Archive for PE/VC News

Wellington Financial completed a $14 million financing for Waterloo-based Dejero Labs

Let’s file this under “better late than never”.  A  belated congratulation to our good friend, Mark Usher, one of the two “Marks” at Wellington Financial LP on the completion of their latest Canadian funding, a $14 million growth financing for Waterloo-based Dejero Labs.

Founded in 2008, Dejero has become a market leader in the remote acquisition, cloud management, and multiscreen distribution of professional live video over IP.   Dejero’s centrally managed LIVE+ range of products have changed the broadcasting landscape, allowing video journalists to record and transmit live, from the scene of the action, using wireless uplink solutions and its patent-pending Intelligent Connection Management system. The company’s customers include ABC, CBC, CBS, CTV/Bell Media, Fox, NBC, and Rogers Media.

In total, the company has completed three rounds of financing for a total of ~$18.5 million beginning with the  MaRs Investment Accelerator Fund (December 2009), followed by a $4.5 million round with Best Funds in May 2014 and finally, Wellington’s $14 million investment in February 2017.  Dejero management plans to use the Wellington investment to expand to the EMEA and APAC regions in 2017.

Wellington Financial LP is a privately-held specialty finance firm providing term, venture and amortizing loans from $2 million to $40 million to Canadian and US technology companies.

Wellington currently manages a $900 million investment program and its latest fund, Fund V, launched on October 1, 2015 has committed or closed $207.4 million to 16 companies.

Importantly from our perspective, Wellington has closed $51.4 million of Canadian transactions over the past 18 months to five companies:

  •  FinCad, a Vancouver-based technology company providing risk analytics and risk management software for valuation and pricing of derivatives including swaps, options, and futures.
  • CareWorx, an Ottawa-based top 100 Global Managed Service Provider targeted at the senior care market with over 4,000 facilities operating over 60,000 CareWorx touchscreens for their daily electronic health record (EHR) documentation.
  • Acquisio, a Montreal-based software platform that facilitates customer acquisition using ad platforms such as Google AdWords, Facebook Ads, and Bing Ads.
  • Exinda, a Toronto-based provider of network orchestration solutions that helps IT teams from over 4,000 worldwide organizations manage the way users, traffic, devices and applications behave across their networks.
  • Dejero Labs, a Waterloo-based technology company that simplifies the remote acquisition, cloud management, and multiscreen distribution of professional live video over IP.

For more transaction details, please click here

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When Should You Sell Your Startup?

In a recent article, Tunguz from Redpoint takes a stab at the age-old question of “when should I sell my start-up?” As most of you have already expected, the answer to that question is unique to different situations. To help figure this out, Tunguz invites the readers to think about a more tangible, but related, question–when is value maximized? Specifically, “when is a company’s value maximized, given a declining growth rate?”

A startup’s value is highly correlated to its ability to grow, the linear relationship between its Enterprise Value and its TTM Growth rate is shown below.

The R^2 between growth and ev/ttm

Given this correlation, Tunguz concludes that “Just because the business grows doesn’t mean it increases its value. It has to grow at a certain rate to be worth more.”

Take a look at the three different scenarios of declining growth rate:

Comparison of scenarios for EV of company when growth rates are falling

In the last scenario, the EV of the hypothetical company actually falls despite a 25% increase in revenue.

So to answer the original question– the best time to sell is before it decreases in enterprise value.  Tungus explains further “Startups are valued for their growth. At some point, if the business can’t grow fast enough, its enterprise value will fall year over year.”
Source: TOMASZ TUNGUZ

Posted in: PE/VC News, Selling Your Business

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DH Corp acquired by Vista Equity Partners LLC

March 13th, 2017. Vista Equity Partners LLC agreed to buy Canadian financial services provider DH Corp (TSX: DH). for $2.73 billion plus the assumption of $2.07 billion in debt for a total value of $4.8 billion. Vista plans to combine DH Corp. with Misys Ltd., which it bought in 2012.  Founded in 1875, DH Corp. (formerly known as Davis+Henderson Corp) attempted to transition away from its tradition cheque print business into financial technology with the $1.2 billion 2013 acquisition of Hartland Financial Services and the US$1.25 billion 2015 acquisition of Fundtech, a provider of global payments to banks.

Source: Globe and Mail

For more information, click here.

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BlueCat Networks acquired by Madison Dearborn Partners

February 23rd, 2017. BlueCat Networks was acquired by US private equity firm Madison Dearborn Partners for almost $400 million. Founded in 2001, Bluecat raised $27.8 million in two rounds that included Bridgescale Partners, TD Capital, and Trident Capital. BlueCat’s server technology is used by about 1,000 large corporate and government customers to connect their users and devices securely to Internet-based applications and services.

Source: Globe and Mail

For more information, click here

 

 

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PointClickCare Technologies

February 2nd, 2017. Canadian health-care software firm PointClickCare Technologies Inc. delayed its plans to go public and instead raised $85-million (U.S.) in a private financing led by San Francisco fund Dragoneer Investment Group.

Mike Wessinger, CEO stated that investor uncertainty about the U.S. health-care industry given new U.S. President Donald Trump’s pledge to undo predecessor Barack Obama’s Affordable Health Care Act made this a good time to hold off on an IPO.

PointClickCare currently provides cloud-based health-care record and revenue-management software tools to more than 13,000 North American institutions that provide care for seniors. The company earned an operating profit on revenue of $160-million last year – up from $82.1-million in 2013 – and according to Report on Business reporter Sean Silcoff, the Company expects to be profitable this year and increase revenue by more than 20%

PointClickCare’s venture financing is the latest in a string of significant private-capital injections into scaling Canadian tech firms; there were eight deals for $75-million or more by Canadian firms in 2016, up from one in 2015.

Source: Report on Business

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Diagram closes $25 million fund – Big name backers, and focus on three huge markets

Montreal-based Diagram, a new venture firm focused on financial, insurance and healthcare technologies announced the close of a $25 million fund and deployed its first two investments, Dialogue and Collage.

Diagram is looking to make a limited number of large concentrated investments and provide advice, capital and expertise with the support of Power Financial Corporation (TSX:PWF) and certain of its subsidiaries via Portag3 Ventures LP (a corporate partnership exclusively sponsored by Power Financial Corporation, IGM Financial Inc. and Great-West Lifeco Inc). Additional investors include a group of 50 angel investors such as the CEO of Quora and former CTO of Facebook, Adam D’Angelo; the CEO of Hootsuite, Ryan Holmes; the Founder and former CEO of WIND Mobile, Anthony Lacavera; the Founder of Palantir, Joe Lonsdale; and  the former CEO of Rogers, Nadir Mohammed.

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Solace Systems Sells Majority Stake to PE Firm

Kanata-based middleware company Solace Systems has sold a majority stake to Bridge Growth Partners, a private equity firm in New York City that makes investments in the technology and financial services sectors.  Terms of the transaction were not disclosed.

Solace Systems was founded in 2001 and manufactures and sells networking software and hardware equipment that enables cloud computing, e-commerce, big data, and other capabilities.  According to the company’s founder, it has raised $80 million in growth capital from institutional investors since its inception.  It plans to use the new capital from Bridge Growth to fund its international expansion strategy and its sales initiatives in the transportation, aviation, and gaming industries.

You can read more about the transaction here.

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Canadian VC Funding in October and November 2015

Courtesy of Techvibes and Index.co, here are the lists of Canadian companies that disclosed new rounds of venture capital funding in October and November.

In October, 22 Canadian companies raised a combined $168 million in venture capital, including an impressive $60 million investment in the Waterloo-based drone company Aeryon Labs, which is already backed by the MaRS Investment Accelerator Fund.  Click here for the full October 2015 list.

In November, 19 Canadian companies disclosed a total of $92 million in VC funding, the most prominent of which was a $34 million investment in Toronto’s VarageSale, a platform that allows customers to sell their unused clothing, toys, and household items.    Click here for the full November 2015 list.

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Vancouver’s Elastic Path Raises $10 Million

Elastic Path, a Vancouver-based customer experience software company, has raised an additional $10 million in venture capital funding from Yaletown Venture Partners and BDC Venture Capital IT Fund.  The company had previously raised over $14 million in a combination of private equity, venture capital, and debt financing.  It offers a commerce integration platform – delivered through the Adobe Marketing Cloud platform – to over 200 enterprise customers around the world and has a current headcount of over 130 employees.

To read more about this transaction, click here.

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The Strange Death of the Tech IPO

In his Financial Times article, Jonathan Ford discusses the trend towards the decreasing number of initial public offerings, as many startup founders choose late stage funding rounds over listing their companies in the public market. Ford notes the following benefits and drawbacks to this trend:

For technology company founders, staying private for longer can be beneficial by allowing them to focus on their core operations rather than the demands of public shareholders. This allows them to develop their businesses, placing them in a stronger financial position when the choice is made to eventually undertake an IPO. This helps founders avoid a repetition of the dot-com bubble by building companies with sustainable revenue models rather than taking them public prematurely.

The downside of electing to take late stage financing over an IPO is that as greater numbers of investors compete to finance a limited number of startups, the result is often overvaluation. Ford remarks that this can lead to substantial losses for investors, as valuations are not sustained once the companies undergo an IPO and become publicly traded.

Ford’s conclusion is that although this tech boom differs from the dotcom bubble, a greater number of IPOs may be beneficial for today’s tech market. For subscribers to Financial Times, click here to read the full article.

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