Getting the world—and, more importantly, investors—to beat that proverbial path to your door takes visibility: unless people know where to find that better mousetrap and those who came up with it, growing the business and trying to capitalize on the idea can be a long ordeal. And that’s where the Deloitte Technology Fast 50 list
comes in. Identifying companies that have racked up impressive growth in revenues gives those businesses a platform to stand out from the crowd.
It’s also a barometer of how Canada’s technology sector is faring, and the news is good, said Richard Lee, Deloitte Canada’s national technology, media and telecommunications practice leader.
While the growth rates in percentage terms didn’t hit the highs of past years, he said the numbers are still impressive and indicate the sector is healthy, viable and growing, despite the obvious setbacks of the economy and global debt issues.
Top 5 average GROWTH 38,527%
“This is a healthy, growing sector and indeed there are even signs that things are accelerating,” Lee said. “And that’s terrific news. The growth average in the top five companies was 38,000 per cent. That’s not the highest it has been but it’s only down slightly.”
Given the gyration of the global economy, it counts as a victory and a strong signal to venture capital funds and bigger players looking for acquisitions: there is a lot happening north of the 49th.
Perennial lister Research In Motion (29th place) retains a strong spot for the 14th year running, suggesting reports of its demise are somewhat premature. Headlines aside, revenues are strong, up 35 per cent in 2010 over 2009 and a healthy 634 per cent over 2005.
And that’s another aspect of the list. While some companies are relatively young and in the early cycles of their business, they have all earned revenues for five years, taking them well beyond their cash burning phases.
50,136 per cent
, of Saint Laurent, Que., topped the list this year with revenues that were up 50,136 per cent, an outcome vice-president of marketing and product management
Craig Easley said came about with a little luck, a lot of hard work and great timing.
Accedian invents, designs and builds hardware and software for the wireless industry that allows for more efficient handling of data between users. With the explosion in demand for mobile services such as video, images, e-mail and text, the strain on existing wireless networks was beginning to show in dropped calls and lost transmissions. Accedian’s solutions gives wireless companies a relatively simple way to manage the “carrier Ethernet,” which involves routing the data zipping between users from a cell tower to a wired network and then back to a cell tower again. Accedian’s NIDs (Network Interface Devices) are sophisticated boxes installed on network access points that manage the data, while its software allows for remote control and tweaking to ensure optimum quality of service–something wireless companies are desperate to achieve.
“When we started we were a little ahead of our time,” Easley said, but added demand for their products is taking off as carriers see the value. What’s really interesting is that North American carriers are early adopters of this technology and stand to leapfrog those in Europe and Asia into the next generation of network capability, in effect wiping out the gap that existed when they lagged behind deployment of 3G and 4G networks.
Today, Easley said, Accedian’s products are installed in 40,000 cell sites across North America, it has sold more than 70,000 platforms worldwide, and the company is being listed as a preferred vendor by companies like Nokia-Siemens Networks, Fujitsu Network Communications and British Telephone.
For now, he said, Accedian is a private company, though an initial public offering is probably inevitable. In the interim, topping the Fast 50 is itself an honour.
Certainly, large percentage jumps in earnings can sometimes be attributed to limited cash flows in early years, but in some cases it’s about the market aligning around what you do.
46,278 per cent
Such is the case with RTI Cryogenics
, aCambridge, Ont.-based manufacturer of a turnkey technology that turns waste tires into fine rubber crumb. It slotted into second place with revenues that rose 46,278 per cent compared to five years ago.
Like many companies, it’s an overnight success—20 years in the making. Its roots stretch back to 1989 when founder and owner Jim Anderson, working in the tire recycling industry, realized there was an abundance of supply and too few sustainable ways to dispose of tires.
At the time, recyclers either burned tires or mechanically shredded them to separate out the steel belts from the rubber. In the latter process, while both the metal and the rubber crumb could be recycled, the size of the pellets limited options. Burning tires to generate energy or make cement wasn’t efficient since tires require more energy to manufacture than they release.
The burning question driving Anderson was how to dispose of tires, and this became a huge environmental and social issue in the late 1980s and early 1990s when tire dumps started burning. At the dump in Hagersville, Ont., 13 million tires caught fire and burned for nearly three weeks. The toxic smoke forced the evacuation of 4,000 residents.
Anderson’s technology uses cryogenics, extreme cold temperatures, to freeze tires and make them easier to shatter and render into fine crumb, while also separating out the steel.
The company now builds and sells turnkey systems at about $13 million each, along with a secondary system that uses the fine crumb as a component with post-consumer plastic to make XyCOM TPE, which in turn is used in injection-molded products like car grills. Fine crumb is also a key component of rubberized asphalt cement used for paving roads, where its elastic nature helps roads last longer and generate less tire noise. Other uses include playgrounds and athletic fields.
“Lists like this are great because they give us visibility,” said Gary Hedges, president and CEO. When interviewed, he and Anderson were heading to the airport to nail $100 million in four deals in Austria and the Middle East.
He said RTI Cryogenics is looking for a global-scale partner to build and install systems. While the company is building sales, it needs more execution muscle. “It wouldn’t be bad if someone came along and offered to buy the company for a few hundred million either,” he said.
It is a common theme with many entrepreneurs: they’re looking for an exit strategy. In fact, Lee said the majority of the companies on the Fast 50 list are now private, whereas from 2001 to 2010, they tended to be public. He can only speculate as to why. Perhaps market conditions have been soft for initial public offerings during the recession and recovery or, just as likely, the burden of assigning resources to remain compliant with securities regulators is an expense left for later in the business growth.
“These are attractive companies. Many of them are back–some 24 on this year’s list were on last year’s list.”
NexJ Systems, for example, which targets financial services, insurance and health-care industries, is back at fourth with 29,161 per cent growth, while PC security maker ParetoLogic pops back at 24th, down from 18th with 939 per cent growth.
While the companies on the list represent a broad and deep sample of tech sectors, Lee said new categories, such as digital media, are starting to stand out. These are starting to show real traction, boosted by provincial and federal government policies designed to assist them.
“We try to categorize them but some really defy categorization,” he said, noting clean tech and green tech sectors are also taking off. Regardless of where they placed, there’s one certainty: companies on this list bear watching because they’ve proved they can generate revenue and grow revenues. In this business climate, that’s always worth celebrating.
The Deloitte Technology Fast 50™ - 2011