Edward Tromczynsky, president and COO of PlanSoft Corp., makes raising capital look simple, but he says finding the money to grow a company is hard work.
Its not easy to raise capital, Tromczynsky says. You have to work hard, put together a good plan and a good management team and have some revenue already.
PlanSoft, a technology company based in Twinsburg, is a worldwide provider of Internet-based, business-to-business e-commerce solutions for the meeting, convention and event industry.
If youre taking 500 people to Chicago, you need to find a hotel, Tromczynsky says. You have no idea whats there. You need a convention center, off-site locations for dinner, you need to know what airlines go there, how to get from the airport, audiovisual equipment, centerpieces. All of that stuff is on our Web site.
Tromczynsky and co-founder Bruce Harris started the business about five years ago in Tromczynskys home and incorporated in 1997. They initially raised $1 million, then a few million more in private commitments. Last June, the company closed on investments of $11.25 million.
We sent out 75 business plans and got 50 venture firms very interested, he says. People say, Youre a tech company in Twinsburg. You raised $11.25 million? Theyre pretty amazed. Im unaware of any other tech venture raising $11.25 million in Ohio.
This spring, Tromczynsky attended Innovest, designed to bring entrepreneurs and venture capitalists together. While the experience was worthwhile, and PlanSoft attracted some interest, Tromczynsky said the company may be a little big for the concept.
Weve been valued by six to eight investment banks at $60 million, with shares between two and three dollars, Tromczynsky said. No venture capitalist interested in getting in on a deal wants to spend that much. They want 25 cents a share. Theres a chance $2 could become $10, but theres more of a risk.
Investors have found PlanSoft so attractive because it fills a needed niche. Internet users click on links on the companys Web site for photos and panoramic images of every facility in North America with at least 5,000 square feet of meeting space; the company is in the process of adding 10,000 international hotels.
The site is free to planners. PlanSoft profits from selling enhanced listings to properties and suppliers, posting banner ads, and collecting commissions from hotels and facilities booked.
If you took a meeting of 500 people to the Sheraton, thats $200,000 to $300,000 worth of business for them, Tromczynsky said. For them to find you in Cleveland, theyre overjoyed. They cant pay us enough to be there (on the Web site).
A year ago, the company employed 19 people, working seven days a week, from six in the morning until 10 at night, Tromczynsky said. Those guys became so unified, they became a skeleton for the company.
The company grew five times in the past year, and although were not going to grow five times again this year, when you have that skeleton, an amazing group results, he says.
As it continues to grow, PlanSoft is looking toward another round of private financing of about $20 million and anticipates going public in the first or second quarter of next year.