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Rare Canadian tech IPO crosses finish line

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With markets so choppy, the last thing you would expect to see is a tech company trying to go public.

Yet Vancouver's Avigilon Corp. , which develops and sells high-quality video surveillance software and hardware, thought it could beat the odds. A month after launching its IPO, the company has done just that.

On Tuesday, the firm started trading on the Toronto Stock Exchange, capping off three years of explosive growth. In 2008, its first full year of sales, Avigilon posted revenue of $5-million even though it wasn't exactly the easiest time to start a company. The next year, sales more than tripled to $17-million, and they have kept growing to $26-million in just the first half of 2011.

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Chief executive officer Alex Fernandes has fuelled this rise. After incorporating the business in 2004, he spent three years on product development and research to create extremely high quality cameras that can be used for video surveillance. To get the product right, he relied on his imaging experience in the medical and industrial industries. He had also founded and sold Q-Imaging, or Quantitative Imaging Corp., so he had some experience with a start-up.

Avigilon can market high quality equipment because even in 2011, 80 per cent of all surveillance cameras sold to places like banks and airports are still analog VGA, which is very grainy. Though Mr. Fernandes has never worked in the security business, he realized just how low this quality is when he was a surveillance user at his last company.

But the picture is only part of Avigilon's "secret sauce," as Mr. Fernandes calls it. The other part of the equation is the company's patented "high definition stream management." High quality pictures are heavy on data, so sending them over a network requires more bandwidth, which increases costs. Avigilon's HDSM has found a way to send these images for very cheap.

While the company had a unique offering, it still had to amass sales at a time when the global economy was slowing. Plus, "the first million is always the hardest,' Mr. Fernandes said. To drum up sales, he looked outside North America's borders, and now more than half of the company's sales come from outside Canada, the U.S. and Mexico. To break into these foreign markets, Avigilon used intermediaries who had contacts and networks in the other regions.

To get a sense of just how powerful Avigilon's technology is, Rogers Centre in Toronto, the home of the Toronto Blue Jays, uses the company's cameras. With just 19 of them, security there can perform facial recognition of 50,000 people, Mr. Fernandes said, saving the stadium from having to install and monitor many more smaller, grainy cameras.

Raymond James led the IPO, in which the British Columbia Discovery Fund and an individual unloaded their shares to the public. The provincial fund bought into the company in a $6-million private placement in 2008.

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