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Valsoft Corporation, a Montréal-based firm that seeks to acquire and scale vertical software companies, has closed $229 million CAD ($170 million USD) in growth funding as it looks to expand its portfolio.

The investment was led by new investor Coatue and returning investor Viking Global Investors, which acquired a minority stake in Valsoft in March 2022 for $100 million USD. A spokesperson for Valsoft told BetaKit this latest all-primary investment comprised a mix of debt and equity financing.

The financing comes after a period of growth for the technology consolidator. In a statement, Sam Youssef, Valsoft CEO and co-founder, claimed the firm had more than doubled its business in the last two years, and is now entering a new phase of growth.

Valsoft placed on Deloitte’s Technology Fast 50 list last year with a three-year revenue growth of 340 percent.

Founded in 2015, Valsoft acquires and develops vertical market software companies. Its portfolio includes companies in over 40 verticals, including information technology, retail and point of sale, aviation, education, transportation and logistics, among others. Valsoft’s spokesperson said Canadian-founded companies make up five percent of its current portfolio.

According to a 2023 report from the Montréal Gazette, Valsoft typically targets “established” software businesses with stable cash flow and sales ranging between $3 million and $50 million. 

Under Valsoft’s model, acquired businesses continue to operate as they did before but with additional support and expertise from Valsoft’s network. The firm says on its website that Aspire Software, the operational arm of Valsoft Corp, operates and manages Valsoft’s portfolio.

In a statement, Youssef said he believes Valsoft’s model offers several advantages. Since the firm does not operate with a predefined investment horizon, it can build long-term partnerships with the management and customers of its portfolio companies.

“This compounds over time, which allows us to create enduring value for our portfolio companies and drive Valsoft’s sustainable growth over time,” he added.

According to the spokesperson, Valsoft has just shy of 100 companies from over 50 countries in its portfolio. Included in its Canadian portfolio are Mississauga, Ont.-founded car rental software firm Navotar, which it acquired in 2021, and Toronto-based Interdev Technologies, purchased in 2020.

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In a statement, Valsoft claimed it had completed 25 acquisitions in 2023. One of these included buying Seekda, the hospitality technology business of Toronto-based Kognitiv Corporation.

Valsoft is not the only major software acquirer in Canada. Toronto-based Constellation Software, founded in 1995, also buys vertical market software companies, and in 2021 launched a $200-million CAD venture capital fund, called VMS Ventures.

In November 2023, Valsoft placed on Deloitte’s Technology Fast 50 list, tracking a three-year revenue growth of 340 percent. According to The Globe and Mail, Valsoft saw between $100 million and $250 million in revenue in 2022. Valsoft aims to close over 30 new acquisitions in 2024, according to the firm’s spokesperson.

Valsoft has previously spoken about its potential plans for an initial public offering (IPO). Valsoft’s spokesperson confirmed this is still the case, adding that the firm plans to grow by over 50 percent in the next year or two, ahead of a potential IPO.

 “We expect the funds to allow us to execute our strategic plan faster, positioning us to take advantage of attractive market dynamics and the powerful effects of our portfolio strategy, which delivers increased value for our companies and their customers,” Youssef added.

Youssef and Valsoft co-founder Steph Manos’ previously founded Montreal-based MindGeek, the company behind Pornhub and other adult websites. Youssef told the Gazette last year that he “got out of the business” in 2008 and sold his stake in 2010. Now known as Aylo, the company recently reached a deferred prosecution agreement in the United States over a relationship with a sex trafficking website.

Feature image courtesy of Valsoft via Twitter.