Ottawa-based Solink has raised US$60 million in fresh venture capital as it sets its long-term sights on going public amid massive growth.
The video surveillance software company announced Tuesday it has closed a series-C round led by Goldman Sachs Asset Management with participation from existing investors OMERS Ventures and BDC IT Ventures.
Solink’s technology is used in more than 18,000 locations around the world. Its artificial-intelligence platform stores data from security cameras in the cloud, allowing customers such as restaurants, manufacturers, property managers, cannabis producers and hotels to quickly search and analyze video.
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Since it was founded in 2009, Solink has developed a reputation as a trailblazer in the fast-growing video surveillance space. The firm is “the up-and-coming leader in a market undergoing a rapid transition to the cloud and modernized solutions,” Mike Reilly, a vice-president in Goldman Sachs’ equity growth business, said in a statement.
Solink’s revenues have been growing at between 70 and 80 per cent a year as cloud-based video technology rapidly becomes the new industry standard. According to market research firm Novaira Insights, the number of security cameras connected to the cloud is forecasted to rise by 80 per cent a year.
“What we’re seeing is our market is shifting further and faster into cloud,” Solink CEO Mike Matta said in a recent interview. “What we saw in the data centre space 10 years ago is what’s happening in the security space.”
Solink’s system taps into other hardware and software such as point-of-sale systems and inventory-tracking tools to help clients detect fraud and theft and spot inefficiencies in work flows, among other uses. The firm sells the software on a subscription basis starting at around $150 a month.
Near-zero churn rate
Solink claims its products, which collect data from hundreds of thousands of cameras, typically deliver new clients a positive return on their investment within 30 days. Once buyers realize the software’s value, they’re hooked – the firm says it has a 96 per cent customer retention rate.
Laura Lenz, a partner at OMERS Ventures, said Solink’s clear value proposition, easy-to-use system and capability with hundreds of camera types and business tools make it the clear winner in its space.
“Our investment thesis is that Solink is well-positioned to capture the massive market shift to the cloud because of its product innovation, market-leading customer service and horizontal platform,” Lenz said in an email.
The 230-person company now has more than 1,800 customers in 29 countries. Major brands that use its software include Tim Hortons, Five Guys Burgers and Fries and fast-food chain Carl’s Jr.
After years of strong growth in North America, Solink took a leap across the Atlantic last fall, setting up an office in London in a bid to expand its footprint in Europe.
Matta said the firm is also poised to make a major push into Latin America and the Asia-Pacific region as more and more customers in industries that were previously reluctant to store video data in the cloud, such as financial services, embrace its platform.
“We see the opportunity to scale (the technology) internationally,” he said. “Inevitably, you kind of cross the chasm and everybody is doing it.”
While many tech firms have found fundraising to be tough sledding amid a widespread economic downturn that has seen valuations fall throughout the sector, Matta said that hasn’t been an issue for Solink, which brought in $23 million in a series-B round three years ago.
‘Committed’ to future IPO
“We weren’t looking at fundraising at all,” he explained. “We were heads down, focused, we had cash in the bank. I think the benefit of not looking is that everyone comes looking for you. We had a lot of interest from various parties and we kept kind of shooing them away.”
Until Goldman came calling, that is.
Matta said he was impressed with the investment firm’s forward-thinking approach.
“Goldman was interesting in the sense that they said, ‘Look, at some point you’re going to want to go public. But how do you (send that) message to public investors?’” Matta explained.
“They showed us a path that’s not just for 12, 18 months, but a path of four, five, six years. There’s certain muscle that you need to build within the business, and you need to plan for it today. You can’t just kind of think it’s magically going to happen.”
As for launching an initial public offering, Matta said it’s not a question of if it will happen, but when.
“We see a lot of opportunity to keep growing, and inevitably we have to return capital back to investors,” he said. “One way that’s within our control to do that is to go public. We have to do it. We’ve committed to doing that from our first (VC) investment that we did in 2017.”
Still, Matta said the firm’s board and management want to see more “predictability” in key cash-flow metrics before embarking on that path.
“I think realistically, given the growth and given where we’re at, it’s probably within the next two to four years. But it’s not something that we’re circling a date and saying it must happen by that point.”
