Gaiia Transforms from ISP to Software Company with Strategic R&D Funding

In early 2023, the Quebec City-based company Gaiia made a significant shift by transitioning from being an internet service provider (ISP) to a software-centric business. This strategic pivot involved selling its ISP operations, which served around 40,000 subscribers and generated tens of millions in annual revenue, to Cogeco Connexion for approximately $100 million. Gaiia’s leadership recognized the potential of its in-house software, originally developed to manage ISP operations, leading to this transformation.

Following the sale, Gaiia launched as a standalone software company, offering an all-in-one platform that aims to replace the legacy infrastructure that many ISPs currently rely on. This platform allows challenger ISPs to efficiently manage essential functions such as reporting, analytics, network monitoring, and inventory. However, the transition came with challenges; Gaiia’s revenue dropped to less than $1 million with only a single customer at the outset.

Erin Bury, who joined Gaiia as Head of Finance shortly after the company’s rebranding, faced the challenge of maintaining the company’s financial stability with a significantly smaller team. “We’re a finance team of one,” Bury remarked, highlighting the need for efficiency in managing finances while also investing in a growing engineering team. The company benefitted from a sizable seed round following the sale, alleviating some cash-flow concerns typical for seed-stage startups.

To support its growth, Gaiia took advantage of Canada’s Scientific Research and Experimental Development (SR&ED) tax incentive program, which is designed to encourage local businesses to conduct research and development within Canada. Previously, while still operating as Oxio, the company had successfully claimed these credits using the help of Boast, a platform that leverages artificial intelligence to streamline the R&D tax credit filing process.

In addition to the SR&ED program, Gaiia became eligible for another funding opportunity through Quebec’s Développement des affaires électroniques (CDAE) tax credit. Initially focused on businesses adopting AI, the CDAE offered credits for activities related to the design and development of computer systems and software. “Anything that extends our runway helps us grow,” Bury explained. “We’re growing so quickly that adding a month or a quarter of runway potentially has a huge impact on our valuation.”

Accessing these funding programs required navigating complex administrative processes. The SR&ED program necessitates detailed documentation to demonstrate experimental development, while the CDAE involves certification with provincial authorities and a formal review. Bury expressed concerns that the additional paperwork would detract from productivity, noting that “engineers love writing code. They didn’t become CPAs for a reason.”

To mitigate this, Gaiia continued its partnership with Boast, which simplified the claims process through straightforward data collection and direct collaboration with the company’s technical leadership. “I like how the team is pragmatic,” Bury said. “There’s just more understanding of how startups are actually working, which is very helpful.”

Since the rebranding, Gaiia’s customer base has expanded, primarily in the United States. Boast also assisted in reconciling SR&ED claims to accommodate transactions in U.S. dollars. Bury estimates she spends only about eight hours on SR&ED claims per cycle, allowing her to focus on broader financial strategies for Gaiia. “The amount of money we received felt proportional to the time invested,” she noted.

Language barriers presented additional obstacles, as Gaiia is primarily a francophone company and Bury does not speak French. Boast’s bilingual team members provided essential support during the CDAE certification process, ensuring smooth navigation through the complexities. “Without Boast, I would have struggled significantly more—both from a technical understanding of the program and from a language perspective,” Bury stated.

As Gaiia prepares for a Series B funding round targeted for later this year, the company’s financial landscape appears promising. The convergence of building costs and revenue generation is becoming more favorable, and Bury believes that the R&D incentives facilitated by Boast have allowed the company to convert its experimental work into capital, thereby preserving strategic options.

“Finance is often a cost centre,” Bury explained. “So any grants I can secure that mean I cost the company nothing—even though it’s really R&D salaries being recovered—that feels good.”

This strategic pivot and the effective use of available funding not only demonstrate Gaiia’s resilience but also highlight the importance of leveraging R&D incentives in supporting innovation and growth within the technology sector.