MONTREAL — Subscription commerce platform AppDirect has secured US$185 million in Series D funding led by the Caisse de dépôt et placement du Québec with participation from Montreal’s Inovia Capital, JPMorgan Chase and Mithril Capital, the investment firm co-founded by Peter Thiel. With the investment, the company now has a valuation “north of” US$1.5 billion, according to spokesperson Madeline Mains.

Founded in 2009 by Nicolas Desmarais and Daniel Saks, AppDirect helps businesses build subscription-based, recurring-revenue business models. Comcast, Deutsche Telekom and Jaguar Land Rover are among the company’s clients. 

The company, which is headquartered in San Francisco but which has Canadian offices in Montreal and Calgary, counts 300 Canadian employees amongst its 750-member global workforce. While the founders are Canadian—Desmarais is part of the Quebec establishment family best known for its stewardship of Power Corporation—they founded AppDirect in California to take advantage of Silicon Valley’s talent pool, according to Saks. It took in US$150 million in revenues last year, said Inovia CEO Chris Arsenault in an interview with The Logic. “The company is almost doubling revenue every year,” said Arsenault, a member of AppDirect’s all-Canadian board. In total, Inovia has invested US$25 million in the company to date.

It is the Caisse’s first investment in the company, but marks the 15th time the Quebec public pension fund manager has led an investment round in a SaaS company. In AppDirect, Caisse managing director Thomas Birch sees similarities with Montreal-based e-commerce platform Lightspeed. “They both have recurring revenue models, and I think that’s a really good place for a pension plan to invest in venture capital,” Birch said. “It’s not just the large enterprises that are buying SaaS now. The small- to medium-sized enterprises that weren’t buying cloud services are also doing so.”

The Caisse’s investment “was of the same magnitude” as its US$166-million investment in point-of-sale software firm Lightspeed in 2017. “AppDirect will be hiring massively in Montreal over the next four years,” Birch added. 

While brick-and-mortar operations have suffered alongside industries like travel and hospitality during the COVID-19 pandemic, many software-as-a-service (SaaS) companies have benefited from the work- and shop-from-home tendencies spawned by the pandemic. A recent Aruba Networks survey found that 41 per cent of tech manufacturers said at least half of their IT products would be SaaS by 2022, an increase from 24 per cent today.

“Our company was born out of a recession, and a lot of the impetus for starting the business was recognizing that small businesses on Main Street are struggling,” said Saks, who serves as AppDirect’s co-CEO with Desmarais. “I think that digital transformation accelerates in economic challenging times, particularly because of the subscription model, small businesses can get up and running really quickly and adopt new digital technologies.”

Correction: An earlier version of this story incorrectly stated revenues of US$15 million. The piece has been updated to reflect revenues of US$150 million.