2024 Public Market Exodus: Lessons from Clio’s Record Funding Round

Burnaby-based legaltech company Clio made headlines in 2024 by raising a record-breaking $1.24-billion CAD ($900-million USD) Series F funding round, achieving a $4-billion CAD ($3-billion USD) pre-money valuation. This landmark raise has set a new benchmark in Canadian tech history, surpassing the $744-million CAD Series C raised by 1Password in 2022. The sheer size of the round was not only remarkable but also critical, as it accounted for nearly half of all venture capital raised in Canada during Q3 2024, demonstrating Clio’s dominant role in the country’s tech landscape.

While the numbers themselves are impressive, the story behind Clio’s fundraising sheds light on the broader challenges and opportunities in the tech sector. Clio navigated a tough market environment, where public markets proved increasingly inhospitable to tech firms. Many Canadian technology companies, unable to sustain public shareholder demands, opted to delist or seek buyouts from private equity firms. Against this backdrop, Clio’s decision to remain private stood out as a strategic move to retain control and flexibility in shaping its future.

At the BetaKit Town Hall in Vancouver, Clio CEO Jack Newton elaborated on the rationale behind staying private. Newton acknowledged the intense pressure from existing investors, many of whom were reaching the end of their fund cycles, to exit through an IPO or acquisition. However, instead of following the traditional exit routes, Clio utilized its Series F round—structured as “substantially secondary”—to facilitate investor exits without forcing the company into a public listing or sale. Newton emphasized that founders don’t always need to sell and highlighted private markets as a viable alternative for managing investor exits while maintaining the company’s independence.

Clio’s move reflects a larger trend within Canadian tech in 2024, where a significant number of publicly traded companies returned to private markets. Over half of the 20 Canadian tech firms that went public during the IPO boom of 2020 have since delisted, been acquired, or otherwise returned to private ownership. Montréal-based payments company Nuvei is among the most prominent examples, having been acquired by Boston-based private equity firm Advent International for $6.3 billion USD. Nuvei, which initially went public during the 2020 IPO wave, re-entered private ownership less than four years later.

Similarly, Lightspeed Commerce, another Montréal-based company, is exploring the possibility of going private. Under the leadership of returning CEO Dax Dasilva, Lightspeed initiated a strategic review of its business, raising speculation that it may follow the trend of privatization. The review has already resulted in the postponement of its highly anticipated Capital Markets Day.

The acceleration of this go-private trend can be attributed to several factors. Public markets have become increasingly volatile, and the demands for consistent quarterly performance have placed a heavy burden on companies. Many firms struggle to meet these expectations while also navigating macroeconomic challenges. Privatization offers a solution, allowing companies to restructure and refocus outside the scrutiny of public investors.

Tamara Steffens, managing director at Thomson Reuters Ventures, highlighted the advantages of going private in today’s climate. She noted that private ownership provides companies with the opportunity to clean up operations, streamline costs, and prepare for future growth without the pressures of quarterly earnings reports. While some companies may eventually return to public markets, the temporary retreat into private ownership offers a chance to stabilize and rebuild.

Clio’s record-setting raise symbolizes its ability to adapt and thrive in a challenging environment. Beyond the capital infusion, the company’s decision to stay private reflects its commitment to long-term growth and strategic independence. As Clio continues to lead in the legaltech space, its success serves as both a milestone and a model for Canadian companies navigating the evolving dynamics of the global tech ecosystem. The go-private wave of 2024 underscores the importance of flexibility, resilience, and innovative thinking in ensuring success during uncertain times.