If there was a Deal of the Year for in the Atlantic Canadian startup community in 2014, it would undoubtedly have gone to Verafin’s $60 million financing by American private equity fund Spectrum Equity.
Rumours of a whopper of an investment began to circulate in Verafin’s home base of St. John’s in the spring, and it lived up to expectations when CEO Jamie King announced it last May. Now Verafin, which makes software that detects money laundering and fraud, says it has continued to grow with the new capital on board.
“With our third consecutive year of double-digit revenue growth, strong new customer growth, and many new enhancements to our product, we had an outstanding year in every part of our business,” said King in a statement in February.
The details of the Spectrum investment were never released, but the Boston- and Silicon Valley-based fund took a substantial minority stake, and some of the $60 million tranche went to buying out existing investors.
In its history, Spectrum has raised $4.7 billion for investment in IT and media companies, and now has more than 50 portfolio companies including AMC Entertainment, SurveyMonkey and Ancestry.com.
No deal announced last year in the Atlantic Canadian startup community had more impact. The exits in 2014 were modest. The Spectrum deal was the largest investment in a high-growth company in Atlantic Canada since Entrevestor began almost four years ago, possibly ever. It was a pure private sector deal, and brought in foreign capital. It allowed Killick Capital to exit its investment in Verafin, and Killick has already begun to redeploy the capital, adding to its funding of Celtx in late 2014.
Most important, it has allowed the continued growth of one of the most successful startups in the region.
Verafin’s revenues continue to storm ahead, with organic revenues rising 45 percent in 2014. At the time of the investment, the company forecast its sales would rise by about half in 2014 to about $30 million. Overall, Verafin said its compound annual growth rate for revenues in the past three years has been 51 percent.
The company has clients in 44 states in the U.S. and its number of customer bookings in the fourth quarter of 2014 was 68 percent higher than the same period a year earlier. The company, which reached its 1,000th customer in May, 2013, added 200 customers in 2014.
“This growth demonstrates the strength of the unique Verafin cloud Putting New Funding to Good Use
Having raised $60 million in private equity in 2014, Verafin recorded organic revenue growth of 45 percent and added 200 clients.
“This growth demonstrates the strength of the unique Verafin cloud solution,” said Vice-President of Sales Jason Quann.
“It’s been an amazing year for growth, and we are very excited to continue this momentum into 2015.”
Founded in 2003 at the Genesis Centre at Memorial University of Newfoundland, Verafin makes enterprise fraud-detection and anti-money laundering solutions for financial institutions across
North America. Its software uses advanced behavior-based analytics that allow banks and credit unions to stay a step ahead of cutting-edge fraud trends.
The company has been growing strongly for several years. Its citation in the Deloitte Technology Fast 50 (the 50 fastest-growing tech companies in Canada) in 2012 revealed its revenues had grown 358 percent in the five years to 2011. In March 2013, the company added the 1,000th financial institution to its list of clients.
Verafin’s other milestones in 2014 included:
• Upgrading its user interface for increased speed and enhanced usability;
• Improving analytics so false alerts were reduced by 50 percent;
• Implementing new data interfaces to bring the total to more than 125;
• Launching a new user community with 6,000 users to enhance the customer experience;
• Surpassing 120 million transactions processed daily;
• and maintaining a leading retention rate of 98 percent.
The company is continuing its growth in 2015. In listing its achievements in the past year, Verafin noted it was listed in the Globe and Mail’s Canada’s Top 100 Employers list for 2015, which should help in its bid to attract new talent.
As it looks forward to 2015, Verafin plans to continue its track record of growth and further penetrate the North American market with its innovative software solution. The company now has weekly product releases to increase its ability to help customers fight fraud and money-laundering.
“We are constantly working to ensure we provide our valued customers with the highest level of service and the best solution for their needs,” said King. “We are proud to have over 1,200 customers benefit from our software and are well on our way to see that reach 3,000 in the next few years.”
This article originally appeared in the latest edition of Entrevestor Intelligence.
Disclaimer: Entrevestor receives financial support from government agencies that support startup companies in Atlantic Canada. The sponsoring agencies play no role in determining which companies and individuals are featured in this column, nor do they review columns before they are published.
