Verafin made the list on the strength of its $515 million equity-and-debt round announced in September, the biggest round of development capital ever closed by an Atlantic Canadian company. Halifax’s Manifold made the list in 2018, and they are the only East Coast companies ever recognized by the Narwhal Project.
The Narwhal Project on Wednesday unveiled its 2020 list, which comprises 60 companies – 40 in computer technology, and 10 each in health technology and clean technology.
Compiled by the University of Toronto’s Impact Centre, the Narwhal List assesses what it calls the “financial velocity” of high-growth companies. It divides the amount a company has raised by the number of years it has been in existence, indicating the firm’s momentum in building up its capital structure.
“If you have a large market that is ready and willing to purchase your innovation, then your growth is limited only by the capital you have on hand to fuel that growth,” says the latest report. “The amount of ‘fuel’ required increases as a business grows; thus, a scaling company requires more and more capital to sustain operations.”
Founded in 2003, Verafin is older than most companies on the Narwhal list, though the report notes that several of the high-profile additions this year are more than 10 years old. The St. John’s company has developed software that helps banks battle fraud and money laundering. Nearly 3,000 banks and credit unions use Verafin’s solutions, and the company surpassed $100 million in annual recurring revenue in the first quarter of 2019.
Though the company booked a record-setting funding round last year, it only placed No. 6 in the latest Narwhal list because of its age. Dividing the number of years it’s been in business into the amount it raised, Verafin received a financial velocity score of 26.7.
Most of the companies that beat Verafin were younger, led by Vancouver-based Chinook Therapeutics, which was founded last year with a US$65 million investment, giving it a financial velocity score of 65. The number of companies in the list has grown each year since the project began four years ago.
“Over the last three years, the financial velocity required to make the list has increased from 4.2 to 8.3.” says the report. “In the same time frame, the average financial velocity of companies on the list has increased from $8.7 million to $15.5 million.”
Manifold entered the Narwhal list in a very different way to Verafin. The company, which helps software developers access tools and services, was only two years old when it raised US$15 million (C$18.5 million) in a funding round led by OMERS Ventures. Its young age helped to propel Manifold into the Narwhal List.
The Narwhal Project is headed by Charles Plant, a serial entrepreneur who has been an officer, director or investor in more than a dozen technology companies. He has served as the Managing Director and the Chief Financial Officer of Toronto’s MaRS innovation district.