Atlanta’s nuBridges wouldn’t take any institutional money in its Series A round. The business services provider, which enables the electronic exchange of business information between trading partners, had significant investments from chairman and CEO C. Tycho Howle and other individual investors.
“We became aware of it and wanted to take part in the Series A round,” says Chuck Johnson, general partner with Noro-Moseley Partners, “buy they weren’t opening it to institutional investors at that point.”
“We’re fairly conservative,” explains Allen Chan, nuBridges’ vice president of marketing. “Our thought was that we’d rather be risking our own money for a while so that we could prove ourselves and deliver on some market solutions.”
Noro-Moseley eventually got its chance, along with C&B Capital, the C. Tycho Howle and Marie Howle Foundation, GMT Capital, Flagship Investments and 24 individual investors as nuBridges raised $11 million in its Series B financing. The round was over-subscribed and described by Johnson as a “modest markup” in valuation from its Series A round. The Series A round was closed in December of 2001, and is “significantly smaller” than the $11 million Series B, according to the company.
The company, which was founded in June of 2001, originally sought $7 million for its Series B round in November of 2002. It was increased to $11 million and closed on January 15, 2003. “It was a very non-traditional type of closing,” says Chan. The company used no bank or placement agent and says there was no lead institutional investor.
Johnson says that nuBridges holds promise in a space also being addressed by Noro-Moseley portfolio company Flamenco. “As a firm we think helping companies solve the problems of dealing with different trading partners is an important new area,” he says. Noro-Moseley was impressed with the fact that nuBridges had demonstrable products and customers early on. “It’s rare that such an early-stage company has customers.”
He adds though, that there are challenges ahead for the firm. “While it’s going to help businesses do business more efficiently, it is disruptive, and there’s going to be more of an adaptation curve than companies typically see.”
NuBridges says it will use the funding for further product development and to launch its products and services in Q3 2003. The company currently has 26 employees in its Atlanta office and no plans to open new offices or expand much beyond its regional and domestic focus. “We’ve maintained a very flexible organization,” says Chan. “The market is so down right now that what we don’t want to do is ramp up prematurely.”
“We are absolutely trying to reach profitability with this round. We think that if all of the sudden IT spending catches on and we ramp up considerably, we’d want to raise another round, but even in the bleakest situations we have years of runway with this,” says Chan.
Contact Matthew Sheahan