Predicting the Ideal VC Vintage

The past few years have been challenging for Canadian venture capital, with significant declines in capital raised. This year, Canadian VCs are projected to raise the lowest amount of capital in a decade, totaling just $500 million so far. This is a stark contrast to the $7 billion raised in 2021 during the zero-interest-rate policy environment and the $7.4 billion raised in 2022, which benefited from carryover fundraising from the previous year.

However, markets, including venture capital, are cyclical. An anticipated interest rate cut is expected to continue the trend towards greater liquidity. The current general malaise in the venture capital ecosystem is understandable but likely temporary.

John Rikhtegar, director of capital at RBCx, believes that the current struggles will lead to future success. He explains that when less capital is allocated to an asset class, it ensures that only the best founders and investors receive funding, potentially leading to some of the best-performing venture capital vintages on record. "Vines that struggle produce better grapes," he said, suggesting that funds able to convince LPs to invest in riskier assets will be those that successfully identify and support high-performing startups that will thrive over time.

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Additionally, the recent CrowdStrike global outage has had widespread impacts, grounding flights, disrupting hospitals and emergency services, and causing countless businesses to experience blue screens of death. Cybersecurity expert Troy Hunt described the disruption as “the largest IT outage in history.” The Business Development Bank of Canada announced on X (formerly known as Twitter) that it was experiencing “some technology interruptions” due to the CrowdStrike incident, highlighting the widespread nature of the impact.

The outage underscored the vulnerability of interconnected IT systems and the critical role of cybersecurity in maintaining operational continuity. The disruption affected numerous sectors, demonstrating how a single point of failure can have cascading effects across different industries. Flights were delayed, hospitals faced operational challenges, emergency services were disrupted, and businesses across various sectors had their operations halted or severely impacted.

This incident has sparked significant discussions on the importance of rigorous testing and validation processes for software updates, especially those related to cybersecurity. CrowdStrike’s commitment to conducting a thorough root cause analysis and implementing process improvements aims to prevent similar issues in the future and enhance the resilience of their services. Ensuring that updates are thoroughly tested before deployment is crucial for maintaining the trust and reliability of cybersecurity solutions.

Furthermore, the outage serves as a stark reminder for organizations to reassess their IT infrastructure and disaster recovery plans. It highlights the necessity of having contingency plans in place to manage and mitigate the impact of such widespread IT outages. Businesses need to ensure that their internal IT teams are equipped to handle crises and that they have partnerships with reliable cybersecurity vendors.

In summary, the CrowdStrike outage has illustrated the significant impact that a cybersecurity incident can have on global operations. The widespread disruptions emphasize the importance of robust cybersecurity measures, thorough testing, and effective crisis management strategies. As affected organizations work towards recovery, this incident will likely lead to increased scrutiny of cybersecurity practices and a push towards greater resilience in IT infrastructure.