A startup with strong Canadian ties has captured the attention – and funding – of billionaire investor Peter Thiel's venture capital firm.
The San Francisco, Calif.-based AppDirect has secured a $50-million (U.S.) investment from Mithril Capital Management, the firm started by Mr. Thiel and Ajay Royan, who are presumably Tolkien fans. This is the firm's second investment in AppDirect. Mr. Thiel is known for co-founding companies such as PayPal, and for being among the first investors in Facebook.
AppDirect, which powers companies' online marketplaces, was started by two Canadians in 2009. Nicolas Desmarais, son of Power Corp. co-CEO Paul Desmarais Jr., and Daniel Saks, born in St. Catharines, Ont., to an entrepreneurial family, are co-CEOs of the business.
AppDirect aims to change the way businesses buy software. Right now, that's typically off the shelf through local stores, from an Internet provider or IT consultant. The AppDirect platform provides a virtual shelf that can be branded by a client, such as Staples Inc., and loaded up with different apps and services for tasks like billing, accounting and other needs. In the same way Facebook made finding friends easy online, AppDirect aims to bring companies and cloud-based business services together. AppDirect's first client was Bell Canada, helping develop its business apps store. Other clients include Samsung and Deutsche Telekom.
The company generates money on both the monthly fees charged to clients to license its platform, as well as taking a cut of the apps sold through the marketplaces.
While the entrepreneurs chose the Bay Area for AppDirect's headquarters, their first funding partner was Montreal's venture capital firm iNovia Capital. AppDirect's first angel investor was Eric Boyko from Stingray Digital Group.
One year ago, AppDirect founded a Montreal office with eight people to focus on research and development. Mr. Saks says the office could have as many as 100 employees by the year's end.
And the company's ties to Mithril also have a Canadian connection, since Mr. Royan has family in Southern Ontario and lived in Canada in his youth. AppDirect's early funding partners connected the firm with Mithril, and last year the firm invested an initial $35-million.
"AppDirect opened a new market for software makers by helping small businesses find software and use it well," said Mr. Thiel, in a statement, adding that he sees the business as a durable franchise.
AppDirect plans to use the newest round of funding to grow its presence in Canada and internationally, including increasing its employee base to 300 people around the world from more than 200 today. Along with the Montreal and Munich offices, AppDirect wants to open its doors in Silicon Valley, as well as seek new customers in Asia and Latin America. Revenue doubled to $18-million in 2014 and the company plans to double it again in 2015.
"Us being able to scale fast around the globe is very important… if we make software accessible globally then we will be the next big thing. Right now it's really just about finding the right talent and growing fast," Mr. Saks said.
Mr. Saks said AppDirect needed San Francisco's talent and ways of thinking to achieve its growth, but he hopes to reinvest in the Canadian economy and tech sector and promote communication between Canada and Silicon Valley. He also hopes to move back to Canada some day.