Recognition Systems Group Plc (RSG), a UK-based customer relationship management software developer, has begun to show why venture capitalist 3i Group was prepared to invest 3m pounds ($4.8m) for a 30% stake in the company at the beginning of this year (CI No 3,590). Revenue for the first six months to March 31 is up 192% to 955,0000 pounds ($1.5m), way above the total of 788,000 pounds ($1.2m) achieved in the whole of last year. The net loss of 733,000 ($1.1m) is down on the 1.3m pounds ($2.1m) achieved in the same period last year. Most importantly, there is 1.9m pounds ($3m) cash in the bank compared with just 97,000 pounds ($157,140) at the start of the financial year.
CRM software is currently a hot growth area but RSG learned the hard way that having a good product is irrelevant without the resources to promote it in a worldwide market. Even worse, the company’s fragile financial position at the start of this year deterred potential purchasers who obviously wanted to be sure the company was going to be around for a while.
3i’s investment has changed the landscape and enabled RSG grow its sales force and recruit the consultants it needs to exploit a growing market. RSG competes directly with US supplier Exchange Applications Inc and another UK firm, Prime Response, but says that its background in data analysis puts it ahead of companies that have a campaign management background.
The bulk of its revenue comes from the US which, RSG says, is two years ahead of Europe in adopting the technology. But RSG’s disappointing record has left investors skeptical and the shares dipped 8.7% to 15.75 pence.
