AWARD SPOTLIGHT: Real Ventures Winner of CVCA’s 2018 Venture Capital Deal Of The Year for SweetIQ
Location-based marketing analytics company SweetIQ Analytics Corp. didn’t have product-market fit — just a prototype — when it first attracted an investment from Real Ventures in 2011. It was the team behind the Montreal-based company, including co-founders Mohannad El-Barachi, Michael Mire, Ravdeep Sawhney, which led the VC firm to get involved and lead the startup’s first seed round.
“It was less about the product,” recalls JS Cournoyer, a partner at Real Ventures. “We felt the founding team had what it took … not just from capabilities, but also from a leadership perspective. We trusted their ability to get there [with the product].”
That first round led to two seed extensions and a bridge financing all backed by Real Ventures. SweetIQ then did a Series A in 2015, led by Plaza Ventures and including other investors such as Desjardins-Innovatech, Otimo Retail Group and Rothenberg Ventures.
Since it was founded in 2010, SweetIQ has grown to include a suite of local products and services that help businesses connect with consumers by boosting brand awareness through reviews, consistent local content, and keyword monitoring. The company also has reputation management software-as-a-service solutions that help businesses manage their location data and measure consumer engagement. SweetIQ’s customers include hundreds of Fortune 500 brands and local businesses across North America.
It was in early 2017, as Sweet IQ was finalizing the papers for its Series B, that the company received an expression of interest to join the round from California-based digital marketing company ReachLocal, a division of U.S. media company Gannett Co. Inc. El-Barachi met with Reach Local executives in Los Angeles to discuss their interest. That meeting eventually led to a bid to buy SweetIQ outright.
“They made us an offer that just made sense and everyone around the table felt comfortable with them,” says El-Barachi. “It became a question of, ‘Is it the right time to sell, or continue with financing?’”
El-Barachi cites market conditions at the time, shifting pricing factors and industry consolidation as some of the reasons why they did the deal, the terms of which haven’t been disclosed.
“We felt the better move was to go in and consolidate with the company that had the right set of dimensions and ingredients for us to all go in together. So we all went down that path,” says El-Barachi, who is now general manager of SweetIQ and senior vice president at ReachLocal. “It happened very fast – the letter of intent was in January and we were sold by April.”
When the deal was announced, Gannett said ReachLocal’s purchase of SweetIQ “marks an important milestone in Gannett’s digital transformation.”
“SweetIQ’s advanced technology, analytical expertise and experienced team will deliver significant value to our local and national clients,” Gannett CEO Bob Dickey said in a statement, adding that SweetIQ “will play a pivotal role in helping our clients achieve superior returns on their digital marketing investments.”
When takeover offers like that come, Cournoyer says his fund likes to leave the decision up to the entrepreneurs. “When the entrepreneur feels it’s time to sell and to move on, we go all in on those conversations and help them with the best outcomes possible. We aren’t there to try to convince them not to do it or to feel bad about doing it. We treat it as a win.”
El-Barachi’s advice for other entrepreneurs looking to sell is to stand back, assess the fork in the road and be honest about whether you and your team want to go down a different path.
“Do you have the mental capacity, the willingness and stamina to continue? Or is it time to sell?” he says. “You will know when you know.”
Cournoyer says El-Barachi and his team deserve the success experienced with SweetIQ. “Because of that exit, and what he’s learned, he’s ready for something big – whenever that happens. I hope that we will work together again,” Cournoyer says of El-Barachi.