Toronto-based data company NowVertical has named Sandeep Mendiratta its new CEO.
Mendiratta replaces Sasha Grujicic, who joined NowVertical as COO in early 2022. He was named president of the company in January 2023, and in May 2023, was named CEO. According to the company, Grujicic officially stepped down from NowVertical’s board of directors on January 12, 2024.
Mendiratta joined NowVertical in January 2023 as the former CEO of Acrotrend, which NowVertical acquired that same month, coinciding with NowVertical’s $7-million CAD credit facility from TD Bank.
Chair Elaine Kunda said the board “had to make difficult but necessary decisions to preserve shareholder value.”
Founded in 2018, NowVertical develops and offers “vertical intelligence” solutions, which involves integrating human expertise with big data analytics. NowVertical serves over 175 customers, including Nike, Disney, and Nestlé. The company began trading on the TSX Venture Exchange in 2021.
In the last three years, NowVertical has focused on growth through acquisition. The company has made over 10 acquisitions since its inception, including Halifax marketing software startup Affinio for $9 million CAD and Argentinian data science company CoreBI for $8 million USD.
But according to a statement released Monday, NowVertical’s board of directors determined that the company “had not maximized the expected benefit” from these acquisitions, nor was it “effectively positioning those business units or their respective leadership teams for success.”
“The board also determined that the current course of growth, and the company’s spending across the enterprise, was unsustainable without substantial dilution to shareholders on potentially punitive terms amid poor market conditions,” the statement reads.
RELATED: Top Hat CEO Joe Rohrlich and CRO Matt Schurk depart EdTech company
In the statement, NowVertical board chair Elaine Kunda, also managing partner at early-stage venture firm Disruption Ventures, said the board “had to make difficult but necessary decisions to preserve shareholder value and put the company back on track for growth.”
As part of this leadership shake-up, several former leaders from NowVertical’s acquired companies are being promoted. Santiago Trógolo, former CEO of CoreBI, will be promoted to EVP of Latin America. Mostafa Hashem, former CEO of Smartlytics, acquired by NowVertical in 2023, will be promoted to EVP of product and technology.
Kunda said these promotions position NowVertical “to scale a business originally and solely focused on growth by acquisition.”
According to NowVertical’s statement, the board has been focused on improving the company’s financial performance in recent quarters. The company said these efforts included minimizing redundancy, fostering synergies across individual business units, and reducing corporate expenses.
The company said these efforts resulted in a reduction of operating cash burn from $3.6 million USD in Q1 2023 to just $300,000 USD in Q3 2023. The company’s stock is down 56 percent from its price a year ago, trading at $0.36 CAD at press time.
On January 18, two days after this story was published, Daren Trousdell, who claims to be the founder and largest shareholder of NowVertical, published a statement calling on the company’s board to be replaced, and for Kunda, Andre Garber, Darrell MacMullin, David Charron, and Chris Ford to resign from the board.
Trousdell claimed, among other things, that the company “failed to announce that a significant number of shareholders voted against the re-election of NowVertical’s incumbent board.”
“The resignation and replacement of the company’s former CEO and recent appointments of David Charron and Chris Ford to the board, without stakeholder consultation, fail to address the need for fundamental change,” Trousdell’s statement reads.
Trousdell also claimed the board had presided over “an incredible erosion in shareholder value” since Trousdell resigned as an officer and director of the company in May 2023, and has abandoned growth in favour of “short-term cost cutting.” He alleged that Grujicic’s resignation shortly followed the resignation of NowVertical’s CFO as well as its auditor.
That same day, NowVertical responded to Trousdell’s statement, claiming that at the time of his resignation, he signed a separation agreement preventing him from engaging in attempts “to influence the management, board or policies of the company,” among other stipulations.
“Unfortunately, Mr. Trousdell has taken the position that he is not bound by his commitments,” the company’s statement reads. “As a result, the company has regrettably been forced to bring legal proceedings to put an end to these distractions.”
UPDATE (01/19/24): This story has been updated to include details of the dispute between NowVertical shareholder Daren Trousdell and NowVertical’s board.
Feature image source Acrotrend via YouTube.