Three months in, the students were worried. They were engineers with no business background, working on a research project paid for by a man named David Kelly, who had already built and sold a cash-processing software company. What if he simply took what they found and built the business himself?
They were Jamie King, Brendan Brothers and Raymond Pretty, all Memorial University engineers in St. John's. Before any of this they had been building pattern-recognition software to help robots navigate underground mines, and had incorporated a company for it. Mining was a modest market. King, then a PhD student, had been picked by Kelly for the project over a Rhodes scholar, because Kelly liked his drive.
was incorporated with Kelly, King and Kristine Trask as directors, working out of the university's Genesis Centre.
Kelly's idea came after 9/11 and the USA PATRIOT Act, which forced banks to hunt for suspicious money. In October 2002 he proposed a research project on suspicious transactions to Memorial's business dean, with US$50,000 and equipment from his firm Jambrex. He suggested the students aim their mine-robot pattern recognition at money laundering. They saw a market far bigger than mining.
Then came the fear. Kelly and the professor Bob Richards settled it in the students' favour: they offered the IP and 75 percent ownership, with 10 percent for the university and 15 for Kelly. By March 2003 Verafin Inc. was incorporated with Kelly, King and Kristine Trask as directors, working out of the university's Genesis Centre.
The launch was quiet. A May 2003 presentation in New York brought no sales. After searching widely, an advisory board member pointed to the Newfoundland and Labrador Credit Union, which became customer number one and a testing ground. Killick Capital put in C$1 million. Later the Royal Bank's venture arm added US$5 million to move the company toward subscription revenue.
The pay-off came in two steps. In late 2019 the company announced a C$515 million financing, described as the largest venture round in Canada at that time. In November 2020 Nasdaq agreed to buy it for US$2.75 billion. At the sale it had about 600 employees, more than 3,000 bank and credit union customers and annual revenue above US$140 million.
The human lesson sits in the second quarter of 2003. The students could have walked away from a sponsor they did not fully trust, or stayed quiet. The deal they ended up with, their own IP and three quarters of the company, is the reason a Newfoundland incubator produced a Canadian unicorn. Ask for the ownership conversation early. It was awkward, and it was worth billions.