Two fast-growing Ottawa artificial intelligence software companies – Solink Corp. and MindBridge Analytics Inc. – have each raised US$60-million to fuel their global growth plans.
Solink, a video surveillance software company initially backed by Ottawa billionaire Terry Matthews, raised its funding from Goldman Sachs Asset Management and past investors OMERS Ventures and BDC IT Ventures after the company more than tripled the number of locations where its technology is used to 18,000 worldwide over the past three years.
Key customers include Tim Hortons, Dollar Tree, T-Mobile, Nike, Chick-fil-A, Gap and Lululemon chains. Solink is “the up-and-coming leader in a market undergoing a rapid transition to the cloud and modernized solutions,” Mike Reilly, a Goldman growth equity vice-president, said in a news release.
Solink’s software is used by restaurants and hospitality businesses, manufacturers, property managers and health care providers to upload video feeds from their existing security cameras to cloud servers. That data can be easily searched and analyzed on the customers’ mobile devices using Solink’s artificial intelligence-powered software, which integrates with other business tools, including point of sale and inventory-tracking systems, to track fraud, theft and adherence to procedures.
By contrast, most video surveillance systems record and store feeds at individual customer locations, making footage more difficult to analyze.
The number of security cameras connected to the cloud globally is expanding by 80 per cent per year, according to market research firm Novaira Insights – about equal to Solink’s revenue growth rate – and once installed, “a Solink installation never comes out,” Mr. Matthews said in an interview. As the company’s primarily North American customers continue to expand usage abroad, he said, “it will become a very large company globally.”
Meanwhile, MindBridge has raised its US$60-million from Boston growth equity firm PSG Equity LLC and installed veteran U.S. software executive Bill Hewitt as interim chief executive officer, as it searches for a permanent replacement for Leyton Perris, who recently departed, two sources familiar with the matter said. Mr. Hewitt, a senior adviser with PSG, previously led another of its portfolio companies before succeeding Mr. Perris.
His arrival heralds several leadership changes at MindBridge, including last week’s departure of founder and chief impact officer Solon Angel, who has been longing to start a new venture, but will remain on the company’s board.
One source said US$15-million will go to MindBridge’s coffers and the rest to buy shares from investors in a deal valuing the company at $200-million, about twice the level of its last raise in 2019. The Globe and Mail is not identifying the sources as they are not authorized to discuss the matter.
MindBridge, which uses artificial intelligence software to help auditors detect fraud and accounting anomalies, is back on track to realizing its potential as one of Canada’s most promising AI companies. Mr. Angel founded the company in 2015 and brought on veteran Ottawa tech entrepreneur Eli Fathi as CEO, who recruited seasoned leaders including chief technology officer Robin Grosset, former chief architect with IBM Corp.’s Watson Analytics Group.
But MindBridge lacked focus in determining which markets to pursue, encountered cautious clients and prematurely hired two seasoned executives tasked to grow the business who then left within months.
MindBridge then recruited Mr. Perris, a veteran software sales executive in 2021, to replace Mr. Fathi, now chairman. On his watch, annual revenues expanded six-fold to more than $20-million, and in April, the company struck a global deal with accounting giant KPMG International Ltd., which now incorporates MindBridge into its digital accounting platform. The software automatically reviews all of a client’s accounting entries, flagging anything irregular or questionable. MindBridge is also focused on selling to enterprises to use in corporate audits.
The two deals show that despite continuing financing challenges for young tech companies, there is still strong demand by private investors to back companies that are in solid financial health and delivering strong revenue growth.
Solink CEO Mike Matta said his company’s focus on improving unit economics “wasn’t so in vogue” when a growth-at-all-costs mentality prevailed in the sector prior to the tech downturn starting in late 2021. His 230-person company, which generates more than US$30-million in annual revenue, is now profitable excluding marketing spending.
It collects data from 300,000-plus cameras used by nearly 800 customers and says new clients earn a positive return on investment in the product, which is billed on a subscription basis, within 30 days.
Laura Lenz, a partner with pension giant OMERS’ venture capital arm, said in an interview the Solink financing was done at a much higher valuation than its previous financing in 2020, and that it was a “clean deal,” meaning there were none of the onerous terms some investors have pushed tech companies to accept during recent financings giving those investors advantages over prior funders.
“What you’re seeing in today’s market does not apply to Solink,” she said. “This is a consistent, predictable revenue-growth business that’s extremely capital efficient. It’s will definitely be one to watch in the Canadian initial public offering market when and if that window opens.”
Mr. Matta said he chose Goldman, the investment banking giant, as an investor in part because it “would help us level up in the company, not so much for this financing round but on the next round, on a go-public transaction and on our ability to scale globally. They said ‘Mike, forget about this round, what does the next round look like?’ That was compelling.”
Sean Silcoff