How do Canada’s unique characteristics as a resource-rich country make it a fertile ground for technology companies seeking to go public through an IPO? • An open conversation with Roni Yagerman, Co-Founder at EXITEAM

“Canada is a resource-rich country—gas, gold, oil—there is no mineral you will not find there,” explains Roni Yagerman, Co-Founder at EXITEAM. “The way to finance mineral exploration goes through the capital markets. Thus, over the years, a financing track for resource exploration in Canada has been established, also known as exploration.”

Wait, could you expand a bit on the concept of exploration?

“Imagine that in some hole, in a remote mountain, 500 km north of Montreal, there is gold. Or at least there are signs that there is. Perhaps I heard about it from the Indians, perhaps from the Eskimos—it does not matter. The main thing is that I think there is gold there, and then the first thing I do is request a license from the Canadian government to search for gold in that location. Under the license, I will pay royalties to the local government.”

And how does this relate to the stock exchange?

“So for this business to work and for me to be able to search for the gold, financing is needed. What do the Canadians do? Instead of seeking large investors, they built a regulated system that enables raising money through the capital markets for this purpose. By the way, this is not limited only to mineral exploration in Canada. Fundraising in Canada can also be for exploration in South America and Africa. The Montreal Exchange is a world leader in this area.”

How is the money raised? Roni explains that an important factor in fundraising in Canada is retail investors.

“These are small transactions that are, on the one hand, high risk—either I found it or I did not. Small investors in Canada, average households, participate in this. They understand that it is high risk. That if I did not find the gold—all the money is gone. But if I found it, I make 20 or 30 times my investment.”

So anyone can raise funds like this in Canada?

“Broadly speaking, yes. Any entrepreneur, under certain conditions, who is going to search for one mineral or another, can go and raise money in the Canadian market. This is found in what is called the junior market, in markets for young companies, because the regulation required for this is not like in the main and large exchanges such as the Tel Aviv Stock Exchange.

For example, if I think there is gold in the Negev mountains, it is doubtful whether I can publish a prospectus and raise money for such a thing. But in Canada, yes.”

And how extensive is this market?

“Every year, billions of dollars are raised for this. And what drives this is not the stock market, but the minerals themselves. In the last two years, the price of gold has risen. Lithium is needed for every battery, especially for electric vehicles.”

“Another development that occurred not long ago was in the area of cannabis legalization. In 2017, the Canadian government decided that a license is required to grow cannabis. And so within two years, $25 billion was raised in Canada at high risk for more than 200 companies.”

And how does all this connect to technology?

“Similar to the exploration market and the cannabis market, in recent years the technology market has also been rising.

“Startups approach Canadian households and show them new technology. They are familiar with the concept of venture capital and know what it means to invest in a high-risk venture, so there is very high openness to startups and technology companies in Canada.”

In other words, Canadians have money, they like to invest, and they understand the advantages of venture capital investment. Technology companies that undergo the proper process can find in the Canadian stock exchange a fertile ground for significant growth, as evidenced by the story of most Israeli companies that have already gone public there in recent years.