B.C. ‘unicorn’ stampede continues as Trulioo inks $394-million financing

A Vancouver online identity-verification provider backed by global financial services giants has raised one of the largest growth capital financings by a Canadian technology enterprise – and has joined Canada’s rapidly growing elite ranks of “unicorns.”

Trulioo information Services Inc. has inked a US$394-million financing, valuing the company at US$1.75-billion postfunding. Silicon Valley financier TCV led the deal, which was also backed by existing investors Blumberg Capital, Mouro Capital and the venture-capital arms of Citigroup Inc. and American Express Co.

About US$150-million will go to Trulioo while existing investors selling their stakes will receive the balance. Other Trulioo investors include Goldman Sachs Group , Banco Santander and Business Development Bank of Canada.

Startups that reach US$1-billion valuations are known as unicorns, although the implication that they are rare, mythical beasts is at odds with their raccoon-like proliferation in Canada. The list of new unicorns in the past year includes four other Vancouver companies, Galvanize Inc., AbCellera Biologics Inc., Themis Solutions Inc. (known as Clio) and Dapper Labs Inc. A fifth, Thinkific Labs Inc., reached that valuation after going public in April. At least eight other Canadian companies have become unicorns in that time.

“You’re seeing companies that are growing profitable, disrupting very large markets and you’re attracting best-in-class international investors to back them; that’s really exciting for Canada,” said Trulioo chief executive Steve Munford in an interview.

Trulioo is a rarity for a relatively young company, reaching $100-million in annualized revenues while still experiencing rapid growth of about 100 per cent and generating positive cash flows and profits. “To be at this size they’re at now and still be on that growth trajectory is rare,” said Trulioo director Andrew Lugsdin, who manages BDC’s investment through his Framework Venture Partners.

“COVID-19 has accelerated people doing transactions online and you have a need for those parties to connect and get comfort with each other that they’re real.”

TCV general partner Jake Reynolds, whose company has backed Airbnb Inc. , Facebook Inc. , Netflix Inc. , Clio Infotech Ltd. and Wealthsimple, said its stake in Trulioo is its largest inaugural investment in a company.

“The golden triangle for investing is when you can find a very large market, an excellent management team and a company exhibiting significant momentum,” he said. “Trulioo has all three in spades. We don’t get a chance to find many situations where we can check all three boxes at initial investment in such an exciting market.”

Trulioo has the capability to confirm the identities of five billion people and verify 330 million companies. The 240-person company has more than 400 customers, including payments processors, online marketplaces, cryptocurrency exchanges and financial giants.

They use Trulioo’s GlobalGateway platform to access hundreds of data sources online including credit bureaus, government agencies and phone companies to confirm the identities of customers or voters and expose money launderers. Trulioo verifies identities within minutes, not the days or weeks traditional credit bureaus typically take.

“It’s a fact of life that the world is moving online rapidly and it’s going to require new tools and capabilities in order to do that effectively,“ Mr. Reynolds said. “Trulioo sits right in the middle of that.”

Friends Stephen Ufford and Tanis Jorge founded Trulioo in 2011 after building and selling three credit-information startups together. They were inspired to build an online identity verification platform to help people in developing countries sign up for accounts online and by Mr. Ufford’s cumbersome experiences securing bank and credit-card accounts when he lived in the U.S.

With the latest financing, Ms. Jorge and Lisa Stanton are leaving the board as Mr. Reynolds and another TCV representative join. Mr. Ufford, who is still a director, ceded the CEO position last spring to Mr. Munford, a 55-year-old Burlington native who has led public and private companies, including three other unicorns. Since joining, he has hired new chiefs of finance, revenue and technology with public markets experience.

With the accelerated shift to e-commerce during the pandemic, “all these [online] products need levels of authentication, which has been a real boon for us,” Mr. Munford said.

With the U.S. digital identity market projected by consulting firm One World Identity to exceed US$30-billion in two years, he said Trulioo is still “in the early innings” of its growth. Mr. Munford added that Trulioo is looking to invest in building out an “end-to-end” identity platform and may acquire other companies if they can help fill gaps in its product offering.

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