Here’s what will make or break the next wave of Canadian IPOs

Mia Morisset of Inovia Capital explains how the go-public goalposts have shifted since 2021.

The Canadian tech IPO market might seem like a ghost town right now, but Mia Morisset, Principal at Inovia Capital, is optimistic about the potential for a comeback.

After two years of wrestling with high interest rates, inflation fears, and global instability, going public has become a distant dream for Canada’s SaaS scale-ups. Many of those that squeezed through the door during the 2021 boom have seen their share values falter, with some even retreating back to private ownership this year.

Morisset is a growth-stage investor at Inovia Capital, a Canadian investor that has accompanied four portfolio companies to IPO, including Sonder, Lightspeed, Perazo, and Milestone Pharmaceuticals, and works with several pre-IPO stage tech companies.

“Back in 2021, it was all about growth. Now it’s about profitable and predictable growth.”

Mia Morisset

Morisset appreciates the IPO landscape is still rocky, but she’s betting that the tide is set to turn.

“For late-stage startups, the past few years were about right-sizing the business,” she said. “In 2024, we’re starting to see companies going back into growth mode. I do think the IPO window is eventually going to reopen and we are starting to see signs.”

But Morisset says the path to IPO will look quite different when that window does reopen. She said learning from (and not repeating) the past mistakes of other public companies will be key.

“Back in 2021, it was all about growth. Now it’s about profitable and predictable growth. I think people now realize that you better not have a plan based on hope, but rather on what you realistically think you’re going to achieve, and this is how you’ll get rewarded in the public market,” she added.

To Morisset, predictability and scale will be the twin pillars that will make or break the next era of SaaS IPOs.

Predictability, she said, comes from revenue streams and accurate forecasting models. “If you’re worried you’re not going to be able to hit your budget in the next three to six months, you don’t yet have the right predictability,” Morisset added.

Eric Sleeth, Senior Product Marketing Manager at Sage, believes that even for mature SaaS companies, building that predictability can be a multifaceted challenge that demands both strategic foresight and scalable tools.

“Companies should focus on robust financial planning, customer segmentation, and churn prediction, leveraging tools like CRM platforms, subscription management software, and BI dashboards,” Sleeth said. “This predictability not only helps in the short term but also sets the stage for sustainable, long-term growth and investor confidence, particularly when preparing for an IPO.”

In order to build predictability into the business you first need scale, Morisset added. This includes a strong, loyal customer base and market penetration.

Sage’s Eric Sleeth believes metrics like customer acquisition cost, lifetime value, and net dollar retention “tell the story of a startup’s ability to sustain growth and achieve profitability.”

Measuring both predictability and scale involves analyzing key metrics such as gross margin, net and gross dollar retention, among others. “These metrics help you understand the profitable growth story of your company,” Morisset said.

Profitable growth differs from mere profitability, she added. It’s about expanding the business in a way that ensures long-term success. “You cannot avoid growth. But I think the public markets are going to scrutinize a bit more on what’s organic growth versus M&A, and make sure you have a strong organic story,” she added.

Beyond the numbers, Morisset emphasized that SaaS companies must consider the business drivers that aren’t as easily quantifiable. “What’s the market opportunity? What’s your edge? Is this the right management team in place to scale to the next stage?”

Sleeth believes that measuring scale is crucial because it provides a clear picture of a company’s market presence and growth potential. He said metrics like customer acquisition cost, lifetime value, and net dollar retention all offer insights into how well a company is penetrating its market and retaining customers.

“These metrics are not just numbers,” he added. “They tell the story of a startup’s ability to sustain growth and achieve profitability, which is what public markets are increasingly focused on.”

Sage Intacct was built to support growth-stage companies on their path to IPO by providing scalable financial management, automating accounting tasks, and ensuring compliance with industry standards. Key platform features like real-time reporting, multi-entity consolidation, and strong internal controls streamline accounting processes and enhance auditability, all of which Sleeth said are essential for IPO readiness and a successful entry to the public markets.

When the IPO window reopens, Morisset believes the biggest change from 2021 will be the perception of the milestone itself. As more companies have been forced to focus on profitability, she sees an increasing number questioning whether an IPO is necessary at all.

“Before 2021, companies were seeing the IPO as the end game, and I think that has changed,” Morisset added. “People have realized that an IPO is a great milestone, but it’s not the only one, and startups have to think carefully about optionality and the path they want to pursue.”