Already counting revenue from its offering of back-end technologies that power online trading, Javelin Technologies Inc. cashed in on the financial weight of its existing customer base with an $11 million Series A offering intended to fuel its international expansion.
Profitable since its 1997 founding, Javelin expects 2000 revenue to reach $10 million, a significant rise over last year’s $4 million, said Chief Financial Officer Michael Chaladoff. The company is cash flow positive, he said, and expects to keep up similar levels of growth with the added equity infusion.
It is, of course, possible that Javelin could have funded its growth plans off its cash flow, but it was believed that such organic growth would have squelched Javelin’s capacity to meet international market demand.
“They did the smart things, and the mature thing,” said Hadar Pedhazur, founder of Javelin investor Opticality Ventures. “They traded equity to capture more marketplace. They could have said we want it all, but the all would be a much smaller all.”
Opticality led the Series A deal with a $5 million play and, in exchange, received a board seat.
The remainder of the $11 million financing was split among a mix of strategic investors, including some of Javelin’s customers, traditional venture firms and investment banks. Advent Software Inc., Robertson Stephens, Tradescape.com Holdings, Thomson Financial (the parent company of Private Equity Week), Collaborative Capital, Nextera Investments LLC, Schoffstall Ventures, BHH Technology Ventures LLC, Investec Ernst and Jack White, the founder of Jack White Discount Brokerage, participated in the round.
The New York-based Javelin – which operates satellite offices in San Francisco and London – will use the equity infusion to fund its continued international expansion. It plans to open new offices in Chicago, Stockholm and Asia, while also ramping up development, sales and marketing efforts in those regions. Javelin also will invest heavily in its staff, growing the firm from its current 65 employees to 100 employees over the next six months to accelerate its development of wireless applications and expand its existing product suite.
“With this funding we solved the problem of getting institutionally owned and the ability to grow through partnerships,” said George Kledaras, president and chief executive of Javelin. “The best way to grow is through other people and work with other individual leaders.”
Javelin, which provides back-end electronic trading technologies, currently offers Financial Information Exchange Protocol: Coppelia, Common Message Switch Protocol: Lolita and Automated Confirmation Transaction solutions to institutional clients such as Chicago Board Options Exchange, Morgan Stanley Dean Witter and Yahoo!.
“In 1999, it became clear Financial Information Exchange Protocol was going to be the lingua franca of communicating orders, quotes – everything by everybody, not just the mega firms, but the smaller firms too,” said Pedhazur. “This was a no-brainer, watching the convergence of the protocol exploding.”
The company reports no immediate plans for further private equity financing.