CDPQ Gives AppDirect $100 Million for Partner Funding

AppDirect, the B2B subscription commerce provider, landed $100 million in investment that it will use in its partner funding program.

Canadian investment firm CDPQ is making the investment, which is the second it has made to support the AppDirect Capital Invest program. The program gives technology advisor partners funding without relinquishing control of their business, with the caveat that they run their business exclusively using AppDirect's supplier contracts.

AppDirect's Renée Bergeron

The institutional investor poured $80 million into the program at the end of 2021. Prior to the $80 million infusion, AppDirect had reportedly given $45 million went to 11 different partners. The number of participating partners increased following CDPQ's first investment in the program and will increase again, AppDirect chief operating officer Renée Bergeron said.

"It was so successful that CDPQ decided to partner again with AppDirect to launch a new investment fund valued at $100 million," Bergeron told Channel Futures. "It really reflects the success of the first fund that was established two years ago, and really of the partners that participated in that."

Marc Cormier, CDPQ's executive vice president and head of fixed income, agreed.

"Since our initial financing in 2021, AppDirect has demonstrated their ability to accelerate the connectivity and competitiveness of today’s businesses,” Cormier said. “As part of our partnership, this repeat investment continues to facilitate the delivery of critical solutions for the digital economy, while generating stable returns for our clients.”

Related:AppDirect Raises $80 Million for AppSmart Invest Program, Courts Partners

CDPQ also gave AppDirect $185 million in 2020.

“CDPQ and AppDirect have an established track record of working together, and this new investment further solidifies both companies’ commitment to the growth and transformation of AppDirect channel partners and technology advisors," AppDirect chairman and CEO Nicolas Desmarais said.

Partner Funding Example

While AppDirect is known for its e-commerce offerings that it provides both to suppliers and to end users, the company leans on technology advisor partners – also known as agents – to promote its marketplace.

AppDirect bought multiple technology services distributors (TSDs), companies that link technology advisors to cloud and telecom service providers. AppDirect technology advisors still leverage those contracts but can also sell the additional software-as-a-service (SaaS) offerings that exist on AppDirect's marketplace. AppDirect executives say that they want business customers to procure technology through the marketplace while leaning on the advisory services of partners.

AppDirect Capital Invest has functioned as a way to keep technology advisors sticky in an era where many advisors prefer to run business through multiple TSDs at the same time.

NXTSYS' David Wallace

Texas-based NXTSYS participates in the AppDirect Capital program. Co-founder and president David Wallace said his company has seen strong growth since agreeing to the investment. Wallace said the ability to maintain control of his business convinced him that he wanted to take that route.

“For the last five years, we've grown consistently between 22%-30% year over year. Since we partnered with AppDirect Capital Invest, we jumped 50% in a single year in profit. Think about that: Not 50% in revenue, but 50% in profit. Those kinds of numbers are phenomenal,” Wallace said.

Bergeron called NXTSYS "a success story" for the program. The partner notably leaned more on AppDirect for back-office operations like quoting, ordering and commissioning. Previously, NXTSYS had run most of those "labor-intensive" elements on its own, Bergeron said.

"They were able to leverage the capital in the program with AppDirect to basically shift their investments into sales and expand their solutions, and they relied on us to do most of the back-office functions," Bergeron said.

Read about AppDirect's latest initiative around AI.