In the fast and furious world of technology, it’s easy for founders to assume that the amount of venture financing they raise correlates to their company’s long-term value.
It’s true that external funding can be a great way to fast-track growth (and keep the lights on). But with seemingly more capital available than ever before, many founders are pressured to raise and burn though more – choosing a desperate struggle for survival over capital efficiency, profitability, and unit economics.
Copperleaf Technologies, which completed an incredible $1B+ IPO, raising $161-million on the TSX last fall, is proof that you don’t need to drink the ‘growth at all costs’ Kool-Aid to build a unicorn. In the last 12+ years, the company, which offers a decision analytics solution to critical infrastructure firms, resisted the raise-and-burn hamster wheel in favour of sustainable, steady growth – all while remaining well-capitalized.
Of course, there are exceptions to needing to raise money, particularly for capital-intensive hardware businesses, but even then, it’s critical to determine whether the market opportunity is large enough to justify a fundraise. I believe Copperleaf provides a great case study into how founders can build a unicorn based on good, old-fashioned fundamentals. Getting there can seem insurmountable, but when you establish a few essential ingredients, a billion-dollar outcome is possible.
I met Judi Hess in 2009 during my time with GrowthWorks, the investment team then overseeing the Working Opportunity Fund (subsequently managed by PenderFund Capital Management). Judi had only recently been named the new CEO of Copperleaf, and the company was seeking investors for its Series B financing round.
Although my conviction in Copperleaf was strong early on, many thought I was crazy to throw my weight behind this company. At the time, Copperleaf had an incomplete product, dwindling cash, a recent leadership refresh and was trying to court investors on the heels of a global recession. But perhaps most intimidating was the market Copperleaf was taking on: utilities – traditionally one of the most risk-averse and slowest sectors when it comes to adopting new technology.
“It wasn’t exactly a sexy market to sell into,” Judi quipped during a recent conversation we had.
Though the market seemed tough, Copperleaf’s saving grace was that its then-only customer, Duke Energy, was willing to pay for the company’s solution before it was even finished. That was early evidence that Copperleaf had found a compelling opportunity and a solution the market was itching for.
“When you’re going to spend all this time building and delivering a product, you must be sure the problem is large enough to warrant all that effort and angst,” Judi told me. And she’s right – Copperleaf’s early validation from Duke Energy was a sign that the team was onto something big, and that created a viral effect on the company’s future sales, customer loyalty, and industry impact.
Companies nowadays love to say they are “customer-obsessed.” In reality, the vast majority of tech companies today are building for their investors, not their clients. The short-term, quarter-by-quarter mentality of public markets has seeped into the private sector, and I think we as investors are partly to blame for this phenomenon.
For Copperleaf, the customer was truly at the centre of everything they did. They weren’t simply handing off their decision analytics solution; they took a consultative, service-oriented approach to product delivery. From the moment the product was ready, the team was deeply focused on providing extraordinary experiences, always with an ear to their customers’ evolving needs.
Even had Copperleaf gone the way of most tech firms and landed a nine-figure funding round, customers wouldn’t have bought their product any faster. Copperleaf played the long game, patiently building its beachhead while consistently delighting their users. This approach made profitability and growth natural outcomes, and to this day, Copperleaf has never lost a customer.
“It’s not a flash in the pan,” Judi added. “If you have a real value proposition and work well with your clients, you can start to see very steady growth.”
The most important part of this equation was Judi herself. In 2009, I spent some time with her as we conducted diligence for the Series B. Those six months taught me she had not only the expertise to bring Copperleaf’s product to fruition but that she could also manage the business’s financial, legal and communication challenges with respect, professionalism and good judgment.
Being in a traditionally male-dominated role myself, I know how tall the ladder to success is for underrepresented entrepreneurs. I feel confident investing in women like Judi who have advanced into leadership, because more often than not, they had to work at least twice as hard as their male counterparts to get there.
Even in the early days of Copperleaf, Judi had a storied reputation from her days at Creo and the necessary track record of enhancing and scaling products. That, paired with her ‘get it done’ attitude, told me she was the one that could lead Copperleaf into a soaring future.
The story for Copperleaf is far from over. Following its incredible IPO, the team is now focused on cementing its place in the global market. The strategy has evolved, but the company’s essential elements have remained the same: a strong management team with a compelling market opportunity and an unwavering focus on its customers. Looking back over the last 12+ years, I believe putting these building blocks in place ultimately led to one of the most successful technology transactions in Canada in 2021 and to the exciting next chapter for Copperleaf.
Outcomes like Copperleaf’s take discipline, strategy, and a whole lot of patience, but when companies can nail down the essential ingredients early, truly great things can happen.