$40M high-tech catalyst for the east end
Assent Compliance to add 100 jobs after securing fresh equity
Assent Compliance is a 12 yearold software company with an awkward name and an unusual location for a tech firm — Ottawa’s east end. It may be transforming into something rather special.
Three years ago, just 25 people worked at Assent Compliance — which specializes in software for verifying if multinationals and their suppliers are complying with ever-proliferating government regulations. Today the head count is 225.
Now, thanks to a $40-million equity investment led by Greenspring Associates of Maryland, the company is planning to add another 100 employees.
“We’re approaching a tipping point,” said Assent Compliance CEO Andrew Waitman. “Soon we hope people will be seeking us out not the other way around.”
Already, more than 100 of North America’s largest corporations use Assent Compliance software to make sure they are not breaching regulations governing everything from human rights to minerals exported from conflict zones.
Greenspring and several other investors (including Volition Capital and a fund operated by Open Text) are contributing a lot of equity. To put the investment in context, the sum is nearly triple the $15 million secured by Ottawa’s e-commerce software giant Shopify at a similar stage in its development (its series B funding in 2011).
The news from Assent Compliance is a welcome jolt for Ottawa, which has lately trailed other Canadian cities when it comes to attracting early-stage investments such as venture capital.
Venture firms sank a meagre $109 million last year into Ottawa firms, according to the Canadian Venture Capital and Private Equity Association. This put Ottawa well behind Toronto ($946 million), Montreal ($835 million), Vancouver ($410 million) and even Waterloo ($368 million).
This is a long, long way from the peak of the tech boom 17 years ago when Ottawa startups collectively attracted more than $1 billion and, individually, often topped the list of biggest venture deals. But most of the city’s tech stars were concentrated in telecommunications — the sector hit hardest by the 2001 telecom crash.
The region’s entrepreneurs have since been trying to recover, in part by diversifying into other sectors of technology such as software and life sciences.
This is what’s so significant about Assent Compliance’s latest financing: It adds to the momentum created by Shopify (750 local employees) and supply chain management specialist Kinaxis (300 employees in the region). These two software champions alone have added hundreds of workers in the past few years and now have market values in excess of $10 billion and $2 billion, respectively.
Shopify recently unveiled plans to substantially boost the size of its headquarters downtown, potentially accommodating 3,000 employees by 2021, compared to 750 today.
But if we’ve learned anything from the telecom crash, along with the demise of Nortel and virtual disappearance from the region of fibre-optics heavyweight JDSU (now Viavi), it’s that big risks abound in tech. In order to create a self-sustaining critical mass Ottawa’s tech sector, currently 50,000 strong, will need many more successes.
This notion is the driving force behind L-Spark, a startup accelerator that operates under the wing of Invest Ottawa — the economic-development arm of the City of Ottawa.
“Our objective is to create two or three Shopifys over the next five years,” said L-Spark’s irrepressibly optimistic executive managing director Leo Lax. “We do this by concentrating on a sector (software-as-a-service) where we have the most experienced mentors,” he added.
This is how Lax does the math: L-Spark estimates it will assist six to 10 startups per year to hone their strategies and land customers — often under the tutelage of experienced entrepreneurs such as Peter Becke (CEO of Mercury Connects) and Martin Horne (CEO of LiveQoS). By 2022, some 30 to 50 startups will have graduated from L-Spark. With any luck, Lax reckons, one or two will turn out to have Shopify’s mojo. This is roughly the same percentage of tech investments generally that produce home runs.
One of L-Spark’s recent graduates, FileFacets, looks promising. The two-year-old firm makes software that, among other things, protects personal electronic information. CEO Chris Perram previously operated a consulting firm along similar lines.
FileFacets four months ago secured a $4-million series A investment from Celtic House Venture Partners and NextLaw Ventures.
That news undoubtedly rang a bell with Waitman. A decade ago he served as managing director of Celtic House before leaving to try his hand at actually running firms. During the six years he served as CEO of Pythian, a data-storage specialist, Waitman increased revenues enough to justify a sixfold expansion in the workforce, from 50 to 300. Since 2014, when company founder Paul Vallée stepped back into the role of CEO, Pythian has added another 100 employees.
In short, Waitman knows more than a little about what it takes to move a startup through multiple stages of investment and growth. He is less than familiar with the journey required to shift to a trajectory as high as the one being navigated by Shopify.