mnubo: Behind The Exit With White Star Capital and McRock Capital
Photo: mnubo Co-founders (left to right): Frédéric Bastien, Jean-Charles Beaudin, Jean-Christophe Cimino, Aditya Pendyala
On July 12, Montreal-based mnubo Inc. announced it had been acquired by Massachusetts-based Aspen Technologies for CAD $102M. CVCA members White Star Capital and McRock Capital had been early investors in mnubo and the acquisition represents a successful exit for the funds.
mnubo is an asset optimization software company that enables industrial companies to assemble and deploy AI-driven IoT applications quickly, at enterprise scale.
As part of our ongoing series looking at transactions in Canadian private capital, we caught up with Jean-Francois Marcoux, Co-founder and Managing Partner at White Star Capital and Scott MacDonald, Co-founder and Managing Partner at McRock Capital to speak about the mnubo exit.
When did your firm initially invested in mnubo?
White Star Capital: White Star Capital initially invested in 2015 when we led their Series A round and then participated again in their Series B in 2018.
McRock Capital: We participated in the Series A in June 2015 and followed-on in the 2018 Series B round.
Why did your firm choose to initially invest in mnubo?
WSC: We invested in mnubo for several reasons. It all started with a deep interest in the proliferation of IoT devices across industries that we developed in early 2015. This led us to conclude that while we did not want to take a bet on a single piece of IoT hardware, we wished to back an intelligent software layer which powered the use and extracted insights out of all IoT devices.
While there are many companies who offer AI platforms solving for this, mnubo is one of the few companies who offers frameworks to deploy AI technologies across entire organizations that helps scale its business solutions. What’s more, mubo also provides an application builder that enables its customers to deliver AIoT (Artificial Intelligence of Things) that has proven valuable in multiple industries and benefitted from live use cases from day one.
MC: mnubo had a proven team that had worked together previously and had demonstrated that they had built one of the first data analytics engines designed specifically for the Industrial IoT. McRock had been searching for a data analytics platform that could handle huge volumes of data typically in industrial environments. In addition to large volumes of data, real-time conclusions from the streaming data was essential to achieving significant operational efficiencies. mnubo was one of the few teams that we had come across that could deliver real-time and massive data volumes in an analytics platform.
Why did your firm choose to exit the investment in mnubo?
WSC: It comes down to strategy – when we first invested in mnubo, we were confident in the company’s ability to empower product makers with intelligently made data-centric tools, and therefore scale globally, and quickly. As the product quality continues to increase alongside the workforce and customer base, its role in the industry-wide adoption of applied AI becomes more crucial. In its acquisition by AspenTech – a 9 billion tech behemoth with experience selling into the same industries as mnubo – mnubo’s growth and ambition will continue to accelerate, and the next generation of AI-powered business solutions will emerge.
MC: Our decision to exit mnubo was predicated on financial returns, an excellent strategic fit with the acquirer, and a long-term commitment by the acquirer to build an AI Centre of Excellence in Canada proudly based in Montreal. All that aside, the four co-founders were incredibly excited by the opportunity to continue the mnubo journey as part of a larger organization with far greater human and capital resources.
How do you think this evolution of mnubo (exit) will enable the company to continue to scale?
WSC: mnubo’s advanced team and incomparable technical resources in AI and IoT data analytics is now in the hands of a major software vendor, AspenTech. mnubo’s technology will accelerate their vision for the next generation of asset optimization solutions, which is to combine deep process expertise with AI and machine learning.
AspenTech’s decision to build an R&D center of excellence around mnubo’s acquisition in Montreal, will also help the company grow significantly locally and branch out into new offerings.
MC: AspenTech has an impressive list of tier 1 customers that are keen to deploy cloud-based data analytics to optimize asset performance in the process control sector. Broad adoption is anticipated with this customer base which will turbo charge the scalability of the mnubo solution.
How has mnubo grown because of your firm’s initial investment?
WSC: When we first met mnubo, Frederic Bastien was looking to scale globally, but did not have the support needed. Through our investment and guidance, mnubo built a world-class team of data scientists and IoT data experts, as well as an IoT insights platform that helps companies rapidly transform equipment data through the aid of predictive analytics and applied AI with the purpose of making better decisions, optimizing processes and increasing revenue.
In addition, mnubo was able to expand beyond North America and now over half of their customer base is international. They’ve built an impressive presence and customer base in Japan, collaborating closely with White Star and our Japan-based investors to achieve such commercial scale, thus validating our global connectivity model.
MC: mnubo has experience triple digital year-over-year growth since McRock’s initial investment. It has also been recognized as the “Top 20 IoT Solution Providers” by CIO Review; “Top Start-up Transforming the Industrial IoT” by CB Insights; “Employer of the Year” by TechVibe; and “Canada’s Hottest Start-Ups” by Mark Evans Consulting.
What do you believe we can expect from mnubo and this sector in the next few years?
WSC: mnubo was acquired by AspenTech to accelerate the realization of its vision for the next generation of technology that combines deep process expertise with artificial intelligence and machine learning, so we believe one could expect more growth at a global scale while still investing and developing the Quebec AI ecosystem.
Celebrating Quebec’s successes as a tech industry is hugely important and something we don’t do enough of as a province. This is a proud moment for mnubo, and also for Quebec. This strategic announcement reinforces the commercial potential of the AI sector, and solidifies Quebec’s position as a global leader in the artificial intelligence community.
MC: We expect continued adoption of mnubo’s analytics platform by a broad array of AspenTech customers and a variety of global strategic partnerships to emerge. Industrial-focused data analytics and AI software is one of the strongest growth areas of the Industrial IoT. We expect to see significant value creation from companies with strong data science teams over the next five years. There is a race to use AI to achieve significant competitive advantages as the industrial sectors digitize and adopt IoT technology.
What was your experience with the management team?
WSC: JF’s relationship with Frederic Bastien all started with one panel at HEC where both met for the first time prior to the investment. Over the past 4 years this initial encounter has developed into not only a successful investment for White Star but a close friendship between JF, Fred and all of the co-founders of mnubo. This positive experience transcended the boardroom with White Star and mnubo teams taking part in several out of office activities such as the 24h at Tremblant charity event.
MC: Our experience with the mnubo team was superb as McRock served on the board from its initial investment through to acquisition. The four co-founders had all worked together previously and had previous exit experience. They were highly complementary, cohesive and passionate about building mnubo. McRock consistently extended its network of customers, investors and acquirers to mnubo. In fact, McRock introduced mnubo to (1) one of its largest customers, (2) the Series B lead investor, Munich Re Ventures, and (3) the ultimate acquiror AspenTech.
Do you see opportunities to invest in similar companies in the future?
WSC: ABI Research forecasted that deployment of connected devices is expected to grow to 41bn by 2020, so it would be strategic for us to continue to invest in this space. The startup ecosystem here is increasingly strong, and the AI and IoT space is even stronger.
We already have portfolio companies in the AI space, including Meero, KeyMe and Mindsay internationally, and locally we have companies helping the industry 4.0 revolution in other innovative ways such as Vention. We will continue to help similar companies scale as we see fit.
MC: Absolutely. We believe there are many interesting analytics companies with deep industrial domain experience that will receive funding from McRock. In fact, we have just signed a term sheet with a Kitchener-based company that fills the void in our portfolio created by the mnubo exit. This investment is scheduled to close in early August.
Is there anything particularly interesting about this exit that you’d like to emphasize?
WSC: All along mnubo’s growth process, they’ve collected a team of AI experts and data scientists with world-class skills, which can only grow more powerful with the support of AspenTech. This exit crystalizes the value of the AI / data science talent in Quebec, setting another good example of a Montreal-based business succeeding at a global scale and obtaining interest from a major U.S. tech-listed player.
MC: McRock introduced mnubo to AspenTech through its world renowned Industrial IoT Symposium in 2018. This is McRock’s second portfolio company AspenTech has acquired.
Outside of the financial return, what other significant impact has mnubo made in its local/regional community that might be worth noting?
WSC: The growing community of AI experts and businesses in Quebec is making its mark across verticals, from finance to entertainment and everything in between. In investing in mnubo, we saw its potential to impact many verticals as the role of AI becomes more prominent from business to business. Its exit validates that potential, in addition to proving Quebec’s local AI community is a valuable source to locate talent.
MC: mnubo was pivotal in pioneering and shaping the AI and analytics sector in Montreal and Canada. As one of the first data analytics companies to hit the scene, it has been instrumental in drawing data science talent, global customers and tier-1 partners to Montreal.