Every year, Techopia names a new crop of tech firms to watch. Before we unveil our picks for 2019, we’re looking back on how our four companies fared in 2018.
A major push in hiring and R&D over the course of 2018 have set Leonovus up to record revenues for the first time in years heading into 2019.
Leonovus develops software-defined storage solutions for enterprise users but has been stuck in a rut of consecutive quarters without significant revenue for several years. Chief executive Michael Gaffney admitted in a conversation with Techopia late last year that Leonovus’s business model had been “broken,” but said then that its $13.8 million funding round would give the publicly traded firm the cash it needed to get back on track.
Since then, the company has hired nearly 30 people and signed more than 50 potential customers to proofs of concept. In September the company hit a major milestone, landing a Big Six Canadian bank as a customer. Revenue from the unnamed client is expected to start flowing before the end of fiscal 2018.
Gaffney tells Techopia that the main goal for Leonovus now is opening up the revenue pipeline.
“We clearly need to close a basket of paying customers and have significant revenue starting in 2019. That's my simple objective,” he says.
Gaffney confidently expects to close 95 per cent of the POCs the company has underway, a number of which are with federal government departments. The sales cycle for wooing the feds can stretch as long as 24 months, Gaffney says.
Selling the storage story
Leonovus’s solution distributes and encrypts clients’ stored data across numerous cloud servers rather than a single on-premise location. The biggest challenge facing the company this past year hasn’t been building a secure product – it’s been convincing large institutions that the infrastructure they’ve set up and the way they’ve stored their archival data for decades is no longer sufficient.
“You’ve got to somehow fit your solution into that complexity,” Gaffney says.
Aside from the added security that Leonovus touts with its multi-cloud solution, the addition of blockchain to its product line has helped the company stand out from the crowd. Gaffney says the much-hyped technology, which Leonovus uses to help companies with compliance and audit demands, continues to garner market interest.
This past fall, Leonovus set down an ambitious challenge to major players in the cloud hosting space such as Amazon and Microsoft with its Galaxa marketplace. In short, the platform would bring a sharing economy approach to the cloud: In the same way that Uber lets drivers make extra cash with their cars, Galaxa would allow data centre operators with unused server space to open their infrastructure to companies on demand.
“Airbnb is the world's largest real estate rental firm but owns no real estate. Alibaba is the world's largest retailer that has no inventory. Galaxa wants to be the world's largest data centre that owns no data centres,” Gaffney explains.
Leonovus unveiled the white paper for Galaxa at the Singapore Fintech Festival last month and anticipates bringing the service online in 2020. The company will need to raise more cash for the new platform’s development, the first tranche of which Gaffney expects to close in the first quarter of 2019.
Taking the talent crunch in stride
Leonovus roughly tripled its headcount over the past 12 months, today standing at around 35 employees. Adding nearly 30 employees has been a struggle in Ottawa’s tight talent market, Gaffney says, viewing the situation as a classic double-edged sword.
“The good news is, from a tech perspective, we're booming again,” he says. “But the challenge with that is being there's a lot of competition for good talent.”
While the growth and variety in Ottawa’s tech scene might make talent scarce for Leonovus, Gaffney views the recent momentum as a good thing. No longer a one-trick telecom pony, Ottawa’s strength in software and other sectors make the capital a go-to destination for investors and tech workers looking to get a fresh start, he says.
“Now you look around town with Shopify, with Leonovus – things are far broader. We're more like a Silicon Valley now … which I think bodes really well for the long run of the Ottawa economy.”