Fredericton-based Envenio, whose technology assists in the understanding of fluid dynamics, has quietly exited, being taken over by San Francisco electronic cigarette company Juul.

Neither Envenio nor Juul has put out a public statement on the deal and no one from the New Brunswick company is talking. However, Monica Schnitger, head of Massachusetts engineering software consultancy Schnitger Corp., blogged in late November that the deal had taken place, though she had no details on the price. People familiar with the matter have confirmed that it occurred.

Juul, which has 800 employees, was formed by electronic vaporizer company Pax Labs, which spun it off into a separate company in 2017. According to Wikipedia, Juul had US$1.1 billion of revenue in fiscal 2018.

In purchasing Envenio, Juul is buying a specialist in computational fluid dynamics, or CFD, meaning its software helps engineers understand how fluids move. (Though most of us think of fluids as liquids, they can also be gases, solid particulates or anything else that flows.)

Growing out of intellectual property developed at the University of New Brunswick, Envenio’s algorithms allow basic computers to simulate the flow of these substances. Like a virtual wind tunnel, it can chart the interactions of liquids and gases in specific conditions and with certain solid shapes.

It seems that vaping devices contain extremely complex mechanisms that have to account for various states of matter, temperature and combustion, all interacting in a tiny space. Envenio’s software, which Juul had already been using as a customer, can help with product development and understanding of how these factors work together. 

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Schnitger quoted an email from Envenio Vice-President Scott Walton to clients as saying that Envenio’s engineering expertise will “become an exclusive and integral part of JUUL’s product development division, helping to shape the future of the company’s products.”

Envenio began about eight years ago with three mechanical engineering grads building a business out of IP they licensed from UNB. Initially, it was a service company, helping companies and organizations like the Canadian military with their CFD projects. Then it launched products that clients could buy to conduct their own CFD studies at a fraction of the price of competing products.

Early in 2017, the company had clients in Canada, the U.S. and Europe but the team is now working exclusively for Juul.

In June 2017, Envenio secured $1.3 million in venture capital investment from Celtic House Venture Partners, Green Century Investments and the New Brunswick Investment Foundation.

In their most recent interview with Entrevestor, CEO Ian McLeod and Walton said the company employed more than 10 people in Fredericton. Schnitger’s blog said the engineering team will continue to grow in Canada, which likely means it will remain in Fredericton.

According to their LinkedIn profiles, both McLeod and Walton are now working for Juul Labs and based in New Brunswick. McLeod is now the Senior Director of Simulation Research and Development while Walton is the Director of Business Development.

Schnitger noted in her blog that the acquisition is unusual as it involves a manufacturer buying a software company.

“Over the last couple of decades, a lot of manufacturers have divested themselves of in-house software assets –they make planes or cars, after all, and software development and maintenance costs can best be amortized across a wide user base,” said Schnitger. “I’m not aware of [any] other acquisitions like this, where a manufacturer buys a software developer, but I wonder if it could be the start of a trend.”