A little-known Toronto digital company that has become a key provider of health and wellness information to some of the country’s largest companies has raised $42-million from a trio of Canadian institutions.
LifeSpeak Inc., which provides large clients with subscription access to its online library of more than 2,000 video training sessions, podcasts and other content for use by their staff, has just 40 employees. But it generates more than $10-million in annual recurring revenue, earns a profit and is growing sales by 40 per cent to 50 per cent a year.
With new financing from Bruce Croxon’s Round 13 Capital Inc., Kensington Capital Partners Ltd. and Roynat Capital Inc. – a mix of direct investment into the company and buying out early shareholders – LifeSpeak is now valued at more than $100-million.
It will use the funds to expand beyond its largely Canadian base, particularly in the United States and Europe.
“We needed a bit more institutional backing to do the things the company needs to get from a nine-figure [valuation] to the 10-figure level,” said LifeSpeak chairman Nolan Bederman. “There’s a lot more we have to do and want to do to get this business around the world.”
CEO Michael Held, a former Bay Street lawyer and management consultant, co-founded LifeSpeak in 2004 to provide in-person health and wellness seminars to corporate clients to help their employees deal with mental anxiety, depression and a range of other mental health and wellness issues.
“I wanted to set out to prove that investing in people was not only the right thing to do, but is the best business thing you can do,” Mr. Held said. “Human capital is the most important capital.”
By the end of the decade the founders realized they could scale up instead by recording the third-party experts they booked to lead the seminars and transmitting the content digitally to clients through their own platform.
When Mr. Held’s partner decided to sell out, Mr. Bederman, a private equity financier Mr. Held had known since university, bought in, along with a handful of colleagues. LifeSpeak says it now has 500 customers, including a majority of Canada’s banks; telecommunications companies; airlines; and several publicly funded bodies including hospitals and school boards. The company has an annual renewal rate of 97 per cent, Mr. Held said.
Mr. Bederman said since the onset of the pandemic, new customers have added the product at a faster pace than previous sales cycles, with chief-level executives increasingly getting involved in purchase decisions. “COVID-19 has elevated this entire mental health and well-being area to the C-suite,” he said.
“LifeSpeak offered a rare opportunity to invest in a fast growing and profitable Canadian-based [online subscription software] company with a product offering that is legitimately supporting employees and their families in these trying times,” said Sanjiv Samant, managing partner of Round 13′s growth fund, who knew the company’s senior team when he was a Bay Street technology investment banker.
It’s also the first investment announced by the $100-million Round 13 fund, which focuses on giving maturing tech companies a late-stage cash infusion before they are sold or go public.
Mr. Bederman said he anticipated the company could either become a buyer of other digital health and wellness providers, or sell out, if the market consolidates. “We could play both ways. It depends on our partners and how quickly we get to the next stage of scale. We have to become bigger to be the hub of that strategy. We think that can be achieved.”
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Sean Silcoff