NovaSim’s software makes call centers and hospitals more efficient. Will $300,000 take it to the next level?
THE CURE? Kerrie Paige and Jaret Hauge's software helped the American Red Cross turn around blood-test results faster -- and more cheaply. Can it do the same for the rest of the health care industry?
The Pitch: "Our flagship product, ccProphet, helps call centers manage operations by creating what-if scenarios based on parameters such as call duration and number of workers. One of our other applications simulates the flow of patients through health care facilities to determine how many nurses and beds are needed. We do well in a recession, as companies focus on efficiency. We are in the process of standardizing our custom health care application so it works off the shelf for all clients, as well as our evacuation application, which helps a large facility plan a move, in either an emergency or a relocation. So far, we have been self-funded and have kept the company small. But now that our children are older, we would like to move more quickly. We believe that there are many opportunities for us in health care and government, especially with the passage of the stimulus."
OWNERS: Kerrie Paige and Jaret Hauge
LOCATION: Bellingham, Washington
2008 REVENUE: $366,000
2009 PROJECTED REVENUE: $525,000
NET PROFIT MARGIN: 25 percent
TYPICAL CONTRACT SIZE: $20,000 to $150,000
CUSTOMERS: 36 percent manufacturing, 25 percent health care, 20 percent call centers, 5 percent government, 14 percent other
FUNDING SOUGHT: $300,000
The Experts Weigh In
STICK WITH WHAT YOU KNOW
NovaSim's product is impressive, overhead is low, and it has good margins -- those things are all very positive. But instead of focusing on its flagship product, the call center software, the company is trying to penetrate new markets. It's not clear to me whether there is a demonstrated need for these new products. I think it would be more productive to focus on increasing sales of the company's existing products. Anything NovaSim can do to make its business more scalable through existing sales channels will be time well spent.
Peggy Wallace Managing director Golden Seeds New York City
FOCUS ON HEALTH CARE
This is a tough sell. NovaSim hasn't gained much momentum. The company has been in business for nine years, and it has only $366,000 in revenue. Although the software sounds interesting in terms of efficiency and cost reduction, it probably has an extended sales cycle, and it seems like a tough business to scale. The company's primary product is for call centers. That's a highly competitive field, and it doesn't seem to make it a lot of money. On the other hand, there's no question that costs in health care are exploding. If NovaSim has a critical solution, that would be beneficial.
Andy Sack Managing partner Founder's Co-op Seattle
GROWTH CONQUERS ALL
In order to raise funds, NovaSim will have to battle the perception that it is just a lifestyle business run by a husband-and-wife team. It must demonstrate to investors that there is a compelling exit. Changing the business model from custom solutions to product sales signifies a new direction that may be more compelling to investors. NovaSim is projecting strong growth despite the current economic environment. If the company can hit those revenue numbers and show strong year-over-year growth, it will be positioned well.
Fran Seegull Managing director Funk Ventures Santa Monica, California