For a small Ottawa software firm in a nascent industry, Solink is making quite a name for itself in the North American investment community.
Solink’s cloud-based subscription software uses artificial intelligence to analyze video surveillance footage at restaurants, retail outlets and banks in an effort to detect fraud.
The system works by “mining” through security footage at stores, banks and restaurants to spot suspicious transaction trends and patterns of behaviour – and pinpointing exactly where and when the activity occurred.
A pioneer in a fast-growing field, the 29-person firm has seen its revenues skyrocket since its launch seven years ago. Solink was named one of OBJ’s Startups to Watch in 2014 and one of the city’s fastest-growing companies in 2017 with three-year revenue growth of 227.6 per cent.
Investors have taken note. Last month, the company closed a $5-million funding round that featured heavy-hitting venture capital firms from Canada and south of the border.
Toronto’s Generation Ventures, which is headed by former Bay Street lawyer and high-profile business executive Geoff Beattie, led the latest round. Other investors were ScaleUP Ventures, a Toronto-based early stage technology fund with a fintech portfolio that also includes Ottawa’s Fusebill; the Business Development Bank of Canada’s IT Venture Fund; and Chicago-based Valor Equity Partners, whose eclectic investments cover everything from Little Caesars pizza joints and Dunkin’ Donuts shops to Elon Musk’s Tesla Motors and SpaceX.
Solink CEO Mike Matta doesn’t mask his enthusiasm when discussing his new roster of equity partners, and for good reason.
After all, there can’t be many other Ottawa startups sharing portfolio space with Elon Musk.
“We’ve always known that what we’re doing is an inevitability,” Mr. Matta says matter-of-factly.
“It just kind of helped us to know that people with capital who can help us fuel and scale the business also felt that. They didn’t think it was a crazy investment. These are investors that have invested in iconic companies that have gone on to redefine everything that we know of today in technology.”
Valor Equity first entered Mr. Matta’s radar when he read a news article on the fund back in 2014. The private equity firm had taken the quick-service restaurant industry by storm, investing in chains such as Little Caesars and Dunkin’ Donuts and using a combination of software, engineering know-how and “lean manufacturing” techniques to squeeze the most out of those operations – even going as far as counting the number of steps it takes to make a pizza.
“I remember reading (the article) and just kind of being sold on everything they were saying and the need for data in physical space and being able to make decisions that are very data-centric,” Mr. Matta explains. “They had applied it to some of the most unsexy industries like fast food.”
Knowing the firm would soon be seeking a followup to its initial $5-million injection of equity, Mr. Matta cold-called Valor’s Chicago office last year. He managed to land a face-to-face meeting with an analyst, who was impressed enough with Solink’s software to invite fund partner Jon Shulkin to have a look.
After viewing a demo, Mr. Shulkin called in Valor founder and managing partner Antonio Gracias.
“They basically signed up on the spot,” Mr. Matta says.
Generation Ventures vice-president of investments Laura Lenz is equally bullish on Solink’s future.
“I think it’s something like three million hours of video surveillance goes unwatched every minute, so what’s the point of putting up these cameras if you’re not doing anything with it?” she says.
“I think Solink has figured out a very sophisticated way to analyze the data and present it to the customer in a real-time manner.”
As its investment partners’ pedigrees suggest, Solink believes its future market opportunities extend far beyond stopping theft in the workplace. Mr. Matta says a good chunk of its latest VC haul will go toward R&D aimed at expanding the software’s capabilities.
He says the technology could help employers track workers’ movements via video, for example, and use that data to find ways of making employees more efficient.
It could also provide a valuable window into customers’ spending patterns to help identify up-selling opportunities – for instance, if surveillance footage consistently shows a customer in a particular vehicle ordering a doughnut with his double-double, a cashier can be alerted to that preference and remind him to purchase a sweet treat to go along with his morning java.
‘A source of insights’
Mr. Matta compares it to websites such as Google that target ads at specific users based on their web-surfing habits.
“This doesn’t come from thinking of video as a security product,” he says.
“It comes from thinking of video as a source of insights and a source of data. The ability for us to translate that historical insight into ‘what can I do right now’ is important.”
Solink had initially sought a $4-million raise to get it through the next 18 months, but Mr. Matta says investors have been so taken by the company’s potential it easily exceeded that goal.
A monthly email blast updating curious investors on the firm’s progress has grown from about 20 recipients to nearly 200.
“We got a ton of interest from investors in San Francisco, in Boston, New York, Toronto, Seattle, just from publishing those monthly updates,” he says.
About 300 customers – big names such as New York Fries, Tim Hortons and Wendy’s among them – now use Solink’s software at 1,600 separate locations. Mr. Matta says the company is poised to sign two major food-service customers that “have the potential to double our business.”
Ms. Lenz says getting buy-in from top executives at major chains will be essential for Solink to prove its credibility to a broader range of clients.
“I think if they can demonstrate that large corporate retailers, restaurants are purchasing this and it’s a decision from head office to disseminate through to all their franchisees, I think that would definitely help the company,” she says.
With the company’s monthly recurring revenues growing at the brisk rate of nearly 10 per cent, Mr. Matta says he’s aiming to hit the $100-million mark in annual revenues within five years.
“We’re trying to build a company that is going to be here for the long haul,” he says. “That’s our focus.”