$112m injection: tech firm plans to double Christchurch staff to 300

More evidence fleet tracking is hot: Telogis has landed $US93 million ($NZ112 million) in a funding round led by A-list US venture capital outfit Kleiner Perkins.

Telogis plans to use the new cash, in part, to expand its research and development operation in Christchurch from 150 staff to 300 over the next year, co-founder Ralph Mason tells NBR.

He’s not exaggerating. The company lists a raft of positions on its website; including, recently 30 open roles in Christchurch from junior technicians to highly-skilled posts.

Telogis’ cloud-based software offers real-time fleet management and analysis of driver and vehicle performance.

Many offer the same in the crowded GPS technology market.

Telogis has a couple of angles that help it stand out.

One is its auto-industry hook-ups. A breakthrough moment came early 2011, when it landed a major deal with Ford. The US vehicle maker now markets “Crew Chief powered by Telogis” with all its commercial vehicles. A deal with Volvo Trucks North America followed in March this year.

The other is an ambition to track not just commercial vehicles, but literally everything that moves, using GPS technology combined with RFIDs (radio frequency ID tags). Mr Mason reels off a list: “Cars, motorbikes, people, tools, generators, containers, tools.”

Speaking to NBR from Christchurch, Mr Mason would not comment on Telogis’ private equity value, but said the new investor’s collective $US93 million would buy them a minority share. The majority is held by the co-founders and management team.

The funding round, which closed last month, was the first time Telogis has sought outside capital.

The GPS technology company was initially funded through “sweat equity, personal capital and a lot of credit cards,” Mr Mason told NBR.

A number of local tech companies have fallen into the clutches of overseas owners.

But in Telogis’ case, the company always had an American aspect. Mr Mason co-founded the company with the Colorado-educated Newth Morris IV, and it was registered in both New Zealand and the US when it was founded in 2000.

Six years ago, the US company – Telogis Inc – bought 100% of the shares in Telogis Ltd, which now operates as a fully-owned subsidiary.

The company now has 400 staff worldwide, with its head office in Orange County, California.

Revenue was $US59 million last year and is on track to be $US90 million this year, CFO Kyle Messman tells NBR during a phone call from the US.

While he won’t comment on the privately-held company’s bottom line, Mr Messman says it’s “definitely profitable” and could be more so if it wasn’t reinvesting for growth.

Beyond the doubling of Telogis’ R&D centre in Christchurch, the recently closed funding round is precursor to a possible Nasdaq listing in the second half of next year, he says.

Christchurch Technical College graduate Mr Mason tells NBR he now spends around 60% of his time offshore; some in South America and Europe, but mostly in the US.

Will R&D stay in Christchurch as the company expands?

Mr Mason says it’s a certainty. A good R&D team is tricky to build, and you want to hold on to one once it’s established and hitting its straps.

Did the quakes put a brake on hiring?

“They did. But not anymore. The city’s back open for business,” Mr Mason says.

What about the skills shortage so many NZ technology companies complain about?

Telogis faces job market competition from multinational GPS company Trimble Navigation, which also happens to have an R&D centre in Christchurch.

But all up, competition is nothing compared to the US, where the likes of Google, Facebook, Microsoft and countless well-funded startups are fighting for software engineers, Mr Mason says.

Although the fleet management and location-based services fields are crowded – these days Telogis’ CTO – says his company has several years’ lead time in software-a-service or cloud-based apps.

He says as the company expands into tracking everything in the workplace that moves, it will keep on hiring as it ramps up R&D; 300 staff is merely the 12-month target for its research and development team.

Increasingly, Telogis will not just suggest the best route so a truck avoids a low hanging bridge, but collect information about roadworks being done. He gives the example of one commercial vehicle that’s used by 10 staff – a case where job scheduling and job tracking becomes more important than analysing petrol use.

Telogis already integrates with SAP (used by many larger companies to generate work orders). The CTO says his company’s “very open interface” lends its itself to integration with other software used to manage big organisations.

And sticking a radio frequency ID tag on anything that moves – with some intelligent cloud-based software to track it – could, for example, lead a company to learn a $20,000 generator on the back of a truck never gets used, Mr Mason says.

Right now, the lucrative US fleet management market is “under-penetrated,” Mr Messman says, with only around 10% to 20% vehicles using tracking technology. Other markets, and other asset tracking areas are further behind.

Mr Mason says there will be a “radical expansion of R&D” as the market moves from that point to “a time when every vehicle and every mobile asset is tracked.”

Including people?

“Yes, including people.”

ckeall@nbr.co.nz

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