Canadian Unicorn Hootsuite Valuation Written Down By Fidelity Investments

Talk on the street suggests that Hootsuite’s problems are not all related to the downturn in the larger venture capital and private investment markets. There has been criticism of HootSuite’s newest Dashboard iteration, the Hootsuite software design and development process in general, and rumors of stagnant revenue growth as competition has entered the market.  In  addition, there has been criticism of Holme’s personal leadership at Hootsuite, suggesting that he has been spending too much time on “cardboard desktops” and land deals, as the company’s problems have mounted.

In a related development which may suggest the further contraction of investor interest in startups with very large valuations, The Wall Street Journal today reported that many Wall Street mutual funds were reducing their exposure to startup investments. Historically, mutual funds have invested in high-risk startups only via well-known, reputable venture capital firms, who solict the mutual funds managers. However, recently,  and in the cases of some startups like Uber and Hootsuite, the mutual funds have taken direct investment positions. This appears to be ending, and venture capital firms may be hard pressed to attract to their own VC funds:

READ MORE: Mutual funds sour on startup investments

Canadian tech unicorn Hootsuite gets written down by Fidelity

Fidelity Investments cut the value of its stake in Hootsuite Media Inc., one of Canada’s most highly valued technology startups, in a sign that lowered U.S. investor expectations are making their way north of the border. The Boston asset manager wrote down its investment in Hootsuite, maker of social media marketing software, by 18 per cent.

Fidelity was the lead investor when Hootsuite raised $60-million in 2014. That financing round valued the Vancouver company at $1-billion, according to research firm CB Insights. Hootsuite is one of only two Canadian unicorns, the researcher said. The other is messaging app developer Kik Interactive Inc.

As startup financing begins to slow, investors have been reevaluating some of their portfolios. Like other fund managers, Fidelity periodically readjusts the value of its private stock holdings, based on a variety of factors, and is required to disclose the data publicly. The 18 per cent writedown of Hootsuite, from June to December, was disclosed in public filings.

Fidelity marked down its stakes in several corporate software startups in January, but it maintained high expectations for some social networking companies, including Pinterest Inc. and Snapchat Inc. With the writedown of Hootsuite, Fidelity values its holding below what it originally paid. Hootsuite didn’t immediately have a comment.

Last year, Hootsuite Chief Executive Officer Ryan Holmes said that an initial public offering was eventually in the cards but that he was focused at the time on increasing the company’s cash flow. Hootsuite hired a chief financial officer in October. Then it cut some employees in December.

Hootsuite said in October that more than 10 million people use its social media platform to help organize advertising campaigns, interact with customers or streamline their social media presence. The company also provides tools for businesses to produce content for their employees to share on their personal accounts. Hootsuite has said it’s raised at least $250-million since it was founded in 2008.