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Lexitech Goes for the Gold
Branford IT firm lands chamber prez, $5 million in equity investment
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Business New Haven
3/20/2000
By: BNH
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After 17 years in the trenches, Alex Richardson must feel as though his ship is finally coming in.
On March 6 Matthew Nemerson, for 13 years president of the Greater New Haven Chamber of Commerce, announced that he would leave the chamber by April 1 to become senior vice president of Lexitech, the Branford Internet company Richardson founded and heads (see related story, page 3).
Three days later, Richardson announced that his company had attracted $5 million in equity investment from three venture-capital firms. “This proves you don't have to go on a TV game show to raise a million dollars,” Richardson quipped.
Naturally, the two events are not unrelated. Richardson and Nemerson have been friends for years. Both attended the Yale School of Management, and in 1983 Lexitech was the first company to locate in the fledgling Science Park incubator then headed by Nemerson.
The $5 million investment will enable Lexitech to hire some 50 people - with Nemerson likely the most prominent among them. In addition to offices in Branford and San Francisco, Richardson said the company plans to open offices in New York, Atlanta and London.
Lexitech was an early pioneer among Connecticut IT companies. The firm develops e-commerce applications for companies and organizations, especially those using self-service Web terminals or kiosks. Its clients include Fidelity Investments, bookselling giant Borders and the Rock & Roll Hall of Fame in Cleveland, O.
With $3 million in new equity, the lead investor is Zero Stage Capital of Cambridge, Mass., which was lured to New Haven through the offices of New Haven Savings Bank and the United Illuminating Co., which themselves invested in a Zero Stage fund.
According to Zero Stage vice president Inder Soni, his firm reviews some 2,500 business plans each year - and invests in 20 or 30. Zero Stage has chosen wisely in the past: An initial 1996 investment of $250,000 helped New Hampshire-Based Silknet Software get off the ground. Today that firm's market capitalization is $4.5 billion, Soni said.
The other $2 million equity investment will come from the Atlanta-based iXL Venture, one of the world's largest Internet consulting and e-commerce solution design firms. iXL is a strategic partner in Lexitech's Netkey technology, which helps to bring Internet retailing into stores, banks and transportation centers.
“In the new economy, companies don't compete; networks of companies compete,” Richardson said. “We spent a year seeking right investment partners.”
Richardson's vision involves “millions of terminals in public and private places” worldwide. “We make it easy to take Web assets and place them inside bricks and mortar.”
And $5 million certainly makes it easier to grow a company. That accounts for the smiles all around at Team Lexitech these days - present and future members.”
For Nemerson, it means moving from a world where slow and steady wins the race to a realm where speed is a cardinal - if not the cardinal virtue. “I'm in my mid-40s,” he said in an interview. “If you get a chance to get on the [Internet] escalator and take the ride up, you can't not do it.”
And for Richardson, that escalator just started climbing a lot faster. “It's like drinking out of a firehose,” he said.
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