Montréal-based software scaleup Novisto has closed $27 million USD ($37.7 million CAD) in Series C funding from existing backers to scale across Europe and expand its environmental, social, and governance (ESG) reporting platform.
“We have an opportunity to build a global business that is a leader in [this] space,” Novisto co-founder and CEO Charles Assaf told BetaKit in an interview.
“Large companies know that sustainability is a key lever for business value creation.”
Novisto sells software that helps large enterprises collect, audit, and report ESG data. The company’s clients include Bell, Bombardier, The Emirates Group (the Dubai-based, state-owned operator of the Emirates airline), EQ Bank, Intact, Meta, Moderna, Sanofi, and engineering giant WSP, among others.
After seeing significant growth over the past two years, Novisto plans to use this funding to grow its existing presence in Europe, where Assaf anticipates big opportunities as new ESG reporting regulations come online. “They need systems like ours,” he said.
Novisto plans to build a team in Europe that is equal in size to its North American counterpart. The 120-person company is also working to integrate generative artificial intelligence and improve its platform’s analytics, and ultimately hopes to achieve profitability with this capital.
The all-equity round, which closed in March, was led by Montréal’s Inovia Capital, with participation from all other existing investors as well, including UK-based White Star Capital, France’s Scor Ventures, and Montréal-based, Sagard-affiliated Diagram and Portage Ventures. The financing included $25 million USD in primary and $2 million in secondary capital.
Assaf declined to share what valuation the round gave Novisto but claimed it was a “strong” up round. It brings Novisto’s total funding to $55 million USD.
ESG is a framework used to measure an organization’s business practices and performance from a social and sustainability perspective. ESG-focused investors consider a company’s climate-change initiatives, diversity, equity and inclusion (DEI), and corporate transparency.
Founded in 2019 by Assaf, chief information officer Marian Borca, and product evangelist Edouard Clement, Novisto helps big businesses track and evaluate their ESG performance.
This financing comes two years after Novisto’s $20-million USD Series B. In this time, the company claims to have nearly tripled its revenue. Assaf declined to share its exact sales, but confirmed that Novisto is currently generating “well past” $10 million USD in annual recurring revenue.
“Novisto is trusted by leading global enterprises, a testament to the strength of its best-in-class product,” Inovia principal Mia Morisset said in a statement. “Since its Series B, we’ve had the opportunity to witness firsthand how Charles and his team have built a uniquely positioned solution for success.”
Shareholders have been pressuring businesses to become more transparent and improve their ESG practices and policies for some time now. But backlash towards ESG policies has also grown under US President Donald Trump, and this has affected Canadian firms, particularly those with US operations.
Despite this shift in attitude, Assaf claimed that thus far, Novisto has not seen “a massive impact” on demand for its platform, noting that the company’s pipeline has continued to grow. But he said it’s also “too early to tell,” and admitted he could foresee a potential drop in US appetite.
RELATED: Novisto closes $27-million CAD Series B to help companies improve their ESG reporting
A recent survey of Canadian institutional investors indicates that they are still committed to ESG, but have become less comfortable speaking publicly about it lately amid these conditions. For his part, Assaf said Novisto’s clients and other big companies remain interested in ESG but have become “more contained” in how they discuss their ESG initiatives and plans.
“Large companies know that sustainability is a key lever for business value creation, and they have not changed their longer-term plans when it comes to integrating sustainability in their business model,” Assaf said. “What they are doing is being less vocal about it because of the unfolding backlash.”
Assaf highlighted that a lot of the negative sentiment surrounding ESG has been targeted towards the DEI portion of ESG, and expressed confidence that sustainability will remain a priority for large corporations going forward.
“I don’t think that in the big scheme of things—considering the type of companies we work with, which are large corporates, and the fact that they are primarily looking at this holistically and globally—that the backlash is necessarily super disruptive,” Assaf said.
Feature image courtesy Novisto.