A pair of New York companies found themselves on the outside-looking-in this month as a Victoria-based advertising technology firm managed to close a deal to snap up a local software company.
Despite the attention of the American suitors, Pretio Interactive put together an attractive enough deal to convince Tap for Tap to sell locally.
“We’re not surprised. We made a compelling case,” said Jim Hayhurst, chief executive of Pretio. “I think [Tap for Tap founder] Todd Dunlop was pleasantly surprised that we could be competitive. That maybe speaks volumes about the overlooked part of Canada and Victoria. We can be competitive if we just stick our noses out once in a while.”
Tap for Tap is a mobile application exchange network, where developers can cross-promote their apps by exchanging ad placements within other apps in the network.
Pretio has developed technology that delivers brand rewards to application users — such as coupons and discounts to game players for reaching a new level or frequent website visitors a reward for repeated site visits.
The acquisition gives Pretio access to a network of 12,000 developers and 18,000 applications.
Terms of the deal, which was finalized last week, were not released. However, as part of the transaction, high-tech veteran Dunlop will become a Pretio shareholder.
“The appeal of this was they have a huge network of [software] developers around the world that use their technology and to replicate that organically would take a significant amount of time. This was great as it is perfectly suited for what we want to do,” said Hayhurst, noting this accelerates Pretio’s growth by as much as six months. “Plus Todd as an entrepreneur and an expert in this space is a great addition to our team as an adviser and shareholder.”
Hayhurst said the deal accelerates Pretio’s expansion plans, which were expected in the second or third quarter of next year. “This is a significant jump for us.”
Dunlop, a serial entrepreneur who sold his leads generation company, Neverblue, in 2007, said the companies are a good fit.
“What we see is they obviously have a pretty interesting approach to direct advertising and brands to help monetize that network,” Dunlop said. “They have a really strong technical team and we will work with them to make sure they are successful with it.”
But just because it’s a good fit and both are Victoria firms, doesn’t mean there was a “hometown discount” included in the package, said Dunlop.
“But it was a lot easier to get a deal done when you can sit face to face,” he said. “And we know we are all going to see each other, so we have to be good Canadians and get along ... we all know technology is big but it’s also a small community.”
Hayhurst agreed, noting Victoria is a town where reputations matter.
“Neither side was in a position nor did they have the inclination to screw the other guy over, because we all have to wake up the next morning and walk down Government Street and live with ourselves,” he said.
The deal could be a sign of Victoria’s $4 billion technology scene entering a new stage of maturity.
“Typically, we see a lot of our companies as targets for acquisition as we build really good companies, but rarely do we see one local company acquire another,” said Dan Gunn, executive director of the Victoria Advanced Technology Council. “That’s another milestone in the overall maturity of the sector. I think this says a lot.”