Montreal-based TrackTik raises $45-million from Georgian Partners, Caisse de dépôt

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One of Canada’s fastest-growing technology startups, Montreal-based TrackTik Software Inc., has attracted $45-million in fresh financing from two of the country’s largest venture-capital investors, Georgian Partners and the Caisse de dépôt et placement du Québec.

Security-management firm TrackTik, with 120 employees and more than $10-million in annualized revenues, has quickly emerged as one of Quebec’s breakout startups by bringing web-based subscription software to an industry that was too “unsexy” to attract much attention from Silicon Valley, founder and chief executive Simon Ferragne said.

TrackTik’s software platform enables security companies to monitor their guards on walkabouts and to handle numerous back-office tasks. It has almost 450 customers, including security giants Securitas AG and GardaWorld Corp.; several large Silicon Valley tech firms; as well as hospitals, universities and municipal governments in Toronto and Montreal; and is used at more than 225,000 client facilities. “They’re doing a ground-up approach to [supplying software to] this industry,” said Steve Leightell, a partner with Georgian.

Now, TrackTik, which Deloitte named as Canada’s 11th fastest growing startup in its annual “Fast 50” list in November, is gearing up to move into other industries where employees similarly do their work at a broad number of locations, often in small numbers, including facilities management and “gig economy” operations that rely on independent contractors. Mr. Ferragne said “2020 will be the year where we’ll be able to explode in other verticals and apply the same model that has been successful for us.”

The company’s roots date to a chance conversation Mr. Ferragne, now 37, had in a bar in Fort Lauderdale about eight years ago with a stranger who ran a security guard firm. The Quebec-born Mr. Ferragne, who was living in Florida and working as an independent software developer, assumed the physical security industry was at the vanguard of technological sophistication and asked the owner what systems he used to manage his operations in real time. The owner scoffed and replied, “’Yeah, my clients call me real time when [employees] don’t show up’” for guarding shifts, Mr. Ferragne recalled.

What Mr. Ferragne discovered was the industry was inefficient, largely manual and lacking in software systems for firms to manage employees distributed across myriad facilities. “It was archaic in terms of management – pens and paper,” before TrackTik came along, he said.

A few weeks later, Mr. Ferragne built a simple system that allowed guards to scan near-field communication (NFC) chips distributed around facilities with their smartphones while they were on their rounds and instantly transmit the data back to operations. That way managers “could see their people were at work and doing what they were supposed to be doing … to prove to clients their contractor was on the job,” Mr. Ferragne said.

He initially advertised his business the old-school way: with direct mail flyers. Within a year he was making enough from his side business that he focused on it full-time, relocating to Montreal and bringing more software-enabled work force management functions to the guarding business including timekeeping, invoicing, dispatching and scheduling onto one integrated platform.

Normand Chartrand, director of venture capital with the Caisse, said TrackTik has succeeded with a “land-and-expand” strategy by initially selling security firms on the guard tour-tracking feature, then getting them to adopt the broader multi-functional platform. “They become a very sticky, mission-critical platform” for both security firms and companies that manage their own in-house security teams, Mr. Chartrand said.

Mr. Ferragne raised $1-million in 2014 led by Toronto’s Klass Capital Corp. when the company was bringing in about $18,000 per month in recurring revenue. He raised $1.5-million a year after that in a financing led by Montreal’s iNovia Capital, which put the firm on the watchlist of the Caisse, an investor in iNovia. Tom Birch, managing partner of venture capital and technology with the Caisse, said that by mid-2017 TrackTik’s performance on a handful of key performance metrics was so strong it ranked among the top 10 of the 600-plus Canadian tech startups the Caisse tracks. That prompted the pension fund to lead a $7-million financing in late 2017, on the understanding it would invest again in the latest round.

Of the amount invested by Georgian and the Caisse, about $20-million will go to the company and the balance will go to existing investors (Mr. Ferragne is selling less than 10 per cent of his stake). TrackTik plans to invest in product development, including artificial intelligence tools to help customers more effectively staff guards, and to expand internationally beyond its North American base, with the intention to hire another 120 people in the next year.