Toronto-based secure document sharing platform and virtual data rooms provider Firmex has taken a strategic investment from Montreal private equity firm NOVACAP, financed through its TMT IV Fund, which is aimed at creating partnerships with high-growth technology, media and telecommunications companies, and has doled out $375 million since its launch two years ago.
Founded in 2006, Firmex has made a point until now of eschewing outside financing, with co-founder and CEO Joel Lessem telling the financial post last year, “By the time your business starts cresting $5 million, you’re getting three phone calls a week from VCs … mainly from U.S. venture capital,” before adding, “When your business is growing rapidly and it’s profitable… why mess with a good thing?”
Firmex began turning a profit in 2010 and never looked back, earning a spot on Deloitte’s Technology Fast 50 list in 2014, after posting a growth rate of 1,268% selling into 68 countries.
Firmex counts approximately 75,000 companies worldwide among its clients, who use the company’s virtual data rooms to securely exchange millions of documents, which can pertain to financial transactions, M&A, corporate governance, regulatory compliance, litigation or procurement.
Firmex’s client list includes the Big Five accounting firms, all of the top 10 global investment banks, Davies Ward Phillips & Vineberg and several other major law firms, as well as corporate giants like GlaxoSmithKline, Husky Energy, RBC Royal Bank Capital Markets, Deloitte, TD Capital Mezzanine Partners, Forbes Mergers & Acquisitions, and CIBC.
“Our vision is to continue growing with our loyal customers and winning new customers by expanding and enhancing our product and service offering,” said Lessem. “We see tremendous growth opportunities in the market for our company. We selected NOVACAP as our partner because of their strong operational expertise and their conviction in our plan and potential. We couldn’t be more excited about the future for Firmex.”
Lessem plans to stay on as CEO of Firmex, in which he owns a significant interest, along with existing management, with the aim of further expanding the company’s offerings and accelerating its growth, potentially through acquisitions and certainly through organic growth.
“NOVACAP is excited to partner with Joel and the entire Firmex team, and we look forward to continuing to invest in its people, product and brand in order to help the company find new market opportunities both domestically and abroad,” said Yong Kwon, Partner at NOVACAP. “Over the last decade, Firmex has demonstrated the quality of its platform and service offering, having grown tremendously and consistently exhibiting impressively high retention rates from its large and diverse customer base. We believe strongly in the future growth prospects of Firmex and look forward to helping them drive further successes in this next phase of their growth trajectory.”
Explaining the company’s reluctance to accept outside funding to this point, Lessem told the Financial Post last year, “Capital is not the most important thing in driving a business, unless you’re building semiconductors.”
Lessem characterized the current start-up ecosystem funding model as, “Get a great idea, get some funding, hype it up and dump it.”
“Venture capital buries their dead very quietly,” he said. “You always hear about the success stories but you don’t hear about all the ones that get sold for scrap or just wound down. And that is the majority.”
Founded in 1981, NOVACAP has assets under management of over $1.6 billion, and has invested to accelerate growth and maximize value in more than 85 North American companies.
A dollar figure for NOVACAP’s investment in Firmex was not disclosed.