B2B e-commerce software developer Sienna Technologies has wowed a second venture capital (VC) firm this year, securing $A2.5 million in equity from IT, manufacturing and health industry investor Nanyang Ventures.
However, the lobbying process has been all but smooth-sailing for the 10-year-old e-commerce software specialist, whose credentials include e-business integration projects for seven major banks in Singapore, and local clients like the Commonwealth Bank and Optus.
Sienna began the VC-raising rounds this year with cynicism, Robert Byrne, CEO of Sienna Technologies, conceded.
"We approached VC funding with a bit of scepticism. They tell you they're going to add value, but the learning curve which some firms had of our business and the market issues we faced was too steep," he said.
The major difficulty Sienna faced in convincing the top end of town it should be the one per cent statistic worthy of VC dollars, lay in selling-in a viable business plan. According to Byrne, Sienna could not secure VC dollars on a direct sales business model alone, therefore re-jigging Sienna's "value proposition" to that of reseller model.
"The proposition is that there is now a platform for (the channel) to use our technology as a basis for every e-business solution, rapidly and less expensively," said Byrne. "The reseller model is key to us globally going forward."
A pure channel model would lend Sienna a competitive edge in the face of VC scrutiny, he added. By proposing to work with reseller partners, Sienna could offer value-added products to solution providers and ISVs from the channel, Byrne said.
While he would not elaborate on new channel partnerships, he said they would bring Sienna back into the black within the next fiscal year, generating $A6 million in profit over this period. He projected the channel would create 100 per cent profit growth year over year.
Negotiations with Nanyang took 10 weeks. Byrne said the firm played the role of partner as opposed to shareholder. "Nanyang will be actively involved in our business and not just provide passive funding. They've developed a strong understanding of who our business is and where our competitive advantage lies," he said.
Nanyang's backing was a double-win for Sienna today. Technology Venture Partners, the first local VC firm to fund Sienna to the tune of $2.5 million in February, topped Nanyang's investment off with another $1 million.
Now sitting pretty on $3.5 million from VC spoils, Sienna plans to invest heavily in R&D programs over the next few years and open offices in Asia.