It could have been the story of just another startup-venture backing, interesting technology, but not enough fairy dust to get it off the ground. Its investors were about to turn the spigot off when Bud Whitmeyer, a general partner with Research Triangle Ventures in North Carolina, relented. He wanted to revisit the technology. There, he found value and said he would continue to fund the project, but only if could be severed completely from the company that was developing it. That’s when software developer Noverant was spun out of Entrinsik with a seed round of financing from Research Triangle Ventures and Catalysta Partners.
“It didn’t go like they wanted it to-they couldn’t hit their target market with customers or sales and marketing. They weren’t meeting revenue expectations and profits fell way short,” says Robert Woodruff, Noverant’s president and chief executive, formally with Entrinsik.
When the spinout was completed in June, Durham, N.C.-based Noverant had taken many of the engineers that developed the technology inside Entrinsik, along with its sales, marketing and quality assurance teams.
Entrinsik has no remaining equity stake in Noverant, nor does it hold any rights to Noverant’s intellectual property. Although Noverant has already secured capital from Research Triangle Ventures and Catalysta Partners, it is still in negotiations with a third undisclosed investor and should close its seed round of venture financing by the end of the month with $1 million.
Noverant’s technology walks companies through the regulatory approval process when they are developing products in regulated markets.
A pharmaceutical company, for example, might use Noverant’s software to produce audit records and proof of compliance in its manufacturing processes to the Food and Drug Administration and then use Noverant’s partners to train employees in compliance methods. Since August, when Noverant redid its technology package to specifically target drug makers, the company signed on two undisclosed pharmaceutical manufacturers as clients.
“The technology was three years to four years under development and very mature when we got it,” Woodruff says. “The technology is fairly well refined, and we’re not adding much to it.”
Instead the company is adding more sales and marketing staff and quality assurance engineers to support its current roster of 10 employees. It is also working to roll out its product with existing customers and create a pipeline of new ones. The company expects to close enough deals to reach profitability by the middle of 2003.
“I’m tickled that we think we can do that,” Woodruff says. “This round will give us the runway to get to that point and be ahead of the game.”
Contact Carolina Braunschweig