Castek Lands US$22.8M in Venture Capital
Funding
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National Post - July 23, 2002
Toronto-based Castek Inc. announced it landed US$22.8-million
in financing yesterday, among the largest venture capital funding
rounds in Canada this year.
Castek, which makes software which helps automate customer processes
for the property and casualty insurance industry, initially sought
around US$7-million, chief executive and founder Yung Wu said.
But the company found VCs were willing to fund a much larger amount.
While many Canadian technology companies have been shut out of
the venture capital market during the financial meltdown in the
sector, Mr. Wu said VCs were impressed by Castek's history and
global vision. Currently 100% of the company's revenue comes from
outside Canada, though Mr. Wu said he has no intention of relocating
the business.
The current funding round, the company's third, is a windfall
for a business that was founded in 1990 on credit from "Amex,
Visa and Mastercard," said Mr. Wu.
Technology Crossover Ventures, based in Palo Alto, Calif., was
the lead investor for the funding round. Others involved in the
financing include Netherlands-based p3 Technology Partners and
Covington Capital's Triax Fund. As part of the deal, Henry Feinburg,
partner at Technology Crossover Ventures, will assume a seat on
Castek's board.
The VC said it was investing in Castek because of the company's
potential for rapid growth.
"The company has attained rapid market influence and penetration,"
said Rick Kimball, founding general partner at Technology Crossover
Ventures. "This is more than a financial commitment; it is
also a strong endorsement of Castek's outstanding team."
The company had previously raised $10-million in June, 2001,
in a series B round led by p3, CIBC World Markets and Altamira
Management Ltd.
Castek, which employs 350, is expected to have revenue of between
$45-million and $50-million this year, with annual growth rates
of 50%, Mr. Wu said.
The company will use the cash to hire new employees starting
next year, and to increase its share in a market dominated by
the likes of Computer Sciences Corp., a company with a US$6-billion
market capitalization.
This article orginally appeared in the July 23, 2002
issue of The National Post.
Reprinted by Permission.