Two months after it inked a deal to acquire job board CareerBeacon, Moncton’s Alongside has closed an $8 million funding round, comprising 40 percent equity funding and the remainder a loan from TD Canada Trust.
Chief Executive Yves Boudreau said in an interview that Alongside, which makes human resources software, decided to rely partly on a loan because CareerBeacon is a strong revenue generator, making it manageable to service the debt and limit equity dilution.
The equity round was led by San Francisco's 500 Global, and the New Brunswick Innovation Foundation was a returning investor. Mariner Partners Chairman Gerry Pond also invested.
Boudreau said Alongside plans to expand CareerBeacon into Western Canada and that other acquisitions could come in future if conditions prove right. But CareerBeacon will continue to be an important growth pillar for the company.
“I enjoy the whole (acquisition) process,” he said. “I enjoy the negotiation and I enjoy the opportunities that come from doing that.”
He added that Alongside’s capital raise was for slightly more than the cost of CareerBeacon, in order to leave wiggle room for employee onboarding costs.
Boudreau said Alongside has endured a difficult couple years, at one point shrinking to just a four-person team, but is back on an expansion track.
The loan from TD was also helpful for attracting the interest of American equity investors, who were impressed to see that a major bank had enough confidence in a startup to lend it money.
“It's pretty uncommon, especially for our U.S. investors, to see a bank finance this type of deal,” said Boudreau. “So it made them realize that there’s a lot of credibility to what we’re trying to do.”
CareerBeacon was founded in 1996 by Jim Wilson, who at the time headed Wilson Executive Search of Halifax. In 2004, Wilson sold the outfit to Brunswick News. The Irving family conglomerate owns the Telegraph-Journal and most other newspapers in New Brunswick.
Boudreau and CTO Benoit Bourque co-founded Alongside, then called Qimple, in 2014 to make backend software for job boards.
Alongside had already been handling IT development for CareerBeacon before the deal. In December, Boudreau said he planned to add an onboarding tool and a tracking system to CareerBeacon’s functionality.
Alongside now has 17 employees, six of whom came with CareerBeacon, and Boudreau plans to hire three more in the coming weeks.
He said Alongside has not been struggling too much with the tight labour market, partly because the company pays above market rates, particularly by the standards of Moncton. But he hopes to use the $8 million capital raise and large TD loan to reinforce the business’s legitimacy in the minds of potential employees.
"Usually, our start-ups are the ones that get acquired and not the other way around," said NBIF Director of Investments Ray Fitzpatrick in a press release. "Alongside has shown there is more than one way to obtain growth in the NB Tech sector, which may be paving the way for future start-ups looking to go down this path.”