Kim Vivian-Downs and Evelyn Eagle were school bookkeepers in Southern Ontario with a knack for automating time-consuming office tasks such as attendance management when they hit upon an idea for a business.
“We were having fun, but we were thinking, ‘What do all schools need that we could build once and put out on the shelf?’ ” Ms. Vivian-Downs said. As she watched harried teachers bring a steady flow of envelopes stuffed with cash, cheques and permission forms for school photos, yearbooks, field trips and pizza days to be manually processed by staff at her Cambridge, Ont., high school, “I just went, ‘Wow. There has to be a better way.’ ”
That was 22 years ago. Now, their firm, KEV Group Inc., is poised to become North America’s largest provider of cash accounting management and online payments software for public schools following the acquisition of its North Carolina rival, Technology Resource Associates Inc., with more than 16,500 schools using its products.
Terms weren’t disclosed, but the deal was funded by roughly US$30-million KEV raised this year from San Francisco financier Serent Capital. With an estimated 130,000 kindergarten-to-grade-12 schools in Canada and the United States, they see a lot of room to grow. “We still have to pinch ourselves every once in awhile,” Ms. Vivian-Downs said.
Kev’s cloud-based software allows teachers, parents and school administrators to send, receive and track permission forms and payments electronically, providing an audit-able trail and reducing the kind of manual cash-handling bother that sometimes gives rise to theft or fraud – and takes a lot of effort. The Toronto District School Board is rolling it out to all of its 582 schools, which process tens of millions of dollars in fees and expenses annually. At an annual cost to the board of $350,000 for the software – which it offsets by charging transaction fees to parents – Kev “has been very beneficial, as it has significantly minimized cash handling” at schools, board spokesman Ryan Bird said.
The two founders created KEV and built it until they had about 4,000 schools using the product, but struggled at times to run the business. Their fortunes changed after their angel investor Rick Brock – a prosperous Kitchener-Waterloo-area entrepreneur who gave former Research in Motion co-chief executive Jim Balsillie his start – connected them with Bram Belzberg.
Mr. Belzberg had a big name to live up to: His great-grandfather Abraham was a fishmonger who arrived in Canada from Poland a century ago and started a furniture store in Calgary; his grandfather Hyman co-founded First City Financial Corp., a conglomerate that became a feared corporate raider during the 1980s; and his father Brent is a well-known Toronto financier who runs private-equity firm Torquest Partners Inc. and is nicknamed “the Mayor” of Bay Street.
After graduating from McGill University with a psychology degree and working at a variety of finance jobs in Toronto and New York, the younger Mr. Belzberg found his calling in his late 20s when he attended Harvard Business School: he wanted to be a business operator. He also wanted to make it on his own. “We had an understanding from relatively early on that [my father and I] were not going to mix business and family,” Mr. Belzberg said. (Brent Belzberg declined an interview request).
His father did help a bit by asking Mr. Brock, an old friend and business associate, to give his graduating son some career advice. Mr. Brock took to Mr. Belzberg immediately: “He was really bright and had all kinds of energy.” Besides, Mr. Brock had an opportunity for him. He had bought control of KEV five years earlier and was looking to bring in a knowledgeable executive to lead the business.
He offered the unproven Harvard graduate a deal: a paltry salary, but also an option to buy him out later (that happened in 2014 when Mr. Belzberg paid an undisclosed sum to Mr. Brock – without any aid from his father).
The co-founders thought Mr. Belzberg was smart and liked his ideas; while Mr. Belzberg was in awe of what they had built by teaching themselves to code and building products that solved their own everyday problems. He joined in 2009 as chief operating officer and become CEO a few months later. Said Mr. Belzberg: “I still feel to this day that the three of us are the perfect trifecta” with Ms. Vivian-Downs leading sales and Ms. Eagle heading customer support.
One of Mr. Belzberg’s first initiatives was to push Kev – whose web-based cash accounting software was sold to school boards − to build a payments-processing program. That would save school staff from handling cash. Aubrey Kirkpatrick, director of finance with the 37-school Anglophone East School District in New Brunswick, says the software “has really allowed our teachers and school administrators to spend more time on educational matters and less time counting cash and rolling quarters.”
The vast majority of KEV’s 8,500 school customers prior to the TRA acquisition used both its accounting and payments products with boards paying anywhere from tens of thousands of dollars to hundreds of thousand dollars a year. (KEV doesn’t disclose sales nor the number of districts it sells to).
Now, says Serent Capital partner Kevin Frick, KEV’s big opportunity is to offer payments services to the 8,000 customers of TRA, which doesn’t have such a product, and expand sales in the United States. “Our goal [is] be to increase the school base by [up to] five times in the next five years or so,” he said. “How quickly we can get there? We’re working through that now.”