CDPQ Invests Another $100 Million Into AppDirect To Enhance Capital Program
Canadian-founded, San Francisco-based AppDirect has secured $136 million CAD ($100 million USD) from existing investor Caisse de dépôt et placement du Québec (CDPQ) to expand its AppDirect Capital program.
Through AppDirect Capital, AppDirect provides non-dilutive funding to technology advisors using its platform that are looking to grow. The business-to-business commerce software company plans to use this CDPQ investment to offer them more “innovative financing options.”
CDPQ has been a supporter of AppDirect for years, leading the company’s nearly $250-million CAD financing in late 2020.
AppDirect chair, co-founder, and CEO Nicolas Desmarais told BetaKit that this CDPQ funding comes in the form of “a debt fund to support AppDirect Capital,” confirming that it is all going directly towards the initiative. This investment builds on the initial $100 million AppDirect received from the Québec pension giant to launch AppDirect Capital in late 2021.
In a statement, Desmarais noted that CDPQ and AppDirect “have an established track record of working together.” Per the CEO, “this new investment further solidifies both companies’ commitment to the growth and transformation of AppDirect channel partners and technology advisors.”
Founded in 2009, AppDirect provides software designed to simplify the way companies buy, sell, and manage recurring tech services. The company claims that today, more than 1,000 providers, 10,000 advisors, and five million subscribers use AppDirect, including ADP, Coupa, Intuit, and Vodafone.
The San Francisco-headquartered software firm has deep Canadian roots: Desmarais (of the billionaire Desmarais family behind Power Corporation, a major shareholder in a variety of prominent Canadian tech startups) and fellow AppDirect co-founder Daniel Saks both hail from Canada, and the firm has a strong presence here, with offices in Montréal and Calgary.
“AppDirect has long recognized the Québec province’s talent and potential,” said Desmarais. “AppDirect continues to demonstrate this commitment with our official Canadian headquarters located in Montréal and our largest team within North America also located within Québec.”
Via AppDirect Capital, the company provides recurring revenue channel partners with flexible capital to scale, innovate, hire, or make outside investments while retaining full ownership of their businesses. AppDirect did not disclose how many tech advisors have leveraged the program to date since its launch in 2021.
CDPQ has been a supporter of AppDirect for years, leading the company’s nearly $250-million CAD ($185 million USD) financing in late 2020, which reportedly came at a post-money valuation of more than $2 billion, before investing in AppDirect Capital in 2021.
“Since our initial financing in 2021, AppDirect has demonstrated their ability to accelerate the connectivity and competitiveness of today’s businesses,” CDPQ executive vice president and head of fixed income Marc Cormier said in a statement. “As part of our partnership, this repeat investment continues to facilitate the delivery of critical solutions for the digital economy, while generating stable returns for our clients.”
Over the past year, AppDirect acquired Telecom Brokerage Inc., purchased assets from ADCom Solutions, and announced the development of an artificial intelligence marketplace.
Speaking about how today’s challenging tech and broader market conditions have impacted AppDirect, Desmarais argued that “businesses that invest in the right technology and automation and build on scale are the organizations that will thrive and outlast any economic downturn.”
In this context, Desmarais called many of the services sold through the firm’s technology catalogue “table stakes,” noting that lots provide advisors with solutions for end customers that are more cost effective or efficient—a particularly compelling selling point in the current environment.
Maria Deutscher of Silicon Angle also reports technology procurement startup AppDirect raises $100M in fresh funding:
AppDirect Inc., a startup helping organizations procure technology services more efficiently, today announced that it has secured $100 million in fresh funding.
Canadian asset manager CDPQ provided the capital. It previously invested $80 million in AppDirect as part of a 2020 funding round. Since launching in 2009, the procurement software provider has raised more than $500 million from CDPQ and other institutional backers.
San Francisco-based AppDirect operates a marketplace that enables organizations to centrally purchase technology services from different suppliers. The platform provides access to cloud applications, internet subscriptions and a range of other offerings. AppDirect says its supplier network includes more than 600 companies including major industry players such as Google LLC and IBM Corp.
Alongside its core procurement features, the platform provides a user management tool. Companies can use it to create accounts for employees in the cloud applications they purchase through AppDirect. Moreover, the tool promises to automate related tasks such as processing employees’ login requests.
The second core offering is a platform that allows companies to create their own technology procurement portals. According to the software maker, the offering is geared primarily toward IT advisory firms. Such companies can create web portals that allow their customers to purchase technology products on a self-service basis.
The marketplace creation platform comes with a prepackaged interface template. For companies with more advanced requirements, the offering includes a set of built-in application programming interfaces. Those APIs can be used to customize a marketplace’s interface design, product catalog and other key details.
The $100 million investment will be used to enhance Capital Invest, a second service the company provides for IT advisory firms. The service enables companies to raise debt financing for business growth initiatives without selling shares.
AppDirect positions Capital Invest as a more convenient alternative to traditional liquidity sources. According to the company, eligible IT advisory firms receive an “immediate upfront payment” after closing a debt financing round through the service. The deal terms are set based on a firm’s recurring revenue and business data from the past three years.
“To keep up with today’s ever-changing market, technology merchants need fast access to capital to accelerate their growth,” said Chief Revenue Officer Emanuel Bertolin. “With AppDirect Capital, technology advisors can take advantage of innovative capital options to expand their business or invest in the future, which makes increasing access to this program all the more essential.”
Capital Invest is not the only component of AppDirect’s revenue growth strategy. Last month, the company previewed AI Marketplace, an upcoming tool that will enable customers to create artificial intelligence bots based on popular large language models. AppDirect says that those bots will lend themselves to tasks such as helping an IT advisory firm find upselling opportunities.
Earlier today, CDPQ issued a press release stating AppDirect secures additional USD 100 million investment from CDPQ for AppDirect capital program:
AppDirect, the leading B2B subscription commerce platform in North America, today announced it has secured USD 100 million (approximately CAD 136 million) in funding from global investment group CDPQ. This new investment will support innovative financing options for technology advisors through the AppDirect Capital Invest program, allowing them to access flexible capital to transform and scale their business. Building upon the initial USD 80 million financing from CDPQ in 2021, this new investment increases the total program funding to USD 180 million.
In today’s dynamic channel market, every technology advisor faces the decision to stay the course, seek capital to invest back into their business or consider whether the time is right to be acquired or acquire. The AppDirect Capital Invest program supports these endeavors by combining upfront, non-restrictive capital with the power of the AppDirect Marketplace, allowing technology advisors to use the capital to scale, innovate, retain top talent, or make outside investments while maintaining 100% ownership of their business. This new funding from CDPQ enables AppDirect to work with technology advisors on flexible capital solutions to meet their unique business needs.
“AppDirect is committed to providing our technology advisors with an unfair advantage. Our Invest program is purpose-built to empower our technology advisors,” said Emanuel Bertolin, Chief Revenue Officer at AppDirect. “To keep up with today's ever-changing market, technology merchants need fast access to capital to accelerate their growth. With AppDirect Capital, technology advisors can take advantage of innovative capital options to expand their business or invest in the future, which makes increasing access to this program all the more essential.”
"Since our initial financing in 2021, AppDirect has demonstrated their ability to accelerate the connectivity and competitiveness of today’s businesses,” said Marc Cormier, Executive Vice-President and Head of Fixed Income at CDPQ. “As part of our partnership, this repeat investment continues to facilitate the delivery of critical solutions for the digital economy, while generating stable returns for our clients.”
“AppDirect is dedicated to fueling innovation and growth for our advisor community,” said Nicolas Desmarais, Chairman and CEO at AppDirect. “CDPQ and AppDirect have an established track record of working together, and this new investment further solidifies both companies’ commitment to the growth and transformation of AppDirect channel partners and technology advisors.”
With this investment, AppDirect expects to continue bringing value to its technology advisors, like NXTSYS. “For the last five years, we've grown consistently between 22% to 30% year over year. Since we partnered with AppDirect Capital Invest, we jumped 50% in a single year in profit. Think about that: not 50% in revenue, but 50% in profit. Those kinds of numbers are phenomenal,” said David Wallace, Co-founder and President of NXTSYS. “With AppDirect as a partner, we knew we’d have the ability to drive growth. And once we learned that we'd maintain complete control of our business, it was a clear path forward for us.”
To learn more, please visit www.appdirect.com.
(1) Loans are made or arranged pursuant to a California Financing Law License.
ABOUT APPDIRECT
AppDirect is a B2B subscription commerce platform company that brings together technology providers, advisors and businesses to simplify how they buy, sell and manage technology. More than 1,000 providers, 10,000 advisors and 5 million subscribers rely on the AppDirect ecosystem of subscription marketplaces to power their innovation, growth and success. For more information, visit appdirect.com or follow us on LinkedIn.
ABOUT CDPQ
At CDPQ, we invest constructively to generate sustainable returns over the long term. As a global investment group managing funds for public pension and insurance plans, we work alongside our partners to build enterprises that drive performance and progress. We are active in the major financial markets, private equity, infrastructure, real estate and private debt. As at June 30, 2023, CDPQ’s net assets totalled CAD 424 billion. For more information, visit cdpq.com, consult our LinkedIn or Instagram pages, or follow us on X.
Alright, let me get to it as it was a busy day trading for me.
Admittedly, this part was Chinese to me:
Alongside its core procurement features, the platform provides a user management tool. Companies can use it to create accounts for employees in the cloud applications they purchase through AppDirect. Moreover, the tool promises to automate related tasks such as processing employees’ login requests.
The second core offering is a platform that allows companies to create their own technology procurement portals. According to the software maker, the offering is geared primarily toward IT advisory firms. Such companies can create web portals that allow their customers to purchase technology products on a self-service basis.
I asked a friend of mine who is a technology expert and he replied:
Think of a company trying to be like Amazon but selling software instead of books.But don’t think of them as having the same business potential as Amazon. Software procurement isn’t that difficult. The main benefit to customers is one stop shop. This is B2B.Also this $100m injection sounds like a ‘down’ round, ie valuation dropped or hasn’t risen that much.
Ok, got that part and as for the $100 million investment, as CDPQ's press release states:
This new investment will support innovative financing options for technology advisors through the AppDirect Capital Invest program, allowing them to access flexible capital to transform and scale their business. Building upon the initial USD 80 million financing from CDPQ in 2021, this new investment increases the total program funding to USD 180 million.
The AppDirect Capital Invest program allows technology advisors to scale and transform their business without diluting their stake in the company.
It basically acts like a private debt platform for technology companies lending them money to hire and scale their business.
And AppDirect is a reputable company which Forrester named a leader in the marketplace development platforms category.
They're growing nicely and with a partner like CDPQ, they will continue growing nicely.
Their business motto is all about simplifying how businesses buy, sell, and manage technology.
What I also find interesting is what AppDirect CEO Nicholas Desmarais stated in the articles:
Speaking about how today’s challenging tech and broader market conditions have impacted AppDirect, Desmarais argued that “businesses that invest in the right technology and automation and build on scale are the organizations that will thrive and outlast any economic downturn.”
In this context, Desmarais called many of the services sold through the firm’s technology catalogue “table stakes,” noting that lots provide advisors with solutions for end customers that are more cost effective or efficient—a particularly compelling selling point in the current environment.
Anyway, I invite you to read more about AppDirect here.
Below, learn more about how AppDirect is making it easier than ever to sell and manage technology.
And listen to this insightful exchange on the floor of the NYSE where AppDirect CEO Nicolas Desmarais shares his insights on where the firm is today, and his continued vision for helping businesses thrive in the digital economy.
Smart guy, he knows his stuff and is very passionate about AppDirect's business and future.
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