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Report on Business Toronto’s Vena secures $115-million in financing from U.S. private-equity firms

Don Mal, Rishi Grover and George Papayiannis, co-founders of Vena Solutions, pose for a photograph on Oct. 29, 2018.

Christopher Katsarov/The Globe and Mail

With interest in its sector heating up, Toronto financial planning-and-analysis subscription-software firm Vena Solutions Inc. has drawn $115-million in new investment from two American private-equity firms.

It’s at least the seventh $100-million-plus investment in a Canadian scaleup tech company in the past 12 months as the country’s booming tech sector continues to draw attention from global investors.

Vena announced Wednesday that JMI Equity and existing backer Centana Growth Partners led the financing, which is believed to value the firm in excess of $300-million, or more than 10 times its revenue from the past 12 months, a healthy valuation for a cloud-based software firm. Vena did not disclose how much of the proceeds would go to buying-out existing investors and how much would go to the company.

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But chief executive and co-founder Don Mal said the 250-employee company will receive a “significant” capital injection out of the deal, which it will use to hire 100 more people and to expand its customer base of 600 primarily North American mid-market companies with between $20-million and $2-billion in revenue by hundreds more in the next year.

“We were always very bullish on our business and the industry,” Mr. Mal said. “Now we feel much more confident in being able to execute on our vision” with the financing deal, which The Globe and Mail reported was in the works last month.

Vena is an emerging star in the “corporate performance management” software market, providing cloud-based budgeting, forecasting, planning, reporting and analytics software for corporate finance departments. The company is a fast-growing player in a “white-hot” space, said Mark MacLeod, founder of SurePath Capital Partners, which advised Vena on the deal. “I think every big outcome always has an element of luck and timing,” Mr. MacLeod said. “That’s absolutely the case in this deal.”

That’s because two of Vena’s larger competitors filed to go public last year. One, Silicon Valley-based Adaptive Insights Inc., was pre-emptively snapped up by software giant Workday Inc. last May for US$1.55-billion. The other, Anaplan Inc. of San Francisco, has gained about 60 per cent since completing its IPO last October.

Vena has now anointed itself the next player to watch. The company, which generated roughly $30-million in revenue last year, up more than 50 per cent from 2017, recruited former senior Adaptive executive Neil Thomas to be its new chief revenue officer last year. Additionally, JMI was an early backer of Adaptive.

“We’ve known the [corporate performance management] market for a long time,” said JMI general partner Peter Arrowsmith, whose firm has backed several prominent scaling Canadian software firms including PointClickCare Technologies Inc., Intelex Technologies Inc. and Axonify Inc. “The space will continue to have multiple winners. It’s a really big market.” Mr. Arrowsmith said Vena is expanding at a more rapid clip than its fast-growing sector, scores highly with customers and can “grow significantly larger than it is today. It has a clear path over time to a large outcome.”

Mr. Mal co-founded Vena with two IBM colleagues, Rishi Grover and George Papayiannis, shortly after the tech giant bought his employer, software firm Clarity Systems, in 2010. At the time, many startups were trying to disrupt the spreadsheet market dominated by Microsoft’s Excel, which frustrated legions of corporate users because it was difficult and laborious for multiple users to collaborate on documents. While newer players offered cloud-based alternatives, Vena’s founders took a different approach, building a tool that would effectively soup-up Excel. Vena customers could then continue working on the familiar legacy program while getting similar cloud and collaborative capabilities from Vena to those offered by rivals.

The approach clicked with customers. Vena became one of Canada’s fastest-growing startups and raised $30-million in a 2016 venture-financing deal led by Centana. Mr. Mal stepped down last spring after a health scare, but returned just a few months after his successor Shawn Cadeau left unexpectedly for undisclosed reasons and Mr. Mal got a clean bill of health.

The Vena financing is also a big boost for Michael Wekerle’s Difference Capital Financial Inc., which had previously invested $4.7-million in Vena starting in 2013.

Difference, which has invested in several prominent Canadian tech firms including Hootsuite Media Inc. and Vision Critical Communications Inc. said in a release Vena had been its “most successful investment holding to date” and that the current valuation of Vena represented about a four-times return on its investment. The deal also contributed $1.43 to its net asset value per share, which stood at $6.58 on Sept. 30. Thanks in part to funds received from selling part of its Vena position Difference said it would retire its outstanding $6.7-million in debt early.

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