Saturday, May 27, 2006
Investors give Covarity a boost
Covarity Inc., which makes software for financial institutions, has raised $3.2 million in venture-capital funding, the company said yesterday.
The money is to come from Waterloo venture-capital firm Tech Capital Partners Inc. as well as labour-sponsored GrowthWorks Canadian Fund Ltd. and university-sponsored VentureLink Diversified Balanced Fund Inc.
Covarity intends to increase its revenue fivefold this year and needs the added funding to serve all of its future customers, said Rod Foster, Covarity's chief executive officer.
Covarity's software allows businesses that receive loans to submit financial information to their lenders electronically.
The company, founded in 2001, has 18 employees and serves more than 20 credit unions, Foster said.
Covarity is hoping to expand into the United States and sell to larger financial institutions, he said.
Two of the three investors had previously supplied Covarity with funding.
In 2003, Tech Capital Partners provided $3 million and VentureLink $1 million.
Covarity's growth prospects make it a good investment, said Andrew Abouchar, a partner at Tech Capital Partners.
"Whenever we look at a transaction, we focus on what the customers are saying about the company and its product," Abouchar said.
"When you look at the kind of response Covarity has received from the marketplace, it is very clear to us that this is a company that is solving a major problem in the financial-services industry."
Covarity intends to hire several more employees, Foster said.