German e-commerce company MeTechnology AG hopes to carry out an initial public offering on the Neuer Markt in Frankfurt within the next six months. The company has recently changed its name from the less memorable ESD GmbH as part of its move toward going public, and has already opened offices outside its home country, in the UK and France. The US is to be the next destination, as MeTechnology follows in the footsteps of that other German start- up, Intershop AG, which completed a successful IPO in July, raising some $50m on the Neuer Markt via the sale of 1 million shares. The similarities with Intershop do not stop there. Both companies were founded in the former German Democratic Republic; both are in the e-commerce space; and they have both enjoyed rapid growth. In MeTechnology’s case, it was founded in 1994 by IT prodigy Joszef Bugovics (currently aged 26) in Leipzig, with backing from Munich-based venture capitalist GSM, and has gone from a staff of five to over a hundred in Germany. As for its revenues, the company had $1.5m in 1997 and is predicting $4.9 for this year and $11m in 1999. That should also be the first year in which MeTechnology reports a profit, albeit it a modest one of around $800,000, according to its strategic planning. For this year it expects a loss of $2.5m, up from a 1997 loss of $2.2m. The company started out selling Bugovics’ hardware-based solution for secure e-commerce, namely the MeChip. This consisted of a box that fitted onto the parallel ports of PCs and encrypted data using a triple DES algorithm with a key length of 1,064 bits. This, explained Rembert von Meysenbug, managing director of the company’s UK operation, represents the highest level of encryption in e-commerce and was adopted by two German financial institutions, Spardabank from Hamburg and Volksbank in Hanover. Both are relatively small banks, however, and the company had problems marketing the MeChip to larger institutions, as it meant shipping the box to each individual customer. So MeTechnology developed what it calls its scalable bank solution, which can contain as many hardware components as the client bank requires, so that bigger institutions can opt for an entirely software- based solution, though that does mean a lower level of security than the MeChip. Now the company offers three main products: MeBanking, a modular architecture that provides automatic handling of transactions and supports all payment methods; MeCommerce, a platform for on-line payments in non-financial institutions; and MeDio, which enables companies to custom-build solutions for distribution, information and ordering systems. Von Meysenbug said the flexibility of MeTechnology’s e-commerce platforms, which support all the major payment systems in use, enables it to market them to companies wanting to transform their web sites into portals. Also targeted are providers of internet search engines, who want to expand into the portal business.
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