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Fidelity Wrote Down Canadian Unicorn Hootsuite and Other Tech Startups

March 3
6:56 AM 2016

Fidelity Investment released its January valuation report of startup companies. The second largest mutual fund and financial services wrote down many of tech startups. Hootsuite, the Canadian tech unicorn was also among list.

The second world-largest mutual fund and financial service Fidelity Investment released its January valuation report for its portfolio companies. Fidelity slashed value of many startup companies from previous month's value. According to Reuters, Internet security firm Cloudflare Inc took the biggest hit among tech startups with 30.55% decrease. While Stem CentRx was listed the biggest markdown among biotech companies with 37.74% marked down.

Fidelity Investment published the valuation based on its analysis on three mutual fund it owned. They are Fidelity Blue Chip Growth Fund, Fidelity Contrafund, and Fidelity Growth Company Fund.

Canadian startup darling, Hootsuite Media Inc. was among the written down list. Bloomberg reported that Hootsuite wrote down its investment in Hootsuite by 18%.

Hootsuite was founded in 2008 by trio David Tedman, Dario Meli, Ryan Holmes. The company created a social media management system platform for brand owners to keep their social media campaign integrated. Its management system is able to integrate all social media from Twitter, Facebook, LinkedIn, Google+, Foursquare, MySpace, WordPress, TrendSpottr and Mix.

Its platform enable brand owners to harness power of social media, by engaging brands with social networks to build customer relationship and gathering voice of costumers. In recent development, Hootsuite added more social media integration, available in its application directory. The latest integration including Instagram, MailChimp, Reddit, Storify, Tumblr, Vimeo and YouTube.

Fidelity was the lead investor for the Vancouver-based startup in Series D investment, raising $60 million in 2014. With the investment, Hootsuite valued at $1 billion according to CB Insight research firm which reported, "Hootsuite is one of only two Canadian unicorns." Another Canadian unicorn is Kik Interactive Inc, developer of messaging app.

The Canadian startup claim there are more than 10 million people use its platform for either organizing social media advertising campaign, or streamlining their social media presence. The company said it has generated at least $250 million for its service.

Last October, Hootsuite CEO Ryan Holmes said the company had plan for initial public offering, but its current focus is to increase the company's cash flow. For that reason, Hootsuite hired Sujeet Kini, from OpenText as chief financial officer in October. The company also layoff some employeers in December.

The slowdown of startup financing has enforced investors to reevaluate their portfolio companies. Fidelity and other fund managers regularly adjust their investment value of its stock in private companies. Although Fidelity wrote down its investment in Hootsuite, but it still has high expectation on its social networking companies such as Hootsuite Media Inc., Pinterest Inc. and Snapchat Inc.

As Fidelity Investment wrote down its value, Hootsuite is expecting to increase its performance. The company will focus on increasing its revenue before aiming for IPO.

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