquisition companies, direct listings and initial public offerings

SPACs have been growing in popularity. These blank-cheque companies accumulate investments through IPOs and acquire companies to reverse-merge into their shell companies. SPAC IPOs were the most popular IPO vehicle in 2020, and many SPAC IPO registrations are expected to continue targeting technology companies in 2021. We also expect more companies to go public in 2021 via direct listings, a historically less-common debut route. The success of the Palantir and Asana direct listings will have far-reaching implications for how technology companies will choose to debut as public companies in the future. Moreover, many technology companies will continue to choose an exit through a traditional IPO. Some companies that are reportedly eyeing a 2021 public debut are ZipRecruiter, Instacart, UiPath and Roblox.

The takeaway

As tech continues to be one of the strongest segments of the global economy, we anticipate that this trend of abundant access to capital, high multiples and strong exits will continue in the near future, especially as the pandemic continues to fuel the need for remote work and related tools. Given the continued appetite among investors for opportunities in the tech sector, companies in this space should assess what this could mean for research and development investments or overall business strategies.

Let's Talk!

Call us at 1 855 363 3526 or fill out the form below and we'll contact you to discuss your specific situation.

  • Topic Name:
  • Should be Empty:

RSM Canada Alliance provides its members with access to resources of RSM Canada Operations ULC, RSM Canada LLP and certain of their affiliates (“RSM Canada”). RSM Canada Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM Canada. RSM Canada LLP is the Canadian member firm of RSM International, a global network of independent audit, tax and consulting firms. Members of RSM Canada Alliance have access to RSM International resources through RSM Canada but are not member firms of RSM International. Visit for more information regarding RSM Canada and RSM International. The RSM trademark is used under license by RSM Canada. RSM Canada Alliance products and services are proprietary to RSM Canada.

FCR a proud member of RSM Canada Alliance, a premier affiliation of independent accounting and consulting firms across North America. RSM Canada Alliance provides our firm with access to resources of RSM, the leading provider of audit, tax and consulting services focused on the middle market. RSM Canada LLP is a licensed CPA firm and the Canadian member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.

Our membership in RSM Canada Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise, and technical resources.

For more information on how FCR can assist you, please call us at 1 855 363 3526

Important Notice:

FCR will now redirect you to CCH Portal where your FCR Client Portal login is located.

Share This