A Calgary company backed by Dragons’ Den star Arlene Dickinson that has consolidated optometry practices across Canada has raised a nine-figure sum from U.S. private equity giant L Catterton.
FYi Eye Care Services and Products Inc., led by eye-doctor-turned-chief-executive Alan Ulsifer, has built a network of 250 locations, with 500 optometrists and 2,700 employees and annual revenues exceeding $350-million. The company, operating as FYidoctors, makes its own eyeglass lenses at a facility in Delta, B.C.
“We love the brand,” said Andrew Taub, managing partner in L Catterton’s flagship buyout fund, which invests US$50-million to US$400-million a deal. The firm, based in Greenwich, Conn., has backed dozens of consumer-focused brands including Restoration Hardware Inc., Peloton Interactive Inc. and Outback Steakhouse owner Bloomin’ Brands Inc. It’s believed the amount invested in FYidoctors exceeds $100-million, although the parties did not disclose terms.
The optical market in Canada is “a super attractive category” worth $5.5-billion and growing about 4 per cent a year, Mr. Taub said. "It’s a good category, it does well in good times and bad, with nice growth prospects.”
FYi is the latest in a string of Alberta enterprises outside the energy sector to attract significant funding, including online giving software provider Benevity Inc., warehouse robotics firm Attabotics Inc. and learning software maker Absorb Software Inc.
At a time when Albertans are contending with the economic impact of chronically low oil and gas prices and the political challenges of getting those landlocked products to market, “we have to stop thinking about what was and what could be,” said Ms. Dickinson, an FYi investor and board member.
“I’m very sympathetic to the energy sector, but I’m not so sympathetic that I believe [political leaders] don’t need to get thinking about what the future is going to look like [and] what else can happen in the economy to help Alberta," Ms. Dickinson said. "FYidoctors is a great example of what’s possible.”
Dr. Ulsifer was operating one of Canada’s largest independent optometry practices in Grande Prairie, Alta., in the mid-2000s when he came up with the idea for FYi.
Advances in lens manufacturing technology were making it possible for customized manufacturing, and Dr. Ulsifer worried that independents would struggle competing with chain stores on pricing and technology. He persuaded other eye doctors to merge into a collaborative entity to fund their own manufacturing laboratory and distribution centre. By centralizing marketing, administration and training, they could achieve economies of scale and stay in-step with industry changes.
FYi launched in April, 2008, with 120 doctors and 74 locations from British Columbia to Nova Scotia, making it Canada’s second-largest eye care provider behind LensCrafters parent Luxottica Group SpA. Five years later, when FYi had 107 locations, Dr. Ulsifer was named Entrepreneur of the Year by Ernst & Young.
The company is owned by eye doctors, who sell their practices to FYi in exchange for cash and shares in the company. They will continue to collectively own a majority after the financing. In addition, half of the board is made up of optometrists. “Our goal was never just to bring together companies for the purposes of a flip," Dr. Ulsifer said, "but to build an iconic brand … really focused on eye health.”
Constrained in its growth by internal cash flows and lines of credit, the company had relied on word-of-mouth to bring in new doctors. That will change, Dr. Ulsifer said, noting there are more than 2,000 practices across Canada with the potential to join FYi, as well as expansion opportunities in the United States. “With this funding our plan is to go to market and knock on doors, which is not the approach we’ve taken historically. There’s a huge opportunity in the Canadian market [backed by] a proven brand builder” in L Catterton.
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Sean Silcoff