Victoria-based Certn raises financing to expand internationally

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Victoria-based Certn, which provides background checks for employers and landlords, has raised $43-million to help finance international expansion as its revenue soars.

“Most companies were shrinking during COVID,” chief executive officer and co-founder Andrew McLeod said in an interview. “In the first three months, we grew by 75 per cent.”

Founded in 2016, Certn performs criminal record checks, vets potential job candidates and screens prospective tenants. Background checks that usually take weeks of paper-based work, Mr. McLeod said, can be done in as quickly as 15 minutes. The company has about 90 employees, and Mr. McLeod said the team could grow to as many as 150 by the end of the year.

Owen Matthews, chairman of Victoria-based incubator Alacrity Canada, said Mr. McLeod and co-founders Owen Madrick and Evan Dalton approached his team seeking investors before forming the company. Alacrity not only provided capital, leading the seed investment round and a convertible debt round, it also helped the company hire software developers.

“When I moved here I had no idea how many successful people lived here,” Mr. McLeod said about Victoria. “They kind of came out of the woodwork to help us grow.”

The company has formed partnerships with the RCMP and other police departments across the country to speed up criminal background checks, paying forces for participating.

“We make that process so much less painful,” Mr. McLeod said, noting traditional background check companies “present you with this wall of consents and disclosures” while taking several days to complete the process.

Certn’s speedy process is what most impressed Elizabeth Weil, founder of Scribble Ventures, an early-stage venture firm in Portola Valley, Calif. Ms. Weil initially invested in the company as an angel investor, then dipped in again with Scribble, co-leading Certn’s $6-million seed round that closed last February.

Her firm also participated in Certn’s Series A round in November that raised $27.8-million, led by Inovia Capital and 01 Advisors.

A Series A+ round in December added $9.5-million more, taking Certn to more than $43-million for 2020, and was led by Telstra Ventures and B Capital Group.

Mr. McLeod said most of Certn’s business is in North America, and that it will use the capital to expand internationally. Mr. McLeod would not disclose Certn’s valuation, but said it is in the “nine-figure zone.”

Ms. Weil said she “committed on the spot mentally” to investing in Certn during her initial conversation with Mr. McLeod.

“I didn’t realize that with background checks, when they were saying it’s fast then that meant days, and in a time like now this should be done in a matter of hours like Certn can do.”

Certn’s client base includes household names such as Telus, Hudson’s Bay and WestJet. Mr. McLeod said his company has amassed many of its clients from the transportation, grocery and pharmaceutical sectors. Some of Canada’s largest security firms, he said, use Certn to perform background checks on their personnel.

While Certn’s rapid growth has attracted interest from larger competitors, Mr. McLeod said his company may be the one acquiring larger players down the road.

“There’s a couple, not in Canada, but there are a couple that are significantly bigger than us that we’re seriously considering trying to take a swing at,” he said.

“The average background provider, according to the industry news, shrunk by 40 per cent during COVID and we grew by 500 per cent. ... They may be making more revenue, but they don’t have the same kind of growth or enterprise value, and it’s not inconceivable that we could take their clients from them pretty quickly.”

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