After establishing a strong presence in Canada and experiencing years of comfortable, capital-efficient growth, Toronto-based Micharity has raised its ambitions.
Micharity sells fundraising and customer relationship management (CRM) software to small-to-medium-sized non-profits in the health-care, education, faith, and arts and culture spaces. To date, the software startup has amassed a customer base of 4,200 organizations, most of them Canadian.
Verstra Ventures’ Matan Hazanov called the software landscape for non-profits “a historically underserved and underdeveloped market.”
Now, armed with $7 million CAD in Series A funding from INcapital Ventures, GreenSky Ventures, and Verstra Ventures, Micharity co-founder and CEO Rob Nour said Micharity is ready to accelerate its growth and tackle the United States (US) market.
“Generally speaking, over the past, we were growing anywhere between 25 to 30 percent year-over-year,” Nour told BetaKit in an exclusive interview. “We want to be able to reach a point where we can triple [or] quadruple [the business], and to do that we needed a capital infusion.”
Micharity’s all-equity Series A round, which closed earlier this month, included $1 million in secondary funding to the firm’s founders and came at a $27-million pre-money valuation. The startup plans to use this capital to support its US expansion and product development plans, which include integrating more automation and predictive analytics into its platform.
Nour founded Micharity in 2016 alongside a trio of software engineers: CTO Avo Muradyan, head of design Farhan Siddique, and head of engineering Sergiy Stupnytskyy.
The group set out to build an “all-in-one” solution after noticing a gap in the fragmented software landscape for non-profits, which Verstra Ventures managing director Matan Hazanov described in a statement as “a historically underserved and underdeveloped market.”
While more competition in the non-profit tech space has emerged since Micharity first launched, Nour claimed that COVID-19 has weeded out some other firms and led to consolidation across the sector. Among companies that remain, Nour believes that Micharity’s client-led approach, ease-of-use, and affordable price point differentiates the firm’s platform.
GreenSky partner Neil Peet said that GreenSky was impressed by the consistent growth that Micharity has achieved since its inception, with minimal external funding.
“We are excited to see what they are able to accomplish with sufficient capital to invest in their team on the sales and technology side,” Peet told BetaKit.
Prior to its Series A financing, Micharity bootstrapped before raising a total of only $960,000 in 2019 from the Ontario Centre of Innovation and Brown Capital.
According to Nour, Micharity has been profitable since its early days, and has always taken care to balance growth and efficiency due to the sector it serves.
“We were always growing at a certain point, but also conservative in terms of how we spend our money,” said Nour. “At the end of the day, we work with non-profits.”
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To date, this approach has served Micharity well as it has navigated the COVID-19 pandemic and now the tech correction and economic downturn, which have hit many non-profits hard.
“The [Micharity] team is incredibly strong and resilient, working together through some challenging situations, and without taking on any additional capital,” Peet said.
For his part, Peet believes Micharity is well-positioned to make good on its plans to grow south of the border and move into new markets. “When you have a robust product, with customers who love the platform, and a negative churn rate, you are well positioned to grow into new markets across Canada and the US,” he said.
In 2021, Micharity generated almost $4 million in revenue. Last calendar year, the startup surpassed $5 million. Nour is hopeful that the company’s US expansion will help it reach $8 million or $9 million in revenue in 2023.
Over the longer term, Nour sees room for Micharity to expand overseas. The CEO also identified potential for the startup to leverage the tech it has built and expand into new areas beyond non-profits, such as political fundraising.
Feature image courtesy Micharity.