AWARD SPOTLIGHT: Evok Innovations & BDC Capital Winners of 2021 VC Deal of the Year for DarkVision

June 4, 2021 | By: CVCA

When DarkVision Technologies Inc. was started in 2013, its goal was to use the founders’ imaging expertise from the consumer packaging industry and pivot it to the energy sector, particularly oil and gas wells.

“There’s a huge information gap in oil and gas wells,” says Graham Manders, DarkVision’s chief technology officer, who co-founded the company with chief executive officer Stephen Robinson and chief financial officer Osman Malik.

But instead of using more traditional camera technology, the founders capitalized on advancements in ultrasonic imaging to build their industrial acoustic imaging company. Their proprietary and patented ultrasound-based imaging technology gives oil and gas well operators a high-resolution, sub-millimetre 3D scan of the well. The images are used to detect and resolve potential issues that can reduce operating costs, increase production, improve well integrity, and minimize environmental impacts.

DarkVision’s high-resolution ultrasound imaging system can image through opaque fluids, making it one of the most sophisticated industrial imaging platforms available in the industry today. The company’s technology attracted top investors in the energy sector before being acquired by Koch Engineered Solutions (KES), a unit of Koch Industries Inc., in 2020.

The KES deal was a successful exit for VC investors BDC Capital, via its Industrial, Clean & Energy (ICE) Fund, and Evok Innovations, a cleantech fund launched by Suncor Energy, Cenovus Energy and the BC Cleantech CEO Alliance. Together, the VCs invested $5M in DarkVision in a Series A financing in 2016. It was Evok’s first investment after launching its $100M fund earlier that year. The sale to KES provided an IRR of 58% and a 6x cash-on-cash multiple.

Demand for DarkVision’s technology has skyrocketed given the industry’s aging infrastructure and an increased regulatory environment. Before the sale, the company’s compound annual growth was between 400% and 600%.

The technology is seen as a significant improvement over existing ultrasonic and other imaging technologies on the market. In announcing the acquisition, KES cited opportunities to use DarkVision’s technology in other industrial settings such as public infrastructure, aerospace, manufacturing, and automotive.

“DarkVision’s advanced imaging technology is poised to transform the non-destructive testing market and bring it into the 21st century, and this deal is a testament to that,” added Robinson of DarkVision in the deal announcement. “Joining KES and Koch Industries is an important step in the evolution of our company. KES will be a crucial partner in accelerating the growth of our products and services, as well as supporting future innovation that will add greater value in the NDT market and industrial acoustic imaging solutions we develop.”

Evok CEO Marty Reed and BDC’s Geoff Catherwood said they were first attracted to DarkVision’s management team’s experience expanding and eventually selling ClearVision, an imaging technology for consumer packaging. ClearVision was bought by its largest U.S. competitor, Valco Melton, in 2011.

“I was immediately struck by the calibre of the team,” Reed recalls. “And the fact that had worked together previously had a successful outcome is very important in our world.”

BDC’s Catherwood believed the company’s technology was a much-needed solution in an industry starved for cost-saving solutions.

“They took medical-quality ultrasound imaging technology, which normally lives in something the size of a microwave oven, and repackaged it into something that was an inch and three quarters in diameter and seven feet long that could go into wells,” Catherwood says. “To me, they were disrupting the oil and gas industry.”

Catherwood says the investors were prepared to invest more in a follow-on round to help DarkVision with its growth, which the company did not need. “It blew through its revenue projections very rapidly, and became profitable and, and didn’t need more venture money,” he says.

DarkVision also didn’t require much guidance from the VCs except with some governance matters, Catherwood says. “They did a darn good job. There wasn’t a lot of hand-holding or cajoling that we had to do.”

The KES deal came out of what was originally intended to be a further financing to fuel growth.

“We weren’t out looking to sell the company, but it was one of those ‘always be open to the right opportunity’ situations,” Reed of Evok says. “Ultimately, it was very attractive to us as investors, and certainly the management team as well.”

Catherwood is proud of the return on investment, especially given the deal’s timing amid the oil-price collapse that resulted from the pandemic lockdowns.

“I think is a huge achievement,” he says. “I think it speaks to the management team, selling the vision of the technology and what it could be used for, including in other industries.”

Reed says the deal has “special meaning,” given it was the first for Evok. “It had that significance and I couldn’t be more excited to be a part of a team that lived up to every expectation that we had upon them,” he says. “And to be able to get a transaction done in what was a very uncertain time at the beginning of the pandemic was meaningful.”

Since the deal closed, DarkVision has developed two new product lines and hired about 20 people, bringing their employee count to about 60. Manders says the company expects to continue hiring at its offices in Calgary, Houston and North Vancouver and is looking at opening more locations.

He says DarkVision feels lucky to have chosen a supportive, well-aligned group of VC investors to help get the company to where it is today.

“It’s important to remember that there can be a misalignment between what a VC wants and what a founder wants: A VC might have 10 bets, and they want one to be wildly successful, and they don’t care about the other nine, while the entrepreneur has one bet. Or, they might be misaligned on timelines; or they might want to control the company and steer the ship,” Manders says. “We were fortunate enough to have great partners and didn’t have any of those challenges. There was good alignment throughout the process. We had a good experience, and this was one of those rare deals where everyone did well including the employees, founders, investors and the acquirer.”


If you would like to submit an idea for content, contribute to an article, or are interested in submitting an op-ed, contact the CVCA’s editorial department here.