ST. JOHN'S, N.L. — St. John’s-based Verafin Inc., which calls itself the world’s largest financial crime management software company, said it has secured a half-billion dollars in debt and equity financing to spur expansion among large banks.
The $515 million in recapitalization comes from Boston-based Spectrum Equity and Toronto-based Information Venture Partners, Verafin said in a statement. Its client list includes almost 3,000 banks and credit unions across North America.
“This financing round with our long-term partners Spectrum Equity and IVP allows Verafin to accelerate our investments in product innovation and customer success,” Verafin CEO Jamie King said in the statement. The company will “continue our progress in market penetration of larger financial institutions,” King said.
The transaction is one of the largest ever growth financing deals for a Canadian software business, according to the company.
Verafin, which began in 2003 after adapting technology its founders had used to develop robots for the mining industry, will use the new capital to maintain a speedy clip of growth that’s seen 25 financial institutions with more than $5 billion in assets sign on to its services in the last 18 months, the company said. Verafin more than doubled sales bookings and average deals sizes from 2017 to this year, it said.
Spectrum Equity, which provides funding and support to internet software and information service companies from its eighth fund with US$1.25 billion, according to its website, said it’s keen to support Verafin’s next phase of growth.
Spectrum will continue to back Verafin’s “product-innovation led go-to-market strategy that has enabled the company’s explosive growth,” Spectrum Equity managing director Chris Mitchell said in the statement.
The Newfoundland and Labrador-based firm provides a cloud-based secure software platform for fraud detection and management, regulation compliance and information sharing. A customer-driven development program responds to the rapidly changing financial crime landscape by employing more than 400 software developers, among the industry’s most experienced fraud and anti-money laundering-focused teams, Verafin says.
“Verafin is in the very early innings of its mission to create the world’s most effective crime fighting network,” Dave Unsworth, general partner at Information Venture Partners, said in the statement. IVP focuses on investing in early-stage companies in financial technology and cloud-hosted software from its second fund with $106 million, according to its website.
“We see a massive opportunity ahead for Verafin to continue to lead this market transformation through continued product innovation and thought leadership,” Unsworth said.
The new refinancing makes Verafin co-founders King, Raymond Pretty and Brendan Brothers, plus management and employees, the largest shareholding group in the company, Verafin said. Additional financial terms weren’t disclosed. Houlihan Lokey, an American independent investment bank and financial services company, served as financial adviser to Verafin, it said.
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