Now that its only VC backer has converted its debt to equity, Halifax-based STI Technologies Ltd. Is embarking on a fundraising campaign it hopes will raise $5 million to $10 million in follow on funding this year.
The company formerly called Sampling Technologies has doubled its revenue in the past year, and it’s now seeking funding from major venture capital firms or strategic partners to back its international expansion.
On Thursday, GrowthWorks Atlantic Venture Fund announced in a press release it would convert its $2 million of debentures in the company into common stock. The fund originally made the investments in two rounds, in April 2006 and January 2009.
“That press release is just a symptom of our success,” said STI Technologies CEO Steve Nicolle today. “Clearly they [GrowthWorks Atlantic] value the shares more than the dollars they represent.”
Started in 2002, STI Technologies solves a problem for the pharmaceutical industry by simplifying the way pharma companies distribute samples of new products. Rather than shipping out small testers to doctors and have them hand them out to patients, the STI platform allows drug companies to send physicians smart cards they can hand out to patients, who take them to a pharmacy along with a prescription to receive the drug. As well as cutting costs and improving safety, the STI platform allows for an orderly record of how the sample was distributed.
STI now has about 300 projects on the go across Canada, working with such blockbuster drugs as Plavix, Nexium, and Crestor. A year ago, the number of projects was about 150 and two years ago it was about 100.
The next step for the company is international expansion, and Nicolle and his colleagues are now plotting how and where to expand. The U.S. would be an obvious choice, but the U.S. is an advanced market already and there may be more competition in that country. Nicolle said other candidates are Brazil, a European country or Australia.
As part of the fundraising effort, Nicolle will be travelling to presentation days in the U.S. and Canada. STI is one of 10 companies to present at the Technology Investor Day organized by the Toronto Stock Exchange, TSX Venture Exchange and CVCA (Canada’s Venture Capital and Private Equity Association) on May 31 in Toronto.
The company is hoping the fundraising drive will produce an up-round – that is, the valuation will exceed that of the last fundraising so existing investors will not be diluted. As well as GrowthWorks, the investors include about 100 friends and founders who put in a total of $2.5 million in 2002 and 2005.
Nicolle said the growth trajectory of STI isn’t leveling off at all, because the STI system is now gaining acceptance and more drug-makers, doctors and pharmacies feel comfortable with the platform.
“It’s just going to keep growing,” he said. “What we’ve done is new to the market. Now the market is catching up.”