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Century club? VanillaSoft eyes $100M ARR target after investment from U.S. private-equity firm

September 29, 2023

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Sales-engagement software company VanillaSoft says it’s targeting $100 million in annual recurring revenues after receiving new financial backing from a U.S. private equity firm. VanillaSoft, which is headquartered in the Dallas suburb of Plano and has a major presence in Gatineau, announced this week that Texas-based Tritium Partners has acquired a majority stake in its operations. Terms of the deal, which closed Sept. 18, were not disclosed. VanillaSoft CEO David Hood told OBJ this week the cash infusion from Tritium will give his company the financial warchest it needs to expand its software-as-a-service platform into new markets and verticals in the U.S., Europe and beyond. “We’ve grown what I think is a real Canadian SaaS success story, but now I really think that we can take this and become an international SaaS success story,” Hood said. “That’s what the Tritium deal is really about.” Founded in 2005, VanillaSoft has about 100 employees – roughly half of whom live in the National Capital Region, including Hood and many of the firm’s top executives. More than 800 companies now subscribe to VanillaSoft’s software platform, which aims to help small and medium-sized businesses boost revenues by generating potential leads and continuously prompting sales representatives to follow up with phone calls, emails, texts or messages on social media sites such as LinkedIn. The company was self-financed for most of its existence and has been profitable for the past 15 years, according to Hood. In 2019, VanillaSoft landed a $3-million venture capital investment from a Gatineau organization, funding that allowed it to hire more staff and finance growth plays such as its acquisition of Toronto-based automated email marketing startup Autoklose the following year. Despite years of steady if unspectacular growth, Hood said he felt the firm had “a ton of potential but we were going to have to change something to realize it.” Last year, he began exploring ways to bring new blood into VanillaSoft’s brain trust and tap the resources needed to act on an expansion blueprint. After looking at various options, including raising more VC funding or selling the company outright, he opted to go the private-equity route in the belief it would allow the firm to continue to chart its own course with the help of experienced investors. “We decided we’d like to bet on ourselves and grow this as opposed to us selling out and becoming part of somebody else’s platform,” Hood said. He thinks the company has found the perfect partner in Tritium, an Austin-based firm which has raised more than US$1.5 billion since it was founded in 2013 and now has a portfolio of more than two dozen tech enterprises. “Tritium … has given us access to a network that we simply didn’t have before,” said Hood. “We can grow really well, but until you really get into that U.S. network, you just don’t have access to the same talent.” The CEO wouldn’t reveal VanillaSoft’s current financial metrics, but he says hitting $100 million in annual recurring revenues is a “very realistic” goal for the company to chase. “It’s a step that very few Canadian software companies ever make,” Hood said. “It’s tough, and it takes people behind it that have some of that experience. Is it going to be easy? It never is. And that’s why we needed a partner that was really going to be able to work with us and supply some of that knowledge.” As part of the deal, Tritium partners Matt Bowman and Chris Steiner are joining the firm’s board of directors. Among their priorities will be helping VanillaSoft find more potential acquisition targets in a bid to expand its footprint and product capabilities. “Now’s a great time to be out looking for companies,” Hood said. “For a lot of companies, it’s very tough out there right now. I think that there’s going to be some great opportunities to get some great teams and some great technology at much more reasonable prices than what we were seeing 18 months ago.” In addition, veteran tech entrepreneur Louis Summe has joined the firm as executive chairman to help plot its expansion strategy. Hood said Summe, who co-founded contact centre platform LiveVox and grew it into a multimillion-dollar enterprise that now trades on the Nasdaq, brings valuable scaleup expertise to his new role. “He’s got an experience that nobody here has,” he explained. “He has lived through things that we know we’re going to be going through.”