Both investment firms won based on their investment into Layer7 Technologies, a company that has developed enterprise API management tools. Although the company was approached by potential buyers several times over the course of its 12 years, it chose not to sell until it had established itself, gained market share and revenue.
In 2013, Layer7 was sold to CA Technologies and the BDC and Growtworks earned $77.7 million from their initial $17.7 million investment. Both parties are expected to reap a 5.2 times their initial investment once all proceeds are released from escrow, for a 25.6 percent IRR (internal rate of return).
Established in 1998, the purpose of the CVCA’s ‘Deal of the Year’ Award competition is to promote, highlight and celebrate the achievements of CVCA members who have had outstanding investment successes. The selection process focused on CVCA members with the most significant investment return realized primarily during calendar 2013.
“We are honoured to be recognized by the CVCA for this deal – it is the result of patient investment, value-added support and significant collaboration between BDC Venture Capital, GrowthWorks, Layer 7 management and private sector investors,” said BDC partner Andrew Lugsdin. “This transaction is proof that Canada’s IT sector is ripe with innovative entrepreneurs looking to transform their ideas into companies that generate growth and prosperity.”
BDC Venture Capital first invested in Layer 7 in 2003. In 2011, Layer 7 was named the 71st fastest-growing private or public technology company in North America on the Deloitte Fast 500 list.
“I’d like to congratulate our ‘Deal of the Year’ Venture Capital Award winners, BDC and GrowthWorks, who, along with an outstanding management team, showed patience in building Layer7 into a successful company and ultimately a highly desirable acquisition target,” said Mike Woollatt, CEO of the CVCA. “This transaction highlights the role and value of venture capital as dedicated, experienced, and highly motivated venture partners, taking a long term perspective on both company and value creation and working closely with management to achieve that success.”