Little did Andrew Waitman know that a casual conversation with a boxing buddy at the gym less than three years ago would change the course of his professional career.
The former chief executive of Pythian was chatting with regular sparring partner Matt Whitteker, one of the founders of software firm Assent Compliance, when he mentioned he was leaving the C-suite position he’d held for more than five years.
Mr. Whitteker suggested he come have a look at Assent’s operations. The following Monday, Mr. Waitman took a desk at the company’s headquarters, the beginning of a fruitful association that has seen the up-and-coming firm boost its headcount by a factor of 10 and attract $60 million in venture capital.
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“We were literally boxing the week before – we always box on Wednesday nights – and I said I was leaving (Pythian) and (Mr. Whitteker) said, ‘Would you come check out what we’re doing?’” Mr. Waitman recalled in a recent interview with OBJ. “And I said, ‘Well, I need an office, but I don’t want you to pay me because I’m going to take some time and look around.’ I didn’t know I was going to be here. But it’s worked out unbelievably well – for them, for me, obviously for the customers and the market.”
The firm he now leads has made a habit of doing things a little differently than most software companies.
From its location on Coventry Road in the east end – far from the tech mecca of Kanata – to its focus on the little-known field of regulatory compliance, Assent Compliance has become known for taking the road less travelled.
Earlier this month, the tech trailblazer announced it has landed a $40-million series-B round led by Maryland’s Greenspring Associates. Others involved in the new round include current investors Volition Capital, OpenText Enterprise Application Fund, the Business Development Bank of Canada, the National Research Council of Canada’s Industrial Research Assistance Program, RBC and private investors.
The latest cash infusion comes just over a year after the 225-employee firm received $20 million in series-A equity investment.
Mr. Waitman says that’s among the largest combined series A and B rounds within such a short time span in Canadian history.
Founded in 2005, Assent Compliance specializes in software that ensures multinational firms and their suppliers are following an ever-growing list of government regulations on everything from human rights to health and safety standards. Mr. Waitman said Assent hadn’t planned on pursuing a series-B round until later this year, but so many investors were clamouring to get on board the firm decided to act now.
“We were like, ‘Well, we should be getting while the getting’s good,’” he said with a laugh. “It allows us to focus on execution now.”
In a data-driven world, Mr. Waitman explained, Assent Compliance’s key metrics are off the charts.
The firm’s recurring revenues have been growing at a rate of more than 100 per cent annually for four consecutive years, while its “lifetime value” of revenues per customer compared with the cost to acquire them is “well over” the best-in-class ratio of seven for a software-as-a-service firm, he added. Assent’s customer renewal rate is extremely high, he said, and its major clients often end up referring their suppliers to the company as well.
“When you’re hitting those type of numbers, (investors) want to investigate,” Mr. Waitman said. “They’re curious.”
The CEO wouldn’t reveal the firm’s monthly recurring revenues, saying only they are between $1 million and $4 million. When the former managing director of Celtic House joined Assent in 2014, the company had fewer than 25 employees. Thanks to the latest funding, the firm expects to boost its headcount to 325 within the next 12 to 18 months.
While Mr. Waitman said he couldn’t name any of Assent’s customers for security reasons, he said they include “the biggest of the big companies. I think that kind of raised eyebrows from the investors’ perspective.”
That ability to attract multinational clients is rare for a SaaS company such as Assent, said Greenspring managing partner John Averitt. He said most growing enterprise software firms focus on landing small and medium-sized clients before graduating to the big guys.
Not Assent Compliance, which began signing up Fortune 1000 firms practically right out of the gate.
“A lot of SaaS companies, to get to that enterprise level takes a lot of time and a lot more capital. It’s definitely a very strong signal that even in the early days of this business, they were able to achieve large customers and build really trusted relationships with them.”
“A lot of SaaS companies, to get to that enterprise level takes a lot of time and a lot more capital,” said Mr. Averitt.
“It’s definitely a very strong signal that even in the early days of this business, they were able to achieve large customers and build really trusted relationships with them.
“We’ve been impressed with the products that they’ve delivered to date and the road map of products that they have on the horizon,” he added. “I think our capital will further drive some of that product R&D.”
Assent is playing in a field with few other major competitors, Mr. Waitman said, adding the firm wins about 80 per cent of the contracts it bids on.
Collecting data on regulatory compliance is a daunting task most big companies are more than happy to hand over to Assent, the CEO said.
“All these issues, you need to get information from your supply chain. Today, it’s done in an incredibly arduous, tedious and time-consuming way. So our value proposition is quite compelling.”
In addition to further developing its suite of products, the firm plans to use the latest funding to beef up its sales and marketing teams and expand its reach in Europe, a move that will require significant investment, Mr. Waitman said.
“You can’t go into Europe half-assed,” he said, noting customers on the other side of the Atlantic might ask for additional services and features that will need to be incorporated into new versions of Assent’s software. “That’s a big push for us next year.”
It’s all part of Assent’s bid to become “a truly global company,” Mr. Waitman said.
To offer an idea of the kind of scale he’s talking about, he invokes the name of another well-known Ottawa software success story.
“We’ve got a long way to go to be a Shopify, but our series A and our series B are bigger than their series A and their series B,” he said with a chuckle.
“Now their series C (a $100-million round in 2013, 16 months before the firm went public) was really big. We’ll see. Whether we can execute as well as Shopify has, whether we can grow to the scale that they have, we’ll only know in five to 10 years.”