The Caisse de dépôt et placement du Quebec is making yet another nine-figure bet on a homegrown technology company, investing $125-million in Montreal software company GSoft Inc.
The Quebec pension giant is taking an undisclosed stake in the bootstrapped company, created 17 years ago by a trio of 20-year-olds who have never raised outside funding and still run the profitable company, including chief executive Simon de Baene. GSoft this year surpassed the US$100-million mark in annualized recurring revenue and is on track to repeat last year’s sales growth rate of nearly 30 per cent, Mr. De Baene said in an interview.
Mr. De Baene said the proceeds will be used to fuel acquisitions after GSoft tested the waters early this year by buying a small learning management system company from Quebec City.
“For a long time I was not a big fan of doing acquisitions,” he said, adding GSoft had always focused on building its own tools and relying on sales and “sweat and a lot of passion” to fund its growth. “I wanted us to build everything ourselves. Over time, maybe due to maturity or a better understanding of the business world, acquisitions became an option, and now it’s part of the strategy. The kinds of acquisitions we want to do are not that small, so for that we need capital.”
Kim Thomassin, executive vice-president and head of Quebec with the Caisse, said her organization had tracked GSoft for years and that the investment is similar to other $100-million-plus commitments it has made in several Quebec technology companies, including Lightspeed Commerce Inc., Nuvei Corp., Plusgrade Inc., Hopper Inc., Talent.com Inc. and Previan Technologies Inc.
The Caisse has also been a long-term investor in giant acquisitive Quebec companies such as Alimentation Couche-Tard Inc. ATD-T, WSP Global Inc. WSP-T, and CGI Inc. in accordance with its dual, provincial government mandate to both seek investment returns for depositors and support the Quebec economy.
“We see it as an opportunity to invest in a Quebec company that has a clear vision for its long-term future,” Ms. Thomassin said. “We often say we invest into a team first and foremost, then a product, then the deal. We like the management; Simon and his partners have shown their resilience and executed their strategy. "
She noted other Caisse-backed companies “started with one, two, three acquisitions initially, and they became serial acquirers and have built great platforms.”
GSoft started out as a typical for-hire software contractor, founded by Mr. De Baene in 2006 with fellow École de technologie supérieure engineering student Sébastien Leduc (who is now chief operating officer) and a third friend, Guillaume Roy, who leads product development. They shifted in 2009 into building their own products for business customers.
The Montreal company, which is based out of a century-old former Northern Electric factory in Montreal’s Pointe-St-Charles, made a big bet on the cloud-based Microsoft 365 business software platform early on: GSoft built its own tool, called ShareGate, which is used primarily by tens of thousands of information technology professionals to navigate the Microsoft program more effectively through a user-friendly interface.
“Microsoft built a co-pilot and we’re the co-pilot for the co-pilot,” Mr. De Baene said, adding that the giant U.S. tech company “really count[s] on vendors like us to build the technology that is missing or can work on top of their technology.”
GSoft has also created human resources management programs called Officevibe, Softstart and this spring introduced its latest tool, Talentscope, a software program that helps organization track the skills of employees and identify areas for improvement. It has 16,000 corporate customers in more than 100 countries – primarily serving the U.S., Canadian and British markets. Mr. De Baene said GSoft will focus on acquiring companies that can broaden its offering to enterprise customers, noting “the timing is good” for acquisitions after software valuations crashed from inflated levels in 2020 and 2021.