Valsoft | A Montreal unicorn eyeing the stock market

A young Montreal software company, which has reached a billion valuation after just six years of existence, continues its impressive growth and plans to go public next year.

Posted at 6:00 am

Richard Dufour

Richard Dufour
The press

Valsoft is a company founded by Sam Youssef and Stéphane Manos, two former Concordia University computer science students who previously became friends at Cégep Vanier.

The company, whose offices are on the city highway in the Saint-Laurent district, made its first acquisition in 2016. Since then, transactions have followed one another, to the point that Sam Youssef points out that Valsoft now has around 2,500 employees “around the world world” has world”.

He argues that Valsoft could end the year with 25 companies purchased in 2022, bringing the number of purchase transactions to 55 since the company started operations six years ago. “We’ve made about fifteen acquisitions so far this year and should have close to $300 million in sales by the end of the year. »

The 40-year-old entrepreneur says he saw the software industry’s potential for consolidation after initially investing in shares of public companies like Constellation Software and Salesforce.

Inspired by CGI and Couche-Tard

“Interest in software companies grew immediately,” says the Lebanese native from Montreal.

“It’s a fast growing sector. Companies specializing in specific niches can control prices in their market and many generate significant recurring revenue. »

In analyzing the opportunity, he says, “we also looked at Warren Buffett and Quebec entrepreneurs who have made successful acquisitions, such as Couche-Tard’s Alain Bouchard and CGI’s Serge Godin.”

“In Quebec, the market structure and tax regime are very favorable for companies to make overseas acquisitions and we have seen potential for consolidation in the software sector. »

Sam Youssef estimates that 30,000 companies worldwide develop software for niche markets (boutique hotels, forestry companies, etc.).

“We’re looking at all the small vertical markets where it’s possible to have one pricing power. »

The results seem to prove him right. “Six years later, since Viking’s investment, we’re worth over a billion,” he says.

eyes on the stock market

Earlier this year, the Montreal-based company announced that American investment fund Viking would inject $100 million into Valsoft in exchange for a 10 percent stake.

Valsoft is still little known in Quebec, says Sam Youssef, “but it is well known in private investor circles in the United States and elsewhere around the world.”

He claims to have received interest from several companies. “But the people at Viking explained how they could help us develop our potential and approached us in a way that convinced us. Up to that point we were mainly working with the money of our original partners and the money of the acquired companies. »

Contacted by The pressViking management politely declined our request for an interview, but nonetheless stated that they would read our report “with interest”.

According to Sam Youssef, Viking’s investment will help Valsoft grow faster. So much so that Valsoft is considering taking it one step further.

“It’s believed to complete an IPO sometime in late 2023 or early 2024,” he says.

While the two founders remain the main shareholders of Valsoft, around 25 other private investors are involved in the capital, mainly employees of the company, says Sam Youssef.

“Today we have more options than money. An IPO would bring in capital that would help us grow faster. In addition, many of our investor employees would like this liquidity option via the stock exchange. »

Pornography as a stepping stone

At the end of their university days in the early 2000s, the two founders of Valsoft started with affiliate marketing and the management of websites, some of them for adults and today mainly a household name, but from which they wanted to distance themselves in 2010: Pornhub.

Sam Youssef and Stéphane Manos had combined their activities in a company called Mansef (combination of the names of the two entrepreneurs).

“Adult products made more money than the rest. But five years later it had become a big part of the business and we didn’t feel comfortable in the industry anymore, so we sold,” says Sam Youssef.

“We wanted to do something different with our lives,” he adds, without wanting to reveal the sale price out of respect for his partners at the time.

Sam Youssef is aware of the sensitivity of the topic and also prefers not to comment on the development of Pornhub and the allegations of sexual exploitation associated with it.

“Today it is a completely different company. It has nothing to do with what we created. We turned the tide with the sale in 2010,” he says.

Beginning the year after the sale transaction, 2011, Sam Youssef went public with partners to invest and identify opportunities that led to the creation of Valsoft.

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