Toronto-based EdTech startup LumiQ sees room to grow south of the border.
After establishing a strong presence in Canada and securing $5 million CAD in funding led by Firmex founder and former CEO Joel Lessem, LumiQ aims to build its chartered professional accountant (CPA)-focused podcast platform in the United States (US).
LumiQ co-founder Adam Bercovici believes the startup has “cracked the code” in terms of subscription podcasting.
While LumiQ was growing before the pandemic, COVID-19 gave the company’s business a big boost by eliminating in-person learning—which LumiQ co-founder and CRO Adam Bercovici said accounts for a “decent chunk” of how CPAs get their professional education credits.
“People were forced to look at digital options and we experienced a tremendous amount of growth through that COVID period, and I think we’re still riding that tail right now,” Bercovici told BetaKit in an interview, noting that the startup continues to see 100 percent year-over-year growth.
Founded in 2016, LumiQ (formerly Luminari) aims to “make professional education enjoyable.” The company’s podcasts—housed on its native mobile podcast app—enable CPAs to complete their annual training and professional development requirements more easily than via traditional means.
Three and a half years ago, the company pivoted from career management for CPAs into education, after discovering “a massive pain point” for CPAs—obtaining their professional education credits.
Bercovici and LumiQ co-founder and CEO Michael Kravshik, who were already big podcast fans, saw an opportunity to help CPAs get these credits through podcasts, which Bercovici described as “a wonderful way to be able to do something while doing something else.” According to the CRO, LumiQ’s “secret sauce” is this medium.
LumiQ produces its podcasts in-house, putting out about 20 new episodes per month on topics ranging from accounting updates to soft skills, case studies, and more scripted content, with business leaders like Research in Motion (now BlackBerry) co-founder Jim Balsillie, Wind Mobile (now Freedom Mobile) founder Anthony Lacavera, and Wealthsimple co-founder and CEO Michael Katchen. To date, the startup has amassed a list of over 300 company clients that include Deloitte, Purolator, First Capital Realty, and The Beer Store.
In addition to Lessem, who previously invested in LumiQ, the round saw participation from former Intelex CEO Mark Jaine, Resolver president Will Anderson, ex-Carta Worldwide CEO and Verafin chairman Paul Hill, and other undisclosed investors, including a female managing partner of a Canadian private equity firm. This group was supported by existing LumiQ investors like Amazon Alexa inventor William Tunstall-Pedoe.
The all-equity round closed earlier this month and consisted of an undisclosed combination of primary and secondary capital, the latter of which went to LumiQ employees and previous investors. Kravshik declined to share the exact breakdown. In terms of how LumiQ classifies this round, the CEO said the stage of the startup’s business “is probably equivalent to [a Series] A, or maybe even a little bit beyond that.”
Part of what’s notable about LumiQ’s journey is that the startup has now raised $7.4 million in total funding while eschewing the institutional VC route.
“VC oftentimes has this philosophy or approach of growth-at-all-costs,” said Kravshik. “Top line is the only thing that matters. You get on kind of the treadmill of spending more than you’re making, and it’s very hard to get off of that treadmill.”
Kravshik noted that while this strategy isn’t necessarily wrong or bad, it “isn’t really aligned with how we want to run our business.”
According to Kravshik, a CPA by background, LumiQ has always focused on profitability, and the startup has been cashflow positive over the past couple of years. The company has been able to do this in part because its business is less capital-intensive than other ventures.
The CEO added that he and Bercovici have always wanted to build a sustainable long-term company that is less susceptible to market volatility. Kravshik noted that this approach led LumiQ to seek out angel investors with experience as operators rather than VC firms.
Given that LumiQ focuses on a “naturally less volatile” industry in accountants—who provide services that are necessary regardless of broader economic conditions—Kravshik believes the company is well-positioned to weather a recession.
As Lessem told BetaKit, the startup wasn’t in a position where it needed to raise capital given this, but opted to in order to grow its presence south of the border. In doing so, LumiQ chose individual angels who had followed a similar path—like Lessem with Firmex—over traditional VC firms.
Amid the current market downturn, as investor focus on growth-at-all-costs has given way to targeting cash-efficiency and profitability, LumiQ stands out.
“A lot of the past five, six years, we were kind of the ugly ducklings, because nobody wanted to care about profitability,” said Kravshik. “In the past couple of months, I think a lot of that tune is changing.”
In the SaaS space, the term ‘Rule of 40’ describes a business with a revenue growth rate plus operating margin that equals 40 percent or more. Lessem described LumiQ as a ‘Rule of 100’ company, claiming that the company has “great margins” and is situated to “perform extremely well financially without significant capital.”
Firmex founder Joel Lessem described LumiQ as a ‘Rule of 100’ company.
LumiQ’s growth strategy involves expanding in the US. The company already has customers across the country, but it aims to grow more “upstream” by targeting larger accounting firms and private businesses.
Today, most podcasts generate revenue from advertising. Bercovici noted that there are a lot of companies exploring business models beyond just advertising, including subscriptions.
Bercovici believes that LumiQ has “cracked the code” in terms of subscription podcasting. LumiQ derives 85 percent of its revenue from selling B2B. The CRO attributes LumiQ’s success on this front to a combination of its compliance-based approach, engaging content, and learning objectives and outcomes.
“We feel like we’re onto something that nobody else is really onto,” said Bercovici. “Because we’re for accountants and we’re up in Canada, we’re kind of flying under the radar, but we do truly believe that we are on the forefront of the podcast industry monetizing in a new and different way other than advertising.”
Feature image courtesy LumiQ.