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Technology Waterloo software firm Igloo attracts $47-million in financing from Frontier Capital

Igloo Inc. founder and CEO Dan Latendre.

Tim Fraser/The Globe and Mail

One of Waterloo, Ont.'s emerging software stars, Igloo Inc., has attracted $47-million (U.S.) in investment capital from U.S. private equity giant Frontier Capital.

Most of Frontier's investment is going to two early investors, Toronto-based Information Venture Partners, and an Ontario government investment fund; both are cashing out as part of the transaction after earning upward of five times their invested capital, sources say. Igloo will get roughly $10-million in capital from the transaction to fund its continued global expansion.

Igloo CEO Dan Latendre said Frontier – the first non-Canadian investor in the company's history – wasn't the highest bidder among the "multiple" financiers that bid on the transaction. "What was more important was finding a partner that would take us to the next level of growth …" he said. "I'm not interested in stopping here. I'm interested in building a billion-dollar business."

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Early backer and strategic adviser Jim Balsillie, former co-CEO and chairman of BlackBerry Ltd., is not selling his stock. "It's great to see a proper deal in Kitchener-Waterloo for a company that plans to stay and grow because too much of the local ecosystem has turned to hype, spin, built-to-flip ... behaviour, which has long-term negative effect on our economy," he said.

Igloo was created 10 years ago by Mr. Latendre, when he was employed at the Centre for International Governance Innovation, founded by Mr. Balsillie, following a stint as an executive with Waterloo software giant Open Text Corp.

Igloo raised $9-million to develop software to provide what it calls "digital workplace solutions," enabling customers to manage a myriad of internal processes typically related to employee communications. The software typically is geared at companies with mobile workers distributed across various locations; it is flexible and open so that customers can plug in other programs such as Slack or Salesforce.com software products.

Igloo, which initially targeted smaller organizations, has increasingly focused on larger "enterprise" customers, such as restaurant giant Yum Brands; the number of enterprise customers has almost tripled in two years, to more than 600.

That has increased the company's pace of growth: Revenue rose 70 per cent in 2017 from a year earlier, including a 220-per-cent year-over-year expansion in the fourth quarter alone, Mr. Latendre said. This year, Igloo is forecasting revenue growth of more than 50 per cent and plans to increase its 150-strong work force by half. Mr. Latendre wouldn't disclose the company's sales, but sources familiar with Igloo say it generated about $25-million in revenue last year. The company recently struck a deal with Microsoft's Azure data centre business to host its cloud-based software offering.

"As the next generation of employees redefines both the physical and digital workplace, we see a rapidly expanding market for innovative solutions that enable an organization to better engage its work force by fostering collaboration and connecting employees with the right information at the right time," Frontier managing partner Andrew Lindner, who will join Igloo's board, said in a statement. "Frontier is excited about partnering with Igloo, whose extraordinary growth and track record of solving critical business challenges [affecting] employee communication, collaboration, knowledge sharing, and engagement position the company well to capitalize on this market trend."

Sources familiar with Igloo say the financing values the company at close to $90-million.

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