Soft Tech scores a $5 million investment
By Aimee McClinchy
Construction industry software developer Soft Tech will look to make an offshore IPO within a year after receiving a multimillion dollar financial boost from Strathmore Group.
Strathmore, which will add management expertise to Soft Tech's board and lead the company's marketing and sales offshore, has invested $2 million for a 16.7% stake with an option for a further 16.7% stake at $3 million by the end of July.
Strathmore's then one-third stake for $5 million would value Soft Tech at about $15 million.
The eighth investment for Strathmore, it is also the highest profile: Soft Tech is a 13-year-old company led by John Ball, the chairman of industry lobby group New Zealand High Tech Council and president of the New Zealand Software Association.
Soft Tech creates three-dimensional modelling software for the door, window and storefront industries and won the 1999 software excellence award.
The company, with 70 staff, has offices in North America - where the commercial door and window market is estimated at $10 billion - and Europe and Australia.
Mr Ball said the company's main competitor was Auto CAD, used by most of the international community for modelling, but said his product was unique because a change to one part of a model dynamically reconfigured the whole model. "Each bar or piece is intelligent. One change does not mean the modeller has to start from scratch," Mr Ball said.
He said the financial injection which had gone into the US arm of the company, Soft Tech America, meant the company could expand market share, hire programming staff and continue development.
Its current model, V6, has cost $5 million to develop over three years and was funded by the company's activities.
Strathmore Group chairman Phil Norman said V6 excelled in the commercial market but he saw applications in the residential market with construction of homes - and partnerships with companies in related markets.
Acquisitions and mergers to strengthen market share were also possible, he said. An offshore listing was likely in 12 months but he would not say in which market.
Soft Tech's e-commerce procurement applications - enabling buying and sourcing of materials online via a b2b trade web site - would also be developed, Mr Norman said.
All development activities would be retained in New Zealand despite the offshore focus.
Soft Tech has some Asian clients but said it had yet to break into that region.
Mr Norman said the market would be looked at but Japanese and Chinese characters meant a substantial rewrite of the product was needed.
Mr Ball said Soft Tech chose Strathmore from a pool of six venture capitalists wanting to invest since he had spoken at the IT Investment Forum in February.
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