Neovation, the Winnipeg digital learning content and service provider, has become the second Winnipeg company to land growth capital investment from the Canadian Business Growth Fund (CBGF).
Dan Belhassen, Neovation’s founder and CEO, said the company will use the investment — "in the early seven figures" — to fund increased sales and marketing efforts. (CBGF invested in Librestream last year)
"Our growth has been decent but we are expecting the velocity to pick up," he said.
As a company that has bootstrapped itself since its formation in 2012 — Belhassen also owned Modern Earth Web Design until it was sold earlier this year — he has never even courted venture capital investment.
But the CBGF model of long-term, patient, minority growth capital really worked for them.
And while the company was not looking to raise capital in the traditional sense, Belhassen is regularly talking to groups interested in buying the firm.
While the company continued doing well amidst all the recent disruption, he said with the economic uncertainties caused by the pandemic he wanted to be sure he had all the bases covered.
"We decided we needed to have a serious look at who was out there, what the opportunities might be to move from organically funded to some type of model where we could get some additional capital to make sure we are strong and we could grow and also deal with whatever additional economic uncertainty might come," he said.
He said out of the 50-plus organizations he’s spoken to about potential deals, CBGF was the one that really understood the company.
George Rossolatos, CEO of CBGF, said "Neovation is both a software-as-a-service and services company which is unique compared to their competitors in the space. Many companies try to be self-service options but ultimately clients want the personal touch and expertise to help them properly implement solutions."
Belhassen said he has no desire to sell the company and is passionate that it remain a Canadian firm and the CBGF model allows that to happen.
Rossolatos said, "Our goal is to help entrepreneurs stay in control of their companies and grow them over the long term and build successful business that stand the test of time."
CBGF will never force a company to sell.
"Our goal is never to force a suboptimal exit as an investor," said Rossolatos. "It is the entrepreneur’s choice if and when an exit happens, but we hope they choose to grow the business over the long term and allow it to reach its full potential."
Meanwhile, the pandemic has accelerated the demand for digital training services and Neovation is ramping up to meet that demand.
Neovation was able to pivot to a virtual workforce during the pandemic. In fact Belhassen said it will remain so permanently.
Before March 2020, about 90 per cent of its 70 employees were based in Winnipeg. But now Neovation recruits from across the country and its Winnipeg complement is down to about 60 per cent.
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.