Quadstone Unveils $10 (£6.3) Million Investment Package for Global Expansion

Edinburgh-based software house, Quadstone Limited unveiled the details of a $10 (£6.3) million investment package from a consortium led by international venture capital investors 3i plc.

The consortium includes British Linen Equity, Aberdeen Asset Managers and Scottish Development Finance, which is providing funds through the Scottish Equity Partnership. All the capital invested will be used for ordinary share capital (equity) and represents a very substantial resource for Quadstone to globalise its Customer Behaviour Modelling products and services.

Used primarily to fund a major expansion of its activities in Europe and the US, the deal leaves Quadstone valued at around $35 million and places it in the premier tier of independent software companies. The new investment will see staff levels grow by more than 100% in the coming two years with 25 new staff in the United States, 15 new staff in London and an additional 12 staff in Edinburgh planned by the end of Quadstone's current financial year. The package will also allow the company to more than double its marketing activities.

Kevin Lyon, 3i's Glasgow director for technology investment says: "The new funds will enable Quadstone to make further major inroads to this fast-growing and potentially enormous global market. The company is already a significant player and we are convinced it has the technology and the people to really make its mark. This is the type of high-technology business that we are very keen to support."

This is believed to be the largest ever investment in a mid-stage Scottish software company and will enable Quadstone to aggressively develop its global business network and further expand the company's stronghold in the international market place. The deal also comes just after the recent announcement of Quadstone's latest set of international business alliances with partners such as NCR Corporation and PricewaterhouseCoopers.

Neil Heywood, managing director at Quadstone says: "A lot of time and effort has gone into putting together precisely the best consortium of investors to add maximum value to the business as it grows internationally. In the last four years, Quadstone has developed a strong global client base. The new investment package reflects this and will help consolidate and expand Quadstone's long term potential."

Quadstone was set up by its four founding directors in March 1995 with initial funding of £450,000 from them and Northern Venture Managers. The company is one of Scotland's great technology success stories with a turnover in excess of £3.2million in 1998 in what is still very much an emerging, but very high-growth market.

Calum Paterson, Director of Scottish Development Finance says: "Quadstone has always been one of our most exciting and challenging investments. They have great technology and a real desire to take it to market. I believe this is the largest single investment in an early-stage software company in the history of the software industry in Scotland. The Quadstone team have worked hard to build the right consortium to deliver what their business needs to be a global success story."

Recently, the company was placed fourth in the Deloitte & Touche Technology Fast 50 and has been ranked by DataQuest as Europe's number one and the world's number five data mining software provider. Also, in the past nine months, Quadstone has collected the Financial Times British Venture Capitalist Award as Start-up of the Year, a Scottish Business Award for Business Start-up, and a top three placing in the KDD Cup in America. Not bad for a company just four years old!

Quadstone's fast-track success is attributable to its pioneering customer behaviour modelling software - Decisionhouse. Using high-speed analysis tools and high quality graphics to swiftly create models of customer behaviour such as purchasing patterns and consumer profiles, Decisionhouse helps marketers build better customer relations and devise more effective marketing campaigns according to the needs of their customers. The company has also just launched its latest customer analysis package, 'Transactionhouse' which greatly enhances the original Decisionhouse suite of tools by looking in detail at the day-to-day behaviour of customers.

Quadstone claims over 6% of global market share and delivers marketing decision support to some of Europe's largest corporations including Barclays Bank plc, J.Sainsbury's, Telecom Service Centres, C&A and Liverpool Victoria Group. The opening of its Boston office last summer signified a first step into the international marketplace and the new investment will now enable that office to expand to meet US market demands.