AWARD SPOTLIGHT: CAI Capital Partners ‑ Winner of CVCA's 2022 PE Regional Impact Award for Central Canada for Javelin Technologies
Ted Lee and John Carlan came up with the idea for Javelin Technologies Inc. in 1997 while chatting over morning coffee at a local Tim Hortons. The discussions eventually inspired them to leave their corporate jobs and found the company in true entrepreneurial style – from their basements.
It was a time when the personal computer was evolving from handling mostly word processing and spreadsheets to broader engineering functions.
“It was the convergence of wanting to go on our own and the technology was coming of age,” Lee says.
The Oakville, Ont.-based business was created to provide engineering design software, including its flagship 3D CAD product called Solidworks. Javelin grew rapidly from there, winning start-up competitions and being recognized six times as one of Canada’s fastest-growing companies and as one of Canada’s top small and medium employers.
In 2017, the business caught the attention of Vancouver-based private equity firm CAI Capital Partners, just as Javelin was looking to move to its next level.
“We were at a nice stage of the business,” Lee says. “We had a vision for what we wanted to do going forward and CAI offered to provide the competence and the funding to help us make it happen.”
Ashton Herriott, principal at CAI, says the company was doing many great things but saw its potential to do a lot more.
CAI was intrigued by the company’s recent foray into 3D printing hardware as the technology was gaining mainstream popularity. The CAI team and Javelin’s founders discussed the potential of acquiring a 3D hardware company to scale that side of the business – and decided on a competitor they had always respected, Oshawa, Ont.-based Cimetrix Solutions.
In the spring of 2018, CAI announced a deal to facilitate the merger of Javelin and Cimetrix and invest in the combined company, which would become the leading design engineering and additive manufacturing solutions provider with 6,000 customers nationwide across a variety of industries.
It was also a chance for CAI to capitalize on the rapidly expanding digital manufacturing markets, which quickly grew to become more than a third of the business.
“Bringing these two businesses together was a big opportunity and helped the business grow,” Herriott says.
The combined company kept the name Javelin Technologies Inc. and would be headquartered in Oakville, with additional offices in Calgary, Dartmouth, Edmonton, Kitchener, Montreal, Oshawa and Winnipeg. Lee became CEO of the combined company while CAI helped develop a succession plan for Carlan and Cimetrix’s leaders James and Kirsten Janeteas, all three of whom were looking to step away from the business.
Herriott says CAI also helped Javelin consolidate the operations, develop a new compensation structure, reorganize the sales team and connect them with other businesses. The team also offered mentorship and support to the management team, as needed.
“Ted, John, and the rest of the Javelin team had built a well-run business; we were there to support their growth ambitions and act as a sounding board along the way,” he says.
Javelin also persevered during the pandemic, not just for its own business but to help Canada’s frontline workers stay safe. The company developed and produced ProtectON PPE (personal protective equipment) face shields using its 3D printing capabilities, and then created moulds and found a full production partner in Northern Ontario.
As the pandemic passed the one-year mark and the company continued to grow, CAI and Lee discussed selling the company – sooner than planned.
“I think CAI tends to hold on to its companies longer,” Lee says but notes an opportunity came from a company in the same business that shared the same vision, so this exciting opportunity made sense to all involved.
In May 2021, CAI sold its majority interest in Javelin to TriMech, a portfolio company of U.S. private equity firm The Halifax Group. Javelin operates as TriMech’s Canadian business.
CAI’s internal rate of return (IRR) was 70%, the highest of any in CAI’s history, while its gross multiple of invested capital (MOIC) was 4.7x over the three-year investment.
Since Javelin joined TriMech, the combined entity has acquired four more companies and has grown to about 400 employees from just over 100 since the CAI investment.
The deal won the CVCA’s 2022PE Regional Impact Award. At the time of the deal last year, two-thirds of Javelin’s sales came from Ontario-based companies and institutions that rely on the company to provide the products, training and consulting services. Javelin has also helped support significant innovation in Ontario’s manufacturing, health care, and education sectors.
Javelin has not only contributed to the community during the pandemic, but it has done a lot of local fundraising. For instance, it helped raise money for a neo-natal room at the Oakville hospital and has raised money for other health care facilities. In recent years, it has provided financial support and volunteers for organizations like The Hunger Project, CAMH, CareerVillage.org, and others. Most recently the company made donations to support Ukraine in its war against Russia.
“We all love to give back and are looking forward to doing more things in person as pandemic restrictions lift,” Lee says.