Local tech start-up sold for $37m
A LOCAL start-up that almost folded in its second year of business has been acquired by San Francisco's customer support company, Zendesk, in a deal worth up to US$29.8 million (S$37.2 million).
Zopim, a live chat software provider, is finally having its day in the sun - a far cry from its early years when funds were running dry and it was struggling to find a business model around its product.
The six-year-old start-up, founded by four former students from the National University of Singapore (NUS), has certainly not got here without difficulty or hard decisions, co-founder and chief executive officer Royston Tay told BT.
"We set a high bar for our product at the beginning and did not feel comfortable charging for it before it met those standards," he shared. But reality kicked in after two years when the start-up ran low on funds and was compelled to introduce pricing. Today, it offers both free and paid live chat plans that are used by over 100,000 websites in 150 countries.
"2010 was a clear turning point for us. Post-2010, we raised some money from NUS and Spring Singapore, and started to offer paid plans. The influx of cash allowed us to hire more designers and engineers, and we reached profitability shortly after," said Mr Tay.
Since then, Zopim has seen about 2.5 times growth in revenue and headcount annually. In 2012, it recorded US$1.4 million in revenue and US$289,000 in profits after tax, said sources.
"Anyone that says starting up a company is easy is lying. But that's where the fun is. The challenges we overcome as entrepreneurs are what makes it rewarding. Pay cheques and exits are just a manifestation of overcoming those obstacles," Mr Tay said.
The 31-year-old electrical engineering graduate added that Zopim would not have made it so far if not for the support of NUS and the NUS Overseas College (NOC) programme, of which all four co-founders attended. "NOC is a brilliant programme that has groomed many entrepreneurs," said Mr Tay.
Other start-ups founded by NOC alumni include mobile marketplace Carousell, as well as digital marketing company Techsailor, which was acquired by India's digital services network, To The New, last July.
The Zopim acquisition, one of the largest known in terms of value for a Singaporean start-up, was completed in March and announced on Thursday night via blog posts by Zopim and Zendesk.
The latter also filed for an initial public offering on the New York Stock Exchange on Thursday, in which it seeks to raise up to US$150 million, according to the S-1 filing notes.
Financial details of the Zopim acquisition were published in the S-1. Zendesk will make an upfront payment of US$15.9 million to Zopim, and pay out the remaining US$13.9 million in cash and shares over the next two to three years, subject to Zopim staff's continued employment.
"We are thrilled to add (Zopim) to our family of products... to accelerate our chat functionality and bring to our users... an intuitive, transparent and fun product they can use to engage their customers in real time," said Mr Adrian McDermott, senior vice- president of product development at Zendesk.
As part of the acquisition, Zendesk will be phasing out its own live chat software. Meanwhile, the entire Zopim team, comprising close to 30 members, will be joining Zendesk but continue to be based in Singapore.