Round13 co-founder and former Dragon's Den investor Bruce Croxon has five predictions for Canadian business this year, most of them tech-related - including warnings for investors in cryptocurrency and legalized marijuana (which, he notes, will rely on tech for distribution).

Published: January 26th, 2018

By his own admission, Bruce Croxon finds predictions difficult.

“Things are changing so fast,” the Round 13 Capital managing martner and former Dragons’ Den investor says when discussing his five predictions for what 2018 will bring to Canada’s tech and business communities with ITBusiness.ca. “I took my best shot.”

It’s a task for which Croxon is more than qualified: Since co-founding Round 13 with business partners John Eckert and Scott Pelton in 2012, he’s invested in nearly a dozen Canadian tech startups, including TouchBistro, Hubdoc, and Aislelabs.

“Round 13 is smack in the middle of technology innovation as it pertains to Canada,” Croxon says. “Last year, in particular, we made unbelievable strides in global reputation when it came to [artificial intelligence]/machine learning, crypto, and frankly, cannabis – which I’m not directly involved with.”

Many innovations and exchanges involving cryptocurrency in particular have roots in Canada, Croxon says.

“I’m emboldened by that because I’m all about Canadian entrepreneurs holding their own with anyone in the world,” he says. “And I think the area in which we’re most ably competing is IT. Well, IT and smoking weed.”

Check out Croxon’s predictions below.

Prediction 1: There will be an adjustment in the price of most cryptocurrencies, but the blockchain will further secure its potential for decentralized transactions, while Bitcoin itself will continue its upward momentum.

“We’ve come off of at least nine months of extreme volatility in the crypto market,” Croxon acknowledges, noting that in the two days that passed between his representatives contacting ITBusiness.ca with the interview opportunity and our actual conversation alone, the price of Bitcoin went from opening at $13,600 USD to closing at $11,815 USD.

“[Bitcoin] is going to swing,” he says. “It will continue to swing because I think when you have a market that people don’t fully understand, there are a lot of speculators jumping on bandwagons and panicking just as quickly.”

“I think a lot of cryptocurrencies are going to undergo the same kind of volatility,” he continues, “but I believe Bitcoin will remain the market leader because of the simple fact that it’s the one being most widely adopted as a currency.”

Croxon says that while he’s not married to Bitcoin itself, he believes in the blockchain as a platform, and cryptocurrencies as a leading product – and is confident that at the end of the day, Bitcoin will emerge from the ashes as an actual method of exchange.

Prediction 2. Fewer Canadians will choose a legitimate path to purchasing marijuana than the stock market appears to think.

While he refrains from making another joke and admits that it’s only tangentally related to technology (though he believes tech will play a leading role in distribution and education), Croxon believes the current gold rush around medical marijuana is a useful case study in the dangers of overvaluing the Next Big Thing, no matter the industry.

“I think [marijuana] stocks are being valued as if because the government is suddenly setting up this decriminalized channel, everyone’s going to flock to it,” he says. “But anyone who’s been involved in the market all their life has their own source and that isn’t going to just immediately go away.”

“There’s going to be great value created,” he adds. “I just think we’re a little over our skis right now in terms of guessing the extent.”

Prediction 3: The Trudeau government will not end up shooting early stage risk capital in the foot by implementing the unfair tax changes contemplated last summer.

Longtime ITBusiness.ca readers will be familiar with the tech industry’s outcry, led by the Canadian Advanced Technology Alliance (CATA), over changes proposed last summer that were meant to close loopholes in the tax code but which, Croxon says, would stifle innovation in practice.

Fortunately for them, the government appears to be listening, he says.

“The community did a pretty good job of pushing back,” Croxon says. “I think we were heard.”

“At the end of the day, as ill-informed as the government may have been about the impact of some of the changes they were contemplating, I have to believe that rational human beings will ultimately realize that cutting the legs out from under small business and the people that invest in small business is not a recipe for doing anything positive for the country,” he says.

One of CATA’s other prominent campaigns last year, that Canada’s government had essentially reduced innovation funding by $5.3 billion between 2009 and 2016, was followed by the Department of Finance and Ministry of Innovation, Science and Economic Development asking CATA to help develop new standards.

Prediction 4: Machine learning will continue to influence critical industries like manufacturing, automobiles and security.

This, Croxon believes, is the least controversial of his predictions: That Canada will continue to lead a sector in which it’s already widely seen as an international leader, thanks to growing investment, an immigration system that has attracted some of the world’s foremost experts, and multiple research centres.

“On The Disruptors [the BNN show he cohosts with Paige Ellis], we’re seeing breakthroughs coming across our desk all the time,” Croxon says, citing season six Top Disruptor Mindbridge AI, which helps accountants identify fraud; and Blue J Legal, which applies machine learning to the busywork of scanning, editing, and auditing legal documents, as his favourite examples.

“Canada is front and center when it comes to the brain trust we have working on this kind of stuff,” he says.

Not to mention the role AI is playing in helping a former mobility giant gradually re-invent itself as another type of mobility giant.

“With the connected car software, we may even see Blackberry come back to their previous position of influence,” Croxon says. I would love nothing better than to see that.”

Prediction 5: Canada will enjoy another stellar year in technology investments, mergers and exits.

“There’s a lot of money floating around, particularly in the U.S., and it’s looking for a home,” Croxon says. “I think we have a lot of companies at the growth stage that will continue to make their way onto the radar of others in the space who are looking to augment their companies with smart people, good ideas, and revenue growth.”

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