Verafin sale expected to inject capital, jobs into N.L. tech sector
$2.75B US sale to finance giant Nasdaq could lead to 100s more jobs, insiders say
It's the most striking deal that Paul Preston can think of, at least in this corner of the world.
"As far as I'm aware, I do not know of a bigger acquisition of a tech company in Atlantic Canada," Preston said. "And it's going to be a while before these records are surpassed."
Preston, CEO of Tech NL, the province's industry association, said he had a feeling international buyers were sniffing around St. John's, but didn't expect a sale of this size: a $2.75 billion US cash transaction, announced Thursday morning, from financial giant Nasdaq to local software developer Verafin.
For years, insiders have characterized the small, yet flourishing, tech industry here as the province's most under-recognized success story. Exact numbers vary according to the source, but around 200 companies in Newfoundland and Labrador employ about 6,000 people; their products and services range from ocean technology to holographic light displays.
Verafin's labour force currently accounts for one-tenth of that.
Prior to yesterday's news, "we were thinking they'd grow to about 1200 [employees] in the next three to five years," Preston said. "I think it's going to surpass that."
While everyone from government officials to fellow entrepreneurs congratulate the 17-year-old fraud detection company on the sale, insiders are dispelling any fears that Nasdaq will ship its operations to outside the province.
"This is only a positive," Preston said.
"If you get an injection of capital, you're looking at, how can I invest in other local companies? What's the next big tech company?"
Preston predicts the deal will see capital investments spill over into other tech firms, motivating startups and bringing international skilled workers to St. John's.
"That's the biggest gap we have here for our sector," Preston said. "I think this is going to help turn that tide a bit. It's going to help attract global talent to want to come here."
'You don't have to leave'
The deal bodes well for an industry that's spent years grappling with a labour shortage, agrees Michelle Simms, CEO of the Genesis Centre.
Memorial University's self-styled tech incubator, where Verafin got its start, also benefited from the sale: Nasdaq has granted it $1 million for research and development.
That'll aid up-and-comers, Simms said -- as long as they can find enough people to work for them.
Earlier this week, the province announced new perks for international tech graduates: an "immigration pathway" to encourage retention. The timing couldn't have been better, Simms said.
"It enables us to say to them, 'Listen, stay. You don't have to leave. You can stay here, there's opportunity here, there is exciting work here,'" she said.
Simms echoed Preston's optimism about the sale's impact on the wider industry.
"The opportunities coming from this deal, I think we'll still see decades from now," Simms said.
"Now they're globally recognized. They're a company that's going to be sought after, not only across North America, or across Canada. They're going to be sought after around the world as a place where people want to work, and they're going to attract talent from away."
Firing on all cylinders
The sale comes after months of turmoil and uncertainty within the province's nest egg: its once-booming offshore.
Preston doesn't see a sudden tech renaissance as a replacement for Newfoundland's oil and gas sector.
"We need our natural resource economy. But the more cylinders of our economy that we can fire, the better we're going to be," he said.
"If we can have resources, we can have tech, we can have aquaculture and clean energy ... the more we have all of these sectors hiring, the better we're going to be. It certainly diversifies our economy."