The news has leaked out in the last 10 days that STI Technologies of Halifax has been bought by the American multinational QuintilesIMS, and now it’s time to draw lessons from the sale.
The U.S. company, a global leader in services and data for bio-medical research, closed the deal this month. STI, which helps drug companies distribute samples efficiently, will maintain its operations in Halifax under the leadership of CEO Tim Gillis. Allnovascotia.com reported that the price was about $200 million.
Here are three takeaways from the STI story:
1. The Founder Doesn’t Have to be the CEO.
STI started in 2001 when the whole startup thing was new in Atlantic Canada, and its three founders launched the business. William Adams, Paul Tobin and Greg Patey had experience in the pharma trade and believed they could improve the way drug companies get samples of new products to patients. They devised a smartcard system that avoided sending new drugs to doctor’s offices and collected data on how the samples were used.
But as the company grew they wanted a more experienced CEO and brought in Steve Nicolle, a veteran of the life sciences sector in Boston. Nicolle raised $17 million for the company, but was diagnosed with Multiple Sclerosis in 2012. In 2014, STI promoted its CFO Gillis to the top executive position and he guided the company to its exit.
One of the many things that STI has done well is to build a versatile, resilient leadership team that can withstand shocks to the company. And that may mean bringing in people at levels above the founders.
2. You can grow a company in Atlantic Canada without public-sector equity investments.
Despite the various complaints about a lack of capital, Canada’s East Coast is actually a hotbed for seed financing. (Little known fact: Atlantic Canada, with 3 percent of Canada’s population, accounted for 10 percent of its VC transactions in 2016.) A big reason for the number of deals is the participation of government-backed organizations, like New Brunswick Innovation Foundation, Innovacorp, and the Venture NL Fund, managed by Pelorus Venture Capital.
Even though it launched in the early days of the Atlantic Canada community, STI did not tap a government-backed funding body for equity financing. It sought funding from angels and from GrowthWorks Atlantic. The government-backed bodies are great, but our companies are often too focused on them.
3. The Digital Life Sciences segments is still the hottest segment in the region.
The greatest success the Atlantic Canadian startup community has had in recent years is at the intersection of IT and life sciences. The sale of STI Technologies only adds to the success of that segment.
In terms of fundraising, this segment dominated the news last year with big fundings by Resson, Kinduct and Sequence Bio. Now it’s accounted for the biggest exit in the region in almost five years. It’s a segment that’s getting too little attention, given the success we’re having as a region.
