Loss-making cloudy UC services biz Outsourcery is set to pocket £1m worth of investment from a VC just months after it raised cash and cut costs to prevent liquidity drying up, following a forecasted sales slip.
The Manchester-based biz run by Dragon’s Den ‘celebrity’ Piers Linney — who, along with his co-founder, has agreed to forgo his salary for a year in commercially austere times for the firm — will again dilute its issued shares by placing five million Ordinary Shares at 20p each.
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An application for the shares to be traded on AIM has been submitted, and dealing is expected to start on 15 October.
The stock buy — which represents 10.6 per cent of the enlarged total issued share capital — was snaffled by Encore Capital at a 21.2 per cent premium to Outsourcery’s closing price of 16.50 pence on 9 October, mirroring the price of the equity issue on 14 August.
The AIM-listed born-in-the-cloud upstart start-up said last month it is "fully funded to profitability” and predicts becoming EBITDA positive by the end of 2015, and operationally cash positive during the same timeframe.
“The company re-confirms that view today,” the business told the city.
The additional funding gives Outsourcery “greater options to pursue and accelerate its growth, particularly in the mid-market segments and in the enterprise arena,” it added.
Outsourcery scored its first “large-scale” FTSE 100 end customer via a major channel partner recently, it said today.
Some months back, the business raised cash via a share placement, and slashed costs after admitting sales via channel partners were not quite where management expected. It had raised the prospect of building a direct sales force to take destiny into its own hands.
Results for the six months to 30 June, filed last month, show the company turned over £3.4m, versus £2.1m in the prior year period, and saw an operating loss of £3.58m, albeit lower than the loss of £8.7m a year earlier.
Finance costs of £235,000 left the firm nursing a net loss of £3.81m, again better than the prior year’s loss of £9.3m.
The company is predicting sales in the second half of the year to rise 53 per cent, and then 67 per cent by the end of calendar 2015.
As market watcher MegaBuyte pointed out today, Outsourcery’s EBITDA target is based on some “punchy forecasts” and asked if the company should think about holding onto the additional £1m funding for a “rainy day in case the growth does not quite come through”. ®