Clio and Trulioo say not now to IPOs as CEOs discuss unicorn M&A strategies

Clio CEO says IPO window is closed, and “probably gone” for 2022.

At a recent event for BetaKit Patreon supporters, Clio and Trulioo’s CEOs revealed that they aren’t planning to take their companies public anytime soon, and shared an in-depth look at how they raised private capital for mergers and acquisitions (M&A) and how they tackle that strategy.

2021 was a record year for Canadian tech initial public offerings (IPOs) and venture capital investment. Amid this environment, Burnaby-based legaltech startup Clio and Vancouver-based online identity verification firm Trulioo both achieved unicorn valuations. But Canadian tech companies that went public last year ultimately saw mixed to underwhelming results, and have since been hit by a broader tech stock selloff.

Clio’s product roadmap “tags every bit of functionality … as to whether it’s most suitable for build, or buy, or partner.”

“If you were building a company to IPO, and you were planning to IPO in November of 2021, and you got stuck, you’d be panicking right now,” said Clio co-founder and CEO Jack Newton. “You’d be panicking because the window went away and it’s probably gone for the rest of the year.”

Trulioo CEO Steve Munford said, at some point, Trulioo will go public. “But to me, this is not what I wake up and think about,” he added.

During the event, Munford and Newton also shared a closer look at how the two British Columbia-based companies approach M&A. According to Newton and Munford, Clio and Trulioo both bring a similar approach to acquisitions: they both raised significant amounts of capital, at least in part, to support their product-focused M&A strategies.

Collectively, Trulioo and Clio have made five acquisitions to date. Clio purchased Lexicata in 2018, and in the past year, Clio has acquired California-based automated court calendar firm CalendarRules and Lawyaw, which creates digital workflows for legal documents. Meanwhile, Trulioo recently bought Denmark-based no-code customer onboarding platform HelloFlow—its first acquisition since buying Global Data Company in 2014.

Clio also makes venture capital investments through Clio Ventures, which focuses on early-stage legaltech companies building on Clio’s platform. Earlier today, Clio announced its first investment through the fund, participating in Denver-based Proof’s Series A round.

RELATED: Clio acquires San Francisco’s Lawyaw as it ramps up M&A efforts

“When we raised money, we raised it based on our strategy to build out the platform,” said Munford. “Our strategy was very specific, that we would do it organically, or we do it with thoughtful acquisitions, and the money in the bank was our ability to execute on that.”

According to Munford, Trulioo took a product strategy-based approach to its acquisition of HelloFlow. “We’re not buying customers, we’re not buying revenue, and we’re certainly not buying profitability,” he said. “We’re buying a product that we felt was critical, rather than building it ourselves—which may take a year or two—this gets us there very quickly.”

Newton said Clio’s M&A approach is closely tied to the company’s product roadmap. “Our product strategy and our M&A strategy … they do go, really, hand in hand,” he said.

RELATED: Trulioo acquires HelloFlow, adding customer onboarding to platform

Clio’s product roadmap “tags every bit of functionality … as to whether it’s most suitable for build, or buy, or partner.”

“There’s some stuff that you just need to build,” said Newton. “It’s so foundational that driving through M&A is not really feasible. There’s some stuff that partnering might be the right approach, because it’s not valuable enough to either build or acquire for.”

Those who wish to watch the full conversation, which also touches on the pre-IPO checklist Munford shared with his board, why so many SaaS companies are expanding into FinTech, and the growth of BC’s tech ecosystem, can do so by becoming a BetaKit Patreon supporter.

Josh Scott

Josh Scott

Josh Scott is a BetaKit staff writer who loves to tell Canadian business and tech stories. His coverage is more complete than his moustache.

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