IT Capital has taken its first investment step by buying a 35% stake in Auckland-based electronic commerce startup exo-net.
Established last year by PC Direct co-founder, Maurice Bryham and two former members of his management team, Mark Loveys and David McKee Wright, exo-net sells accounting and e-commerce systems to medium-sized businesses. Under a heads of agreement, and subject to legal documentation and due diligence, IT Capital will invest up to $1.5 million dollars in exo-net, acquiring up to 35% of the shares in the company.
IT Capital board member John O'Hara will be appointed chairman of exo-net, while Simon Brown, vice-president of investments, will also take a seat on the company's board.
"Three factors made exo-net an immensely attractive investment opportunity," says IT Capital managing director, David Seton. "It's a new category of e-commerce software that targets small-to-medium businesses, providing solutions they haven't previously been able to afford. Exo-net has an outstanding management team with a proven track record in product development and brand management. And IT Capital is able to make a significant contribution to its international success. All of which adds up to strong upside potential."
For its part exo-net will gain experience in software development, international software distribution contacts and knowledge on readying companies for an IPO, from the IT Capital board members. Bryham says funding is not the main reason for exo-net entering the deal.
The agreement is the first deal concluded by IT Capital since shareholders last month voted unanimously to approve its plans to restructure itself into a venture capital firm operating in the high technology sectors of New Zealand and Australia.
Listed on the NZSE, IT Capital was set up to address the funding gap it believes inhibits small Australasian IT companies, by providing early stage funding not readily available in this market.
The company grew out of a company called Iddison, founded by Seton, which did venture capital work in natural resources, entertainment and agricultural sectors in Asia.
IT Capital shareholders recently approved plans to restructure the company into a venture capital firm, paving the way for it to begin investing in Australasian high technology projects, with the intention of developing and then spring-boarding them into larger overseas capital markets, principally the US.