St. John’s-based engineering software firm CoLab AI Inc. is on track to become a unicorn with a valuation of US$1-billion or more, according to company CEO Adam Keating, as Newfoundland and Labrador tech companies buck national brain-drain trends by raising close to $300-million last year. According to data firm Entrevestor, that funding comprised 78 per cent of Atlantic Canadian startup funding despite the province making up less than a quarter of the region’s population.
Overcoming Silicon Valley Skepticism in St. John’s
In 2019, an investor told Mr. Keating he would finance CoLab only if the engineering software company relocated to Silicon Valley. “You cannot build a billion-dollar company in St. John’s,” the investor told him, according to Mr. Keating. Mr. Keating replied that a billion-dollar company did exist in St. John’s, though he couldn’t name it at the time. Several weeks later, financial crime-fighting technology company Verafin Inc. announced a $515-million financing deal valuing the firm near $1-billion. Today, CoLab has raised US$72-million from American firms including New York-headquartered Insight Partners and San Francisco startup accelerator Y Combinator, with a valuation of about US$500-million when it raised financing last year.
Did you know? Newfoundland and Labrador tech companies raised close to $300-million last year, capturing 78 per cent of all startup funding in Atlantic Canada, according to data from Entrevestor.
Verafin as Ground Zero for the Newfoundland Tech Boom
Verafin served as “ground zero” for the province’s technology boom, according to Steve Follett, CEO of St. John’s-based subsea management software company Enaimco. Founded in 2003 by Memorial University engineering students Jamie King, Brendan Brothers, and Raymond Pretty, Verafin pivoted from mining robot AI to bank anti-money-laundering software after an early investor suggested the change, according to Stephanie Champion, executive vice-president and head of Nasdaq Verafin. After serving credit unions and regional banks, the company scaled to serve global systemically important banks. In late 2020, Nasdaq Inc. acquired Verafin for US$2.75-billion. Today, Nasdaq Verafin employs more than 900 people in St. John’s and has more than 2,800 financial institutions as clients, with revenue more than doubling since the acquisition, Ms. Champion stated.
Scaling Local Unicorns and Retaining Talent
CoLab and legal AI software provider Spellbook are both on track to become unicorns, according to Florian Villaumé, former CEO of techNL. Spellbook raised US$50-million last year in a financing led by Silicon Valley’s Khosla Ventures and was valued at about US$350-million, according to chief strategy officer Chris Gardner.
Frequently Asked Questions
What company started the tech boom in St. John’s?
Verafin is widely credited by local founders as the catalyst for the Newfoundland tech boom, culminating in its US$2.75-billion acquisition by Nasdaq Inc. in 2020.
Which St. John’s tech companies are nearing unicorn status?
According to former techNL CEO Florian Villaumé, CoLab AI Inc. and Spellbook are both on track to achieve valuations of US$1-billion or more.
How much venture capital do Newfoundland tech startups raise?
Newfoundland and Labrador tech companies raised close to $300-million last year, accounting for 78 per cent of total startup funding in Atlantic Canada, according to Entrevestor data.
What role does Memorial University play in the local tech sector?
Call to Action: Want to stay updated on Canada’s booming tech ecosystems and startup trends? Subscribe to our newsletter or explore our latest reporting for more in-depth analyses.