Unverified data pollutes, distorts and dangerous

Photo of author

By Ted Liu

One of Canadian media outlets is proudly to be the “first” to release Q3 Canadian venture capital results, which are inflated.

According to its US third-party data provider, Hootsuite raised US $24.2 million in “late-stage” funding in July 2022. Did Hootsuite receive any VC money or not?

US $24.2 million is a relatively large sum in a relatively slow Q3 in Canada.

According to Hootsuite SEC filings, the US $24.2 million, actually US $21.6 million, is the accumulated fair market value of 4 RSU grants since 2020.

Hootsuite did not receive any money, and no investor has invested any money in the company.

As a result, Q3 Canadian results were inflated by a US $24.2 million non-existing Hootsuite VC deal alone.

Another US data provider who is also actively providing data to Canadian users had Hootsuite raising US $10.35 million in venture capital funding since 2021.

What is to trust

Since these two US data providers derived their information from US SEC filings, let us see what have been exactly filed and declared by Hootsuite.

If you were to spend a minute or two, you would have noticed that the filing dates are not the closing dates. Hootsuite had specifically declared “Total Amount Sold reflects the aggregate fair market value of the shares underlying RSUs on the date of grant.”

Canadian Financings

Canadian Financings truthfully recorded the transactions as follows, with correct closing date and amount:

NOTE: Canadian Financings treats transactions with no money passing through, such as RSUs, options, other share issuances, as “Transactional”. The Transactionals, part of company financial history, are not part of VC and any other financing total.

Blind trust has consequences

One of Canadian finance professors published an article comparing US and Canadian initial public offerings (IPOs).

Because of trust in data from a “global standard bearing” US database, his research team did not even check the validity of the underlying data before proceeding to produce their analysis and results.

Part of the data being used was that Canada had 211 IPOs while US had less number of IPOs in 2016. The truth is that there were only 26 Canadian IPOs or 104 IPOs including ETFs in 2016. Are the research and end results good? You be the judge.

Those firms who are eagerly releasing other people’s data, unverified data, to enhance their images are truly doing harm to their images. It calls into question of the quality of all the other things they are doing.

What happens if the policy makers devise policy and decision based on inaccurate data? Has anyone given serious thoughts? Would that be dangerous?

photo credit: Andrew Martin via pixabay