The Verafin sale: a story of technological success, decades of work

On the other side of Torbay Road are office buildings on Hebron Way that may seem to have gone up quickly, especially if you don’t drive often.

One of these is the headquarters of Verafin, the digital security company that made headlines Thursday when Nasdaq, the company that owns the stock exchange that houses the planet’s best-known tech companies, bought it for 2.75 billion. US dollars.

Quite right – billions. That’s a lot of money.

On Thursday, a colleague and I were curious why the story hadn’t made as big an impact on the national front as we might have thought; after all, the federal government’s controversial purchase of the Trans Mountain Pipeline (which generated countless news and commentary) was CAD $ 4.5 billion, or about $ 3.44 billion in US currency.

In other words, in the same baseball field, throwing words like “billions” around with the same ease as a baseball.

Good news in troubled times

We’ve gotten used to talking about billions lately, but in other contexts. The Verafin deal has been announced almost 10 years after Danny Williams called everyone in a St. John’s hotel room to unveil the Muskrat Falls megaproject. At the time, we were talking about $ 6.2 billion to describe the costs of the muskrat. The latest estimate puts the final cost of over $ 13 billion.

Other talking points in the billions: a decline in oil revenues for years now, a series of stubborn deficits and a growing net debt. The last projection of the deficit, since September, is $ 1.84 billion; our net debt was set earlier this fall at $ 16.4 billion.

WATCH | Terry Roberts of CBC reports on the sale that will transform St. John’s-based Verafin:

Terry Roberts reports huge deal that will see St. John’s tech company grow and stay rooted in the Netherlands 3:02

(Speaking of oil: Verafin’s new neighbor on Hebron Way is oil giant ExxonMobil, which operates Hibernia. It has moved its workforce there from a rented space downtown and is riding the turbulence that is shaking commodity markets. all over the world.)

Verafin’s announcement is great news for the provincial economy, especially for St. John’s. A fundamental reason? Verafin, who already has 600 employees, is adamant about staying.

“They’ll probably have to kick and scream at us,” founding partner Brendan Brothers said with a laugh. “This is something we were tremendously proud of growing up here at St. John’s … We really look forward to an exciting future here.”

Verafin’s specialty is making elite software for banks that can detect fraud, money laundering and other financial crimes that can cost legitimate businesses (and governments, through tax revenues) sums of, yes, billions. The Nasdaq was interested in Verafin because the St. John company, it said, had a product that couldn’t be beat.

A boost to the agency that launched them

An interesting element of the Nasdaq deal is how Verafin found its legs, an origin story that could have significant implications for other young entrepreneurs such as the three graduate students who built Verafin from the ground up, starting in 2003.

Under the terms of the deal, Nasdaq will spend more than $ 1 million on the Genesis Center, a startup incubator run by Memorial University. Later in the day, he first operated in small offices on campus before finding a home at the Inco Center (now Bruneau Center). It is now based at the Signal Hill campus which Memorial operates from the former Battery Hotel.

It speaks volumes that Verafin’s founders want the agency that has nurtured them for several years to benefit from a deal that will enrich them personally. The transaction will not only help the Genesis Center fund more startups, but – through scholarships and cooperative programs – will help Verafin with one of its key problems: finding talent.

WATCH | Anthony Germain of Here & Now asks a tech analyst to contextualize the acquisition of Verafin:

Anthony Germain talks to Mark Nunnikhoven about why Nasdaq bought St. John’s based Verafin 4:12

It may seem like a disconnect in a province where people are constantly going out to look for work elsewhere, but it is very true and has been for some time. Hiring employees with the right skills is no easy task.

Michelle Simms, CEO of the Genesis Center, sees Verafin as a magnet for high-paying jobs, and not just potential local recruits.

“They will be sought after all over the world as a place where people want to work. They will attract talent from afar,” he said.

The big news on Thursday wasn’t sudden magic. Like Verafin, the province’s tech sector has been steadily gaining ground for many years. In fact, much of the foundation here was laid decades ago. There were supporters of what we then called “information age” jobs well over three decades ago (disclosure: my father wrote research papers on this very thing for the provincial government in the mid-1980s). TechNL, a key voice for the technology sector, formed as the Association of Technology Industries of Newfoundland and Labrador in 1988. The Genesis Center began operating a few years later, first as a technology transfer center and emerging as the name we know now. in 1996 (Another revelation: Before he became the longtime founding director of the Genesis Center, I worked for Dave King at another agency.)

At the time, the Genesis Center’s goal was to bring good ideas to campus and turn them into profitable businesses, in the following disciplines: biotechnology, medicine, physical science, engineering, information technology and communications. All of them are still relevant.

The technology industry has been a major employer for years. But interestingly, NATI’s annual report just three years ago put the industry’s overall value at $ 1.6 billion – less than half the value of the Nasdaq deal alone.

The big news on Thursday is proof that the sector is not only on the move, but is already one of the main drivers of our economy.

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