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CEO of Vision Critical, Ross Wainwright, in Toronto, on Dec., 2, 2019.Christopher Katsarov/The Globe and Mail

Vision Critical Communications Inc., one of Canada’s early breakout software stars of the 2010s before becoming mired in years of internal upheaval and slowing growth, has secured its first financing in eight years to help it rebound under new leadership.

The market research software provider, jointly based in Vancouver and Toronto, has raised US$20-million in growth debt – a form of financing that carries higher interest than bank debt and includes warrants to buy equity – from Vancouver’s Vistara Capital Partners. It is Vision Critical’s largest financing yet and comes seven months after veteran software sales executive Ross Wainwright became chief executive officer.

“It’s really a bet on where we think this business can go under the leadership of the team Ross and the board are assembling,” Vistara managing partner Randy Garg said. “I truly believe this company is set for a pretty interesting expansion phase.”

Vision Critical, which sells software used by 750 corporations including Twitter Inc., Condé Nast, LinkedIn and Toyota Motor Co. to tap “communities” of customers through digital channels for their insights, has been in turnaround mode since Mr. Wainwright joined.

He replaced most of the leadership team, recruiting industry veterans from IT services giant SAP SE, where he used to work, as well as OpenText Corp. and Autodesk Inc. Under his watch, Vision Critical has updated and expanded product offerings, focused sales efforts on new sectors and signed its biggest contract to date (a multimillion-dollar deal with online gambling company the Stars Group Inc.). It has also increased the value of new contracts signed by 64 per cent in the second quarter compared with the same period in 2019 and improved renewal rates of existing customers.

The company has also been only mildly affected by the pandemic. Despite cutting more than 5 per cent of staff (it now has just more than 300 employees), Mr. Wainwright said Vision Critical has almost caught up to its precrisis revenue targets for the year and is generating break-even operating profit.

“The business is performing well. … I see this as the ‘build year,‘” Mr. Wainwright said, adding the company would use the new capital to hire engineers and sales people. “We want to keep that momentum going.”

While the company’s annual revenue – believed to be close to $70-million – is little changed, Mr. Wainwright said the company is on track to hit a key target for healthy subscription software companies within three years: a rate of revenue expansion plus operating profit margin that adds up to 40, known in the industry as “the rule of 40.” If it can achieve that level, he said Vision Critical will likely start acquiring companies to accelerate its growth.

Mr. Wainwright replaced Scott Miller, who had in turn replaced veteran pollster Angus Reid in 2012. Mr. Reid, whose son Andrew founded the company, had presided over a period of strong growth in the 2000s as the company sold both software and a traditional market research and consulting services.

But new investors that bought into Vision Critical from 2010 on were mainly interested in software, not services. What followed was a protracted civil war at the board level over Mr. Reid’s continued involvement and strategic decisions. The internal drama was largely resolved by 2017 after several board members exited, the company divested the services business and private capital providers W Capital Partners and Georgian Partners bought out Mr. Reid and other shareholders for $76-million.

But Vision Critical struggled to regain its footing. Mr. Miller shrunk the size of the organization to about 350 people from a peak of more than 800, cut costs, overhauled its main product to make it easier for generalists to use (not just market research specialists) and shrunk losses. But revenue growth stalled out, while larger rivals in the “customer experience management " space grew at a faster rate, including Qualtrics LLC and Medallia Inc., both valued at billions of dollars.

“There’s been a lot of press that’s the wrong kind over the last five years and I’m pretty convinced over the next few years it’s all going to be stories about growth and hiring and product innovation,” Vision Critical chairman Phil Deck said.

“We’re really in a good place here. The pace of change has been really fast [since Mr. Wainwright’s arrival]. It was a matter of executing better and selling software, and that’s really what Ross has been able to do.”

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