CEO says LumiQ found alignment with Vertu after staying away from institutional venture capital.
Toronto-based private equity firm Vertu Capital has completed a strategic investment into EdTech startup LumiQ.
The deal marks Vertu’s fourth platform investment since the private equity firm closed its inaugural fund with more than $300 million CAD in capital commitments. In a statement, Vertu said LumiQ features all the fundamentals of an ideal investment for the firm.
“LumiQ is exactly the kind of market-leading B2B software-enabled technology company that Vertu looks to invest in,” Eric Kafka, principal with Vertu Capital, said in a statement.
“We’ve always viewed our content as not only an incredibly important part of our product, but a really big element of our moat.”
Michael Kravshik
“This is a fast-growing and unique company in an exciting space that is primed to accelerate its domestic and international growth,” Kafka added.
A report in Private Capital Journal described the deal as a majority-stake acquisition, but LumiQ CEO Michael Kravshik declined to confirm or deny the claim. Kravshik also declined to disclose the dollar value of the investment, as well as the percentage of equity acquired in the deal, to BetaKit.
Vertu typically writes cheques between $25 million and $75 million, and targets companies that are either at or close to $20 million in ARR, are breaking even or profitable, and are worth up to $500 million. Kravshik said Vertu participates in both majority and minority-stake deals.
Kravshik said Kafka, as well as Vertu founder and managing partner Lisa Melchior and Vertu operating advisor Peter Lee, have joined LumiQ’s board following the deal. Kravshik said the deal does not otherwise impact the company’s team and leadership.
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LumiQ (formerly Luminari), founded in 2016 by Kravshik and CRO Adam Bercovici, produces podcasts aimed at helping chartered professional accountants (CPAs) complete their annual training and professional development requirements. In 2019, the company pivoted from career management for CPAs into education, after finding that obtaining professional education credits was a key pain point for CPAs.
Since its founding, LumiQ has not taken on institutional venture financing, an intentional decision according to Kravshik.
“The accountant in me has always had a tougher time with the idea of us raising a ton of money and burning capital for a really long time before we could monetize or get to a point of break-even and sustainability,” he told BetaKit.
He also noted that many prospective venture capital investors were more “bearish” about the idea that LumiQ could be a content-led business, rather than a technology-led one.
“We’ve always viewed our content as not only an incredibly important part of our product, but a really big element of our moat,” he added.
While the startup has raised funding in the past, including a $5-million fundraise in 2022, it only raised from angel investors that were aligned with the founders’ vision for the company.
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Kravshik said he has known Melchior and Kafka for years. “Each time I left with the distinct feeling that we shared values, and they saw the same vision Adam and I did for LumiQ,” Kravshik said in a LinkedIn post this week.
Since launching in the United States in 2022, Kravshik said the startup has brought 45 of the top 100 accounting firms in the nation as clients, including Aprio and Eide Bailly LLP. He said the new capital will be used to add new functionalities to the startup’s product and grow the currently 100-person team.
“As we’ve gone upmarket, there have been elements of the product that we need to create—let’s call it more functionality,” he added. “It’s different when you’re managing a team of three or five or even 10 people, and when you have a finance team of 200 or potentially 5,000.”
Kravshik said LumiQ’s clients want stronger data tracking, along with the ability to tailor and manage the app to fit their specific needs.
The accounting industry is also changing more broadly, largely due to the rise of automation, according to Kravshik. He noted that as accountants move from mere executors of tasks into more trusted business advisors, LumiQ can help them do so in an enjoyable way.
“We’ve got the technical content: your accounting standards, tax updates, things like that. But if you really want to be a well-rounded professional and a trusted advisor to any kind of business, you need more than that,” Kravshik added.
Feature image courtesy LumiQ.