Saskatoon-based Vendasta has shelved plans for an IPO, and instead raised $119.5 million in a new financing round. Here’s what you need to know.
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Saskatoon-based Vendasta has shelved plans for an IPO, and instead raised $119.5 million in a new financing round. Here’s what you need to know.
Private or public: Vendasta filed to list on the Toronto Stock Exchange in March, targeting a $100-million raise. Those plans are now paused. But CEO Brendan King insisted the firm was always running a “dual-track process.” An IPO was the option “with the most moving parts,” he said. “We were always open to private capital.”
The money: New York-based Lugard Road Capital led the round, while Vancouver-headquartered asset manager Nicola Wealth and existing backer the Canadian Business Growth Fund (CBGF) also invested. King declined to disclose the company’s updated valuation. Vendasta previously raised $40 million in a CBGF-led round in July 2019.
The IPO rush: More than a dozen Canadian scale-ups and mature tech companies have or are planning to go public this year. While the markets welcomed Farmer’s Edge, Payfare, Thinkific and Magnet Forensics, others—like MDA and Boat Rocker Media—priced lower than their initial targets. In April, The Globe and Mail reported Vendasta’s offering was having trouble selling its offering to institutional investors, citing sources familiar with the deal. On Thursday, King rejected the idea that the IPO effort struggled. “I wonder how they can think that,” he said. “We were trying to do a $100-million IPO, and we raised $120 million. If you think about the math there, we had more than our fill.” Other tech companies are forging ahead. This month, Toronto-based Softchoice, Q4 and VerticalScope have all filed prospectuses for TSX offerings.
What comes next: Software and digital-service providers use Vendasta’s platform to sell to small- and medium-sized businesses. The pandemic has accelerated such firms’ adoption of technology, particularly for online commerce, remote collaboration and virtual learning, King said: “Five or seven years has happened in one.” The firm made $42.6 million in revenue in 2020, up from $34.5 million the previous year. “When the pandemic happened, it wasn’t Walmart or Best Buy that suffered,” said King. “It was for sure small businesses.” Vendasta expects continued growth opportunities in helping those firms use technology more effectively. It also plans to expand its 525-person staff.
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