Verafin's mega sale: a tech success story for decades
Nasdaq would support the incubator that fostered Verafin's founders in their early years
You certainly get mixed economic signals in St. John's Stavanger Dr. region.
There are large plots of empty land. Some stores (Costco, Princess Auto) have gone out on the highway to the allure of Danny Williams' Galway production, while others (Pier One, Bombay, Bowring, Addition'Elle...a it's bit of a list) have shut down since whole national chains have gone under.
On the other side of Torbay Road are office buildings on Hebron Way, which would have looked like they went up fast, particularly if you don't drive a lot.
One of them is Verafin's headquarters, the information security firm that made headlines on Thursday as Nasdaq—the company owning the stock exchange home to the world's best-known tech companies—bought it for $2.75 billion.
That's OK—Billion. That's plenty of money.
A colleague and I were wondering on Thursday why the article didn't make it as large an impact on the national front as we would have thought; after all the contentious acquisition of the Trans Mountain Pipeline by the federal government (which generated numerous news reports and comments) was $4.5 billion Canadian, or around $3.44 billion in American currency.
In other words, in the same ballpark, throwing words like "billion" about as casually as baseball.
Strong news in hard times
Lately, we got used to dreaming about billions, albeit in other ways. Near to 10 years after Danny Williams called everybody into a St. John's hotel room to unveil the Muskrat Falls megaproject, the agreement was announced. At the time we thought about $6.2 billion to explain Muskrat's expenses. The new report places final expense over $13bn.
Other points in the billions: a fall in oil exports, a sequence of stubborn deficits, and an increasing net debt. The new September deficit forecast is $1.84 billion; our net debt earlier pegged at $16.4 billion.
(Speaking of crude: Verafin's newest neighbor on Hebron Way is the energy giant ExxonMobil, which operates in Hibernia. It moved its workers from the leased downtown area to the volatility that shakes commodities markets across the globe.)
Verafin's announcement is fantastic news for the provincial economy, particularly St. John's. A big reason? Verafin, who now has a workforce of 600, remains steadfast.
"They'll probably have to drag us kicking and screaming," said founding partner Brendan Brothers with a chuckle Thursday. "This is something that we've been tremendously proud to grow here in St. John's … We're truly, truly looking forward to an exciting future here."
Verafin's expertise is making elite apps for banks that can detect bribery, money laundering, and other financial criminals that can cost legal companies and governments, by tax revenue) in the billions, indeed. Nasdaq was involved in Verafin because the St. John's firm had a formula it couldn't beat.
The agency that introduced them
An fascinating aspect of the Nasdaq agreement is how Verafin finds his legs, a tale of origin that may have major consequences for other young entrepreneurs including the three-degree students who founded Verafin from the ground up in 2003.
Under the terms of the deal, Nasdaq will invest over $1 million on Genesis Centre, a start-up incubator operating through Memorial University. Back in the day it first served in small campus offices before making a home at the Inco Center (now Bruneau Centre). Memorial is now headquartered on Signal Hill campus from the old Battery Hotel.
It speaks volumes why the creators of Verafin want the agency to benefit from a contract that will financially enrich them. The transaction would not only help Genesis Center finance more businesses, but help Verafin with one of its core issues: finding potential through scholarships and co-op projects.
That may sound like a disconnect in a province where people leave continually to find jobs elsewhere, but it's really real, and it's been for some time. Recruiting professional workers is no easy task.
Michelle Simms, Genesis Centre's chief executive, sees Verafin as a lure for well-paid jobs, not just future local hires.
"They're going to be sought after around the world as a place where people want to work. They're going to attract talent from away," she said.
Big news Thursday was no magic overnight. Like Verafin, the province's tech industry has gained momentum for several years. In fact, the groundwork here was laid down decades ago. There were champions for what we called "information age" jobs about three decades ago (disclosure: in the mid-'80s, my father wrote research papers about this very subject for the provincial government). TechNL, a key voice for the software industry, founded in 1988 as Newfoundland and Labrador Technology Industries Association. A few years after, the Genesis Center first became a technology transition center and appeared as the brand we all know in 1996.
The Genesis Center then focused on bringing good ideas on campus and converting them into sustainable companies in the following disciplines: biotechnology, medicine, physical science, architecture, computer technology and communications. They're all all important.
The tech sector has long been a big employer. But it's interesting to remember that NATI's annual report only three years ago set the sector's total valuation at $1.6 billion Cdn: that is less than half the Nasdaq deal's value alone.
Thursday's big news is evidence that the industry is not only on a roll, but is also a huge engine of our economy.