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Q&A: How investors can help in the journey to a billion-dollar business

Carlo Desierto, President, PenderFund Capital Management Ltd


Earlier this month, Copperleaf Technologies made a showstopping debut on the Toronto Stock Exchange (CPLF.TO), becoming BC’s latest billion-dollar tech darling.


The company was founded in 2000 as a consultancy for energy utility providers. Following a change at the helm in 2009 and a large-scale transition to a software business, Copperleaf quickly became the decision analytics solution of choice for some of the world’s largest and most respected utility firms.


Pender’s history with Copperleaf started early in the company’s journey, with Maria Pacella, now managing partner of the Pender Ventures team, participating in an initial investment in 2010 (the last one required to fund growth). Since 2012, Rolf Dekleer has supported the company as a board member and played an important role in putting together Copperleaf’s blockbuster exit.


Maria and Rolf have worked shoulder-to-shoulder with Copperleaf through the company’s biggest wins and most trying challenges. I recently sat down with them to learn about the many hats investors need to wear when working with a rapidly scaling company. We talked about their respective journeys with Copperleaf, the role of an investor (beyond the chequebook), and some of their key learnings in supporting this company to a $1B+ outcome.


Q: Tell me about how you first started working with Copperleaf.


Maria: I first got to know Copperleaf in 2009, during a rather tumultuous chapter in the company’s history. Copperleaf had just transitioned to a new CEO and was converting from a consulting business to a product company. At that time, the company was trying to sell an early version of their product to the utility industry, traditionally one of the slowest adopters of new technology.


Facing all those challenges against a backdrop of an economic recession, it probably goes without saying that there was a lot of work to be done.


Q: What was your top priority in getting the company through those early growing pains?


Maria: Justifying the value proposition is key in the early stages, but it’s often a very arduous task for tech companies and their investors. But when early adopters can validate the market need for a product, growth tends to follow quickly.


Copperleaf managed to do just that by securing Duke Energy as a customer with an early version of their product. Securing a marquee customer like Duke that early in the lifecycle of Copperleaf’s product demonstrated the magnitude of the problem that utility companies were facing and validated Copperleaf’s approach to solving that problem.


Investors need to help build that foundation, and doing so requires a strong belief in the company’s vision from the outset. If early adopters, like Duke, validate that a company can successfully address their needs, those clients create a viral effect on a company’s future sales, customer satisfaction, and industry impact.


Q: Maria, you mentioned that all of this was happening at a time of serious market volatility when I’m sure most investors were very risk averse. How were you able to bring other parties to the table?


Maria: Copperleaf had big ambitions that I believed they could accomplish, but many thought I was crazy to place my bets on this company.


This is when conviction is critical. You need to be earnest about not only the market opportunity but also the team and technology if you want to truly convert non-believers and close the deal.


Judi Hess was the superstar in this process. She had joined Copperleaf after serving as president of Creo Inc. and vice-president of Eastman Kodak. There were many hurdles to overcome, but I trusted she had the chops to scale this business. Within a few months, Export Development Canada and a group of significant angel investors came on board, and we closed the Series B financing in 2010.


Q: Rolf, you began working with Copperleaf in 2012. What were some of the company’s priorities when you joined?


Rolf: By that time, Judi had brought in some key talent, including many great minds from Creo, to finish building out the product and land more customers. The next big challenge for Copperleaf was attracting even more high-calibre employees to continue Copperleaf’s momentum.


Around 2014, Copperleaf couldn’t match the salary offers from BC’s larger companies and was at risk of losing staff. As part of the compensation committee, after reviewing the salaries and ownership positions of employees below the VP level, I believed that significantly increasing their stock options would help not only retain employees but also attract new talent.


Q: As a board member, what did this teach you about the role of culture at a rapidly scaling company?


Rolf: It’s easy to think that numbers are what drive an investor, but a company’s growth comes from more than just earnings figures. Culture is at the core of every company’s existence, and investors can play a role in instilling that culture at a board level with appealing employee incentives.


Q: It looks like as the years went on, Copperleaf continued to attract more attention. What does that look like from the vantage point of a board member/investor?


Rolf: By the late 2010s, Copperleaf was one of the top 500 fastest-growing companies in North America. The company’s revenue growth was significant, and its customer retention was 100% (and still is to this day). It was clear that the company had caught the eyes of potential buyers.


Working with Copperleaf’s management team and the rest of the board, I helped to evaluate the strategic opportunities beginning to pour in. One of these opportunities was a financing round from one of Copperleaf’s customers, National Grid, one of the world’s largest investor-owned energy companies.


That round, which closed in 2019, was not borne out of a need for cash. However, National Grid’s reputation in the utility space certainly raised Copperleaf’s profile in the industry, in addition to providing some liquidity to the company’s early employees.


Q: I’m sure there were a number of attractive offers coming in at that time. Can you speak to the sort of mindset investors need to have when a company reaches that stage?


Rolf: As a board member, I saw that Copperleaf’s team had many avenues to exit in front of them (including M&A). By that stage, an IPO was our objective, so it was important to maintain a frank and open dialogue about these new opportunities while keeping in mind the interests of all stakeholders, including employees. Ultimately, holding out for Copperleaf’s IPO achieved that objective by an order of magnitude. Being an investor often means playing the long game. It might be hard to resist a chance for liquidity, but remaining patient as companies inch closer to the finish line will ultimately translate to better results down the line.


Q: Looking back on this experience, it seems to me like investors have a lot of different roles to fill. You’re helping lay the foundation, championing the deals, and carving out big strategies as the company gains traction. Looking over your journey with this company, what’s the key takeaway?


Rolf: Copperleaf’s journey encapsulates the “storybook investment” from a VC perspective. Many investors wait decades or more for this kind of outcome, which makes the company’s exit all the more fulfilling.


Maria: It also goes to show that getting to unicorn status doesn’t necessarily take hundreds of millions of dollars. You can build truly great businesses based on old-fashioned fundamentals when a great product is combined with a strong management team and a compelling market opportunity.


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