Antarctica Systems raises $4.2M

by Paul Bonanos, 09-20-04

Business performance analysis software maker Antarctica Systems Inc. of Vancouver, British Columbia, has turned to two new Canadian investors for its third round of funding, a C$4.2 million ($3.2 million) installment intended to carry the startup to profitability by the middle of next year.

New backers Greenstone Venture Partners of Vancouver and Springbank TechVentures of Calgary, Alberta, signed on to a term sheet written by existing investors BDC Venture Capital of Montreal, GrowthWorks Ltd. of Vancouver and RBC Capital Markets of Toronto. Antarctica chief executive Barry Yates said the company's current valuation is up from the time of the previous round.

Both GrowthWorks and BDC, the venture arm of Business Development Bank of Canada, participated in Antarctica's first two rounds of funding, while RBC, an affiliate of Royal Bank of Canada, participated in the first but not the second round. Primaxis Technology Ventures Inc. of Toronto, which invested in the first two rounds, did not join in the new funding, Yates said, because Primaxis' last fund is currently out of money.

The new funding is Antarctica's first since March 2002 and brings the company's total venture backing to C$11.2 million. According to Yates, Antarctica received significant interest from at least one U.S.-based venture firm, which needed more time for due diligence. That firm may lead a future round if Antarctica decides to raise one, Yates said. David Toyoda of Catalyst Corporate Finance Lawyers of Vancouver provided legal assistance to the startup, which did not retain financial advisers.

Founded in 1999 by extensible markup language, or XML, inventor and Open Text Corp. founder Tim Bray, Antarctica's original intention was to create a type of next-generation search engine - based on the belief that existing search products were useful only if a user knew what he was looking for. Yates said the idea was to create a visual map of search results that was better suited to a person who was simply browsing for information.

As Antarctica tried to commercialize the product, however, it saw an emerging market for business intelligence and performance management products and thus geared the product toward visualizing large amounts of data useful to enterprises. The current product allows businesses to map out inventory information, geographic data, assets, logistics and other types of data, which can then be explored and analyzed in an intuitive way.

Although the startup has been selling largely to U.S.-based enterprises, Antarctica hopes to land a series of U.S. government contracts over the next several months. Yates said the company may soon receive more than half of its revenue from government customers.

The company is reserving the rest of its new capital for additional sales and marketing efforts, including relationships with wholesale distributors and original equipment manufacturers, as well as continued product development efforts. Yates said Antarctica has experienced triple-digit annual revenue growth since its first sales more than two years ago. According to its current plan, the company could reach positive cash flow by the summer of 2005, Yates said. If that projection holds true, Antarctica would not raise another round of funding unless it saw an opportunity for accelerated growth, he added.