Covid 19 coronavirus: TracPlus' $5m raise shows NZ's VC scene undaunted

Christchurch Helicopters director and pilot Richie McCaw is one of TracPlus's signature customers.

Fast-growing NZ tech company TracPlus has landed a $5 million investment from the largest local venture capital firm, Movac.

It puts gives TracPlus the funds to continue an international push for its tracking and messaging technology, used primarily by emergency services.

And it shows that contrary to some pundit speculation, the Covid-19 crisis hasn't quashed all venture capital investment. In fact, as with the Global Financial Crisis, Movac sees it as a time to buy in.

"Successful Kiwi tech firms like Vend, PowerbyProxi and Greenbutton were all founded in the GFC, so we know times like this are great for innovation," Movac partner Mark Vivian says.

"Covid-19 pays no heed to emergencies, or fires - two of our major markets," TracPlus boss Trevor McIntyre says. Photo / Supplied

TracPlus was founded in Dunedin in 2007, with the Auckland Rescue Helicopter Trust among its anchor customers.

Emergency, fire-fighting and search-and-rescue remain TracPlus's biggest markets, but clients also use its tracking technology in areas such as tourism and agriculture. Many customers, such as Christchurch Helicopters - where ex-All Black captain Richie McCaw is a director and pilot - are adaptable to any kind of work.

Other hero customers include CalFire (aka the California Department of Forestry and Fire Protection), San Diego Gas & Electric, Australia's National Aerial Firefighting Centre and Chile's Ministry of Agriculture.

Privately-held TracPlus was ticking over at breakeven and revenue around the $2.5m mark when South African expat and one-time PwC M&A manager Trevor McIntyre arrived three years ago.

Last year, revenue was around $7.5m. This year, it's on track for $10m.

That growth means TracPlus has had no need to tap the government wage subsidy scheme. "Covid-19 pays no heed to emergencies, or fires - two of our major markets," McIntyre says.

The CEO says the business is still breakeven, but its faster growth over the past three years has allowed it to increase staff numbers from 11 to 50 and it now has offices in Chile (not an immediately obvious South American base - but McIntyre says a lot of tourists go missing around the Andes), the US (in Colorado, chosen for similar reasons as Chile), the UK, South Africa and Australia.

The injection of capital from Movac will be used in part to open a new office in Singapore, which will be used as a staging post for expansion into Asia.

The company will also hire its first chief marketing officer, and flesh out its sales team.

McIntyre says three years ago "TracPlus was like a lot of Kiwi companies. Very good at technology but not very good at selling it." There was nobody in marketing. Sales was a side-gig for a member of the tech support team.

Some of the Movac funds were also used to complete the purchase of V2track - a four-man Cambridge company that makes tracking devices.

TracPlus's secret sauce has traditionally been that it's hardware-agnostic - its cloud-based tracking, messaging and event tracking platform, which costs from $45 to $90 per month, works across a number of popular brands of satellite and cellular gear.

But McIntyre says buying V2track gives TracPlus control over firmware (software programmed into a hardware device), giving it control over a whole ecosystem.

He says TracPlus retains another of its traditional key strengths and market differentiator: working with both satellite GPS and cellular hardware. "We'll always give you the cheapest and best signature type," he says. And during the likes of search-and-rescue operations, TracPlus will still be able to pull together messages from, say, police and military comms systems plus those used by Joe Public.

Strong investment opportunities

Movac never puts a post-money valuation on its investments. But a May 1 Companies Office update shows that new shareholder Movac gained a 33 per cent stake for its $5m, making it the largest single investor.

The received wisdom has been that VCs will pull their heads in and wait for the Covid storm to pass (a US Venture Capital Association report released on April 27 is titled "Capital Crunch over Coming Months").

But Vivian says, "We seeing a steady stream of strong investment opportunities
- there's an increasing level of M&A and partnership opportunities. Our portfolio companies are looking to acquire or work more closely with other NZ companies.

"Given that early-stage tech companies provide high-value jobs, we are waiting with real interest to see what the Budget has in it for the early stage NZ ecosystem," Vivian says. (The Budget had $230m in new spending for R&D and export assistance. TracPlus is already on a New Zealand Trade & Enterprise grant that sees it receive around $600,000 in support over three years to help it crack the North American market. With Budget 2020, the Government is doubling to 1400 the number of exporting firms receiving intensive support in offshore markets from NZTE.)

In the meantime, Movac sees TracPlus as primed for growth.

The VC outfit's managing partner Phil McCaw (the godfather of the NZ venture capital scene and, if you were wondering, no relation to Richie), says "TracPlus is yet another example of a Kiwi tech company who's built a strong clientele worldwide, and wants to accelerate its growth. The years ahead for TracPlus are exciting, and we look forward to playing our part."

McCaw adds, "As I've said publicly in recent weeks, there's plenty of uncertainty in markets currently, but we are a long-term investor and continue to work with Kiwi companies who are looking for an investment partner with strategic experience, operational ability, meaningful capital and access to global networks."

Three questions with TracPlus CEO Trevor McIntyre

What has been your biggest challenge of the outbreak?

One challenge early on was to make our staff and customers feel certain that our service would never cease. Covid-19 pays no heed to emergencies, or fires - two of our major markets, so we needed our customers to feel certain that regardless of the global pandemic, we were well-equipped to support them.

So this was two-fold: empowering our staff to work at home efficiently and at their best, and making sure our customers received the world-class support that they know and trust.

I am very proud of how we pulled together so quickly. Like our customers, we are equipped to work and plan effectively under pressure where required.

What are your biggest learnings?

We often focus on communications externally that are structured and intentional but neglect to do so internally. When times are uncertain, the team likewise benefits from communication that is structured and planned in addition to the normal day-to-day communications. Also, using the time that challenging situations can create can allow you the time and space to more effectively plan for the future. Having teams spread across the world, Covid-19 has actually allowed our global communications to become tighter.

One year from now our business will ...

... Be helping and supporting others. We take inspiration from the way our customers work so seamlessly and collaboratively together and look at ways we can do the same as technology providers in this space.

• Covid19.govt.nz: The Government's official Covid-19 advisory website