Iteamic looks for second round of funding

Mulls acquiring a consulting firm in the US.

Iteamic, a Bangalore-based software services company catering to start-ups, and small and medium enterprise (SME) clients, is looking for a second round of funding to expand its operations to tier-II cities, besides financing its proposed acquisition.

The privately-held company had earlier raised $1 million (around Rs 4 crore) from the Canara Bank Venture Capital Fund and is negotiating with a few VC firms to raise funds in multiples of $5 million (Rs 20 crore) in about six months, Niyogi Krishnappa, co-founder and vice-president (projects), Iteamic, told mediapersons on the sidelines of IndiaSoft 2008 here on Thursday.

"Tier-II cities offer huge potential for SME companies and, therefore, we are planning to expand our operations to cities such as Mangalore and Mysore. We have already signed up a facility for a 100-seater centre in Mangalore, which will be up and running in six months. Similar plans for Andhra Pradesh are on the cards," he said. Iteamic currently has two development centres and one wellness centre for its employees in Bangalore.

Iteamic, whose principal market is the US, is also pursuing mergers and acquisitions to strengthen its current business. It is in talks with a few consultancy firms in the US and expects to wrap up a deal in the next six months.

Though many Indian SMEs are looking at markets outside North America for growth in view of the anticipated slowdown in the US markets, Iteamic is insulated from any such disturbance, said Krishnappa.

"We are not really experiencing any direct impact of the US recession since we have stable clients. In the recent past, the only impact our business experienced was due to the fall in the exchange rate of US dollar against the Indian rupee," he said.

Iteamic, however, is keen on spreading its revenue base from the geography point of view. "Business development outside the US takes longer and the sales cycles are time-consuming. Also, the acceptance of non-local companies is poor. In that sense, exploring business outside US is a slower process. On the upside, it is steady business once you have established some ground," he added. The company has 13 marquee clients globally.

"For SMEs, it is much easier to germinate and grow in emerging markets like Europe, Russia, Africa, South America and Asia," he said. Europe and Asia contribute 15 per cent 5 per cent respectively to Iteamic's business.

The four-year-old company plans to grow its workforce to 1,000 by 2010, from 225. It registered revenues of $5 million last year and plans to close the current financial year with $10 million (Rs 40 crore).