Australian auto software startup Connexion Media just tipped $5 million into its working capital, raising it from institutional and sophisticated investors via convertible notes.
The business, buoyed by the recent launch of its vehicle management system, Commercial Link, in General Motors cars in the USA, is pushing to drive sales and marketing activities in its existing partnerships with GM and Oracle, which includes Commercial Link and Flex subscribers, MiRoamer licensing fees and continued customisation work.
The Melbourne-based Internet of Things business says it’s working with auto manufacturers in Europe and the USA to provide telematics and infotainment solutions for next-generation connected cars.
The raise has a two-year term with a conversion price of A$0.15 and coupon rate of 9.95% annually. The notes cannot be converted for 12 months, and Connexion has the right to redeem them at any time following the 12-month anniversary.
Connexion’s getting the cash in two tranches, with the vast bulk of the funds, $4,305,192, expected in July 2016, subject to shareholder approval.
The business is now predicting it will be cash flow positive in CY2017. It’s expecting to receive an additional $3 million in CY2016 thanks to a $2.3 million R&D refund, and $700,000 in customisation work.
Connexion Media CEO George Parthimos says the deal protects the company from any dilution in the first year and has the backing of existing investors and the board.
“The high level of demand from investors demonstrates the level of confidence new and existing shareholders have in the Company. The funds raised will be used to bolster our sales and marketing activities, which will accelerate our path to cash break-even, which is expected in CY2017.”
The ASX-listed company’s share price currently sits at $0.13.