But the sad fact is that most young companies aren’t ready for that financing and often flame out if they get it.
In 2001, Exponentia, a small Vancouver tech company, shared those dreams. But if it had followed the score sheet of many companies, it probably wouldn’t be where it is today: poised, thanks to a deal with an American strategic investor, to deliver its sports-broadcast interaction technology to the world.
Exponentia wasn’t able to get financing when it tried to crack the business big leagues amid the tech crash of 2000-2001. So although it received some government-backed development money, it had to essentially bootstrap its business. This meant it was forced into a disciplined, step-by-step strategy that took much longer to pay off.
PROBLEM
Like a lot of young tech companies at the time, Exponentia began with a relatively undefined concept laced with PR buzzwords and tech gibberish such as “real-time communications platform” and “multi-channel alert and response.” This murkiness hampered it, even though there might have been something solid underneath. Also, its target customers had been burned before by geek-spouting concept companies that promised the world and never delivered. They weren’t overly disposed to trying it again.
For four years, the company struggled to find a market, essentially surviving on love money – financing from friends and family – and any kind of outsource software-development work the founders, Jim Fawcett and Andrew Gregory, could rustle up. But like some rookies, the founders kept plugging away while continuing to learn.
As in sports, the software business is full of companies with potential that often fade without reaching that potential. Dozens of operations spring up with a concept, struggle for a while to define it, and then languish or disappear due to lack of funding. It looked at first as though Fawcett and Gregory might follow the same path.
SOLUTION
However, the Exponentia team had something else going for it. Its founders believed in the concept and the company, and were willing to work patiently and develop the discipline to make it happen. Eventually, Exponentia focused on the sports-broadcast market and, in 2003, got a couple of breaks. It convinced a sports show to use its polling software for select broadcasts, and it sold action-prediction game technology to the Toronto Maple Leafs.
The two technology applications led to the development in 2005 of Exponentia’s unique product, the interactive PlayAction platform, which allows fans to send predictions and other information to game broadcasts via text messaging on their cell phones.
Launched as an interesting wrinkle for a televised Vancouver golf tournament, PlayAction went into high gear last year when the NHL signed it on to spice up hockey broadcasts.
This led to a strategic financing deal with a client last month. This U.S. investor liked the interactive potential it saw in some aspects of PlayAction, and it wanted to use the technology in its new interactive division. The investment means Exponentia can service sports and entertainment venues globally.
From their current perch, Fawcett and Gregory can now look back on their early days and be thankful they didn’t get the equity investment they so desperately wanted early on. “Early success can be the kiss of death for some companies,” Fawcett says.
“If you have it, you might not develop the discipline you need to build a business. Because we had to be so creative to get deals, we got to really learn our customers’ businesses, and that knowledge led to the financing.”
Lessons learned
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