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Cape Town venture capital (VC) company HAVAÍC today announced it would undertake a R5-million capital raise for local paperless cloud solutions company Digital Cabinet. The raise includes the conversion of the convertible loan, extended in July last year, into equity.
In a press release HAVAÍC said the company had mandated the VC to undertake the capital raise, which is based on the company’s estimated valuation having doubled in the intervening period.
Speaking to Ventureburn, HAVAÍC executive director Grant Rock did not want to disclose Digital Cabinet’s current valuation. However he was able to say that the VC firm had a minority stake of “less than 20%” in the company.
Several of the convertible loan participants and all the HAVAÍC principals have committed to subscribe for additional equity. HAVAÍC is now engaging with its wider investment community to close the remaining investment opportunity.
Digital Cabinet is on the brink of a period of rapid growth says HAVAÍC
Digital Cabinet offers companies cloud-based paperless document and workflow management solutions, and is on the brink of a period of rapid growth.
This, said HAVAÍC, was as a result of increased focus on sales and marketing as opposed to product development on which it has focused to date, distribution agreements with partners abroad, including US resellers Digital Workflows, and a joint venture partnership with Computershare, an Australian share registrar, for its digital post offering.
The Computershare agreement, the VC firm said, had driven the increase in the company’s estimated valuation as a result of the increased user base this joint venture will facilitate.
Rock said he expects that the company, which was founded in 2011, will expand next to Australia and the UK.
The proceeds of the capital raise will be used by Digital Cabinet to increase its staff capacity (which Rock said currently stood at eight members), undertake a concerted marketing exercise with the objective of creating product and brand awareness, implementing further product development and improving operational efficiencies.
HAVAÍC will represent investors who acquire shares in the company, as a result of the loan note conversion and the fresh capital injection, on the company’s board of directors.