This tech company scored a $515 million financing deal. The key to its success? Being in St. John’s
Posted on September 26, 2019 | Atlantic Business Magazine | 0 Comments
Brendan Brothers started out building robots to work in underground mines, but his latest venture was just launched into the stratosphere after securing what the Globe and Mail is calling the biggest venture deal in Canadian history.
Brothers is a co-founder of Verafin, a St. John’s-based company that makes software to help banks pick up on financial crime. He’s hesitant to commit to an absolute like “biggest venture deal in Canadian history,” but with a $515 million investment from Spectrum Equity and Venture Partners, “it’s certainly toward the top of the list,” he said.
That’s a third of what Newfoundland and Labrador’s entire digital tech industry earned in 2017, according to numbers from the Atlantic Provinces Economic Council.
“We have grand visions for this business,” Brothers said. “This investment round in particular I think gives us the freedom and flexibility to execute on that plan.”
APEC also reported that tech firms based in St. John’s, and in Atlantic Canada as a whole, face a host of challenges, among them finding skilled employees.
But Brothers said the nature of his business — which gives employees a juicy, ever-changing problem to solve in a place where life is good and they’re the only game in town — makes being in St. John’s a unique advantage.
“If we had a business like this in Toronto or San Francisco or Palo Alto where we were worried about people getting a new job offer and moving tomorrow, we’d never be able to create that core of domain expertise in the business,” he said. “We have people who have been working on this problem for ten years plus. And no other business out there in this marketplace has that level of experience.”
Brothers was an engineering student at Memorial University working on software that helped robots navigate through the dark, dangerous underground world of mines when, in 2003, someone suggested he and his co-researchers, Jamie King and Raymond Pretty, use their methods to fight financial crime. Soon after, working out of the Genesis Centre at Memorial, the three founded Verafin.
“The problem of money laundering and fraud protection is not an easy one. It’s a very hard problem, but it’s an interesting problem,” he said.
And it’s always changing. When Verafin launched sixteen years ago, mobile banking was a space-age idea, let alone using a smartphone to take a picture of a cheque for deposit. That means having employees on board who can bring historical and technical expertise to every new iteration of the problem is crucial to Verafin’s success, he said.
“One of the things that we do is that we’ve tried to create an environment where employees will stay with us for life,” he said.
The company puts a lot of time and resources into employee training when they find the right people, he said, which also helps them solve the skills-shortage problem facing so many high-tech businesses in the region. And the largest shareholding group in the company are Verafin’s managers and employees — even after this latest half-a-billion injection.
“That’s exciting for us because it gives the ability to drive and the ability to have control over our own destiny,” he said.
The company does much of its work in the U.S., but Brothers wants Verafin to be serving the world. This latest investment will allow him to stop worrying about money for a bit and focus more on that goal.
And even though there are questions about moving Verafin headquarters to a larger centre each time the company grows, Brothers says they’ll be reaching out to the international market from their steel and glass building on Hebron Way in St. John’s.
“There is no reason we can’t compete globally from Atlantic Canada,” he said.
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