Quick Takes: Tiny to the rescue?

What is the news?

On Monday publicly traded WeCommerce announced that it had entered into an agreement with Tiny and a WeCommerce subsidiary to combine their businesses in an all-share transaction.

What does this mean?

The way it is being announced, it looks like a merger between WeCommerce and Tiny. In reality, it looks more like a reverse merger as Tiny will own 75% of the company and Tiny's co-founders will become CEOs of the combined entity.

If the agreement is approved by WeCommerce shareholders, the combined company will have an "equity value" of $900m+.

What does WeCommerce do?

WeCommerce was a Shopify app roll-up entity created in 2019 by Tiny that went public on the TSXV in December 2020. The idea behind a roll-up is that it can use its shares to buy smaller businesses and create value by improving operations, growing the company, and trading at a higher value than what it paid for the company it purchased.

In the case of WeCommerce, they were looking to acquire Shopify Apps and they went public to have a currency to do acquisitions. What they may do is buy a company with $5m revenue and $1m EBITDA for 3x EBITDA or $3m. They can pull out costs for overhead (e.g. finance team) that they centralized, help grow revenue and once the acquired company's financials are part of WeCommerce, they should be worth 5x EBITDA.

In theory, if they improved EBITDA to $2m, the $3m acquisition adds $10m in equity value for WeCommerce shareholders.

If they were part of Tiny, why are they merging?

Tiny is a Victoria-based private company co-founded by Andrew Wilkinson and Chris Sparling in 2007. They have started, acquired, or invested in 50+ companies. Prior to this merger, Tiny was the largest shareholder of WeCommerce. My guess, is they are merging as the tech roll-up model is now out of favor with investors and WeCommerce was trading down 90% from its all-time high prior to the announcement. Tiny most likely wants to both protect the value of their investment and take advantage of the lower valuation.

Why is the roll-up model out of favor?

Multiple reasons that won't shock our readers:

1. Higher interest rates and more cautious lenders, meaning it is harder and more costly to finance acquisitions with debt.

2. E-commerce growth slowed down pushing the multiples for the entire sector down making the arbitrage play less exciting.

3. Multiple companies launched roll-out models making acquisitions relatively more expensive.

So does it make sense for the companies to merge?

WeCommerce going public was based on opportunistic market timing.

Retail investors wanted access to e-commerce and roll-up plays. Tiny and WeCommerce took advantage and most likely believed that public shares would give them a competitive edge in acquisition.

While it makes sense to take advantage of strong markets, you need to make sure the underlying business can withstand the cyclicality of the market. In this case, it appears WeCommerce could not. Tiny will hopefully bring a more diversified and consistent base of business to the public entity which will hopefully stabilize the shares of WeCommerce.

What are the takeaways from this news?

Tune in to tomorrow's episode of Quick Takes to learn the key takeaways and why this news should change your perspective on the current trends.

Tune in LIVE at 12:00 pm ET/9:00 am PT across the TechTO platforms, or catch the episode later on Spotify, YouTube, or wherever you listen to your podcasts.

*Reply to this email and let us know your takes on the news from the ecosystem and what you'd like to hear us cover on the show, and in an upcoming newsletter

Episodes dropping every other Thursday all year long!

Catch up on past episodes here, while you wait.

Subscribe to Quick Takes on Apple Podcasts, and Spotify so you never miss an episode as it drops.

Profile: Marc Boscher and Unito

What is Unito?

Unito was created to integrate disparate SaaS applications, enabling workflows that cross the boundaries of tools, teams, and organizations. Unito’s workflow automation platform and two-way integrations allow information to flow freely between apps like Atlassian’s Trello and Jira Software, Asana, GitHub and Wrike, leading to easier collaboration, more efficient work, and higher productivity.

What was the insight/inspiration that led you to start Unito?

This was a classic scratch-your-own-itch story.

I had a notepad full of "someone should solve this" ideas I'd accumulated over the years, and among them was to keep all those tools in sync so I don't have to do it manually.

How did you know you were ready to found a company?

I was more than ready. It was the plan since joining my first startup in 1999. I just can't believe it took me so long to get to it.

How did you meet your Co-Founder/know they were the right person to work with?

I was in an idea-stage accelerator with 40 other entrepreneurs testing their ideas. My co-founder's idea didn't work, but he definitely had the right DNA and timing.

What has been the hardest thing about your journey so far?

Building a family while bootstrapping a business.

What is your super strength?

Willpower, although some would call it stubbornness.

Are you hiring right now? If so, which roles are open?

Unito is hiring for a number of roles. We're currently seeking a Senior Designer to join our team in Montreal. There are also more job openings featured on our careers page.

*Reply to this email and let us know what companies and innovators you'd like to see featured in an upcoming newsletter*

Join the Montreal tech community on January 31, and learn more from Marc in real life as he takes the stage at our upcoming TechTO: Together event in Montreal!

*TechTO: Together returns to Montreal on January 31 to kick off 2023 with the local ecosystem. Marc Boscher will be one of the many speakers taking the stage at the event to share more of their Founder journey and answer questions in-real-time.

*Grab your tickets while they last*

Thanks to our friends at Planned for hosting and partnering with us on this event. We'd also like to thank Mission for their continued partnership as well.

You just proved newsletter advertising works!

The TechTO newsletter is the largest publication targeting the tech industry in Canada.

Every week, our newsletter hits 60,000 inboxes across the country 3x a week!

Are you trying to: 

1. Build awareness for your company, event, or product?

2. Let the community know how great it is to work at your company?

3. Fill an open role?

Have you noticed that we relaunched the TechTO newsletter? 

Since we re-platformed, we have open rates of over 35% and industry-leading click-through rates. Our readers include more than 28,000 software engineers and 36,000 decision-makers at Canada's most dynamic companies.

Packages start at $1,000. Reach out to [email protected] to learn more!

Headlines and Content

• #ICYMI - Catch up on past newsletters if you hadn't yet subscribed!

• Canadian Startup News of the week - READ HERE

• Google vs. ChatBot - READ HERE

• The Evolution of Investment Framework. What can we learn? - READ HERE

• Overcoming the "shocks" of Entrepreneurship, and how to do it - READ HERE

• Hiring in Canada is booming as AtomicJar plans to tap into “huge” Canadian tech talent pool - READ HERE

TechTO Talent

VP of Sales, ContactMonkey (Toronto, ON)

Why is this cool? While ContactMonkey enters another year of pivotal growth in the internal communication space, they are on the lookout for a VP of Sales to drive revenue from $10m in ARR to $30m. Today, ContactMonkey is a bootstrapped, profitable business, growing 100% YoY with 95% GDR and 120% NDR. APPLY HERE

Director of Go-To-Market, Metaspectral (Vancouver, Remote)

Why is this cool? Metaspectral delivers the next generation of computer vision software, capable of remotely identifying materials and determining their chemical composition, defects, and other properties otherwise invisible to conventional cameras. The Director of Go-to-Market will be responsible for leading the development and execution of the company's go-to-market strategy and sales efforts. APPLY HERE

Co-Founder Match

Are you looking for your next Co-Founder? Not sure where to start?

Reach out to [email protected] with the following info:

• What you're looking for in a Co-Founder

• What you're building

Events and Links

Check out the interesting content, events, and happenings for the community here:

• TechTO Together | Montreal: January 31, 2023 - Join us LIVE from Montreal and kick off the year with the Montreal tech ecosystem - REGISTER HERE

• Starting and Building a Career in Data: January 26, 2023 - Learn how to start your career in data and related fields with guidance from expert professionals at CIBC and 1Password - REGISTER HERE

• TechTO Together | Toronto: February 6, 2023 - More announcements coming soon! - REGISTER HERE

• TechTO Talent | Virtual | February 22, 2023 - Meet and mingle with top tech talent and employers hiring now! REGISTER FOR FREE

Want to showcase your company, events, and opportunities to 60,000 subscribers across the Canadian Tech Eco-system? Reach out to [email protected] to learn more!