A MODEST CANADIAN VC HAS AN HISTORIC EXIT WHILE NO ONE’S WATCHING

Just before a long weekend at the very height of summer, an unassuming VC in Toronto quietly finalized one of the biggest exits in the software category by a Canadian VC. Most people missed it, but there’s little doubt the US$1.55 billion acquisition of financial modelling SaaS startup Adaptive Insights by cloud-based platform Workday earned Information Venture Partners the attention of the venture capital community. “Our phones kind of blew up for a couple hours, from both the US and Canada,” says Rob Antoniades, cofounder and general partner of Information Venture Partners, one of the early investors in Adaptive Insights.

“We got a great response from the VC community. Lots of congratulatory emails, messages, and tweets,” he recalls. The lack of broader coverage is not surprising, given it was announced in peak summer season, but we think it’s worth highlighting. It’s rare that a Canadian VC headquartered in Toronto — not in the Valley, where both Adaptive Insights and Workday are based — completes an exit of that magnitude. “We’re happy for the Adaptive Insights team, but we can’t take credit for their success,” says Antoniades. “They had the right team, the right product-market fit and they worked hard to get it right. It’s really their win.”

And what an impressive win. Workday agreed to pay Palo Alto-based Adaptive Insights over US$1.5 billion to add Adaptive’s Business Planning Cloud software to its portfolio. The combination will enhance Workday’s suite of enterprise SaaS (Software as a Service) products for financial and human capital management. With the addition of Adaptive Insights’ business-planning software, Workday hopes to “fast track [its] financial planning roadmap by more than two years, delivering customers new, advanced modeling capabilities.”

The VC firm’s relationship with Adaptive Insights goes back more than a decade. In 2007, it caught the attention of Information Venture Partners cofounders Rob Antoniades and Dave Unsworth when Adaptive’s founder Rob Hull devised a way to alleviate a key pain point for CFOs — the dreaded planning season. It was the start of the cloud revolution, and Hull had developed an on-demand, cloud-based financial management and business planning tool with real potential. This was soon after Antoniades and Unsworth joined forces at RBC Venture Partners, the in-house VC arm of RBC Royal Bank. The two intrapreneurs spun it out in 2014, brought on Kerri Golden as CFO, and raised their second fund, worth $106 million, in 2016.

How did this little-known firm pull off one of the biggest software exits by a Canadian VC in history? According to our calculations using data from PitchBook, the private market data provider, the Adaptive deal is the third-largest software exit led by a Canadian VC. Ultimately it comes down to focus, says Antoniades.

The firm’s approach is built on four pillars, community, vision, FinTech and SaaS, and the latter two are key. It only invests in business-to-business FinTech and enterprise SaaS companies that offer specialized services to financial institutions. That focus helps Information Venture Partners sharpen its knowledge and understanding of what CFOs need and how FinTech startups can help. Serving finance teams is a complex business. Working with financial institutions and meeting regulatory requirements can take years. At the time of the investment, Adaptive’s annual revenue was $1 million. Last winter, it reached $100 million in ARR (annual recurring revenue), a milestone few SaaS companies reach.

It’s also easier to focus if you take the lead — which is Information Venture Partners’ modus operandi. The VC has a strong preference for getting in early, taking the lead and staying for the long haul. “We will typically lead or co-lead rounds of financing, usually Series A,” says Antoniades. They cast themselves as active partners who aren’t afraid to get their hands dirty. They get involved in their portfolio companies and they like to be invested in a company for a long time.

Community is another key pillar, and their approach to community means casting the net wider than most. Yes, Adaptive Insights is based in Silicon Valley, but many of Information Venture Partners’ newer portfolio companies are in markets you might not expect. “We’re not afraid to go into secondary markets in our quest for innovative tech companies that may escape the attention of other VCs,” says Antoniades. “We like to be active in the market, talk to people on the ground, and go where other investors wouldn’t even try.”

Among their successful exits: Igloo, a digital workplace solutions provider in Kitchener, Ontario, and eSentire, a cyberthreat detection and response platform in nearby Cambridge. And in their current portfolio? There’s Verafin, a fraud detection and anti-money laundering software provider in St. John’s, Newfoundland, and Coconut Software, an enterprise appointment-scheduling platform in Saskatoon. And in Toronto and San Francisco, there’s Flybits, an AI-based platform that creates micro-personalized customer experiences.

Given the firm’s track record, these newer additions to the Information Venture Partners portfolio suggest they’re companies to watch — just in case the modest-but-mighty Canadian VC pulls off another quiet success story while no one is watching.