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Highroads Inc. shored up its fiscal runway in January with half of a $1.5 million Series C add-on round of funding, and has appointed a new CEO.
The Woburn-based provider of software-supported human resources services is cash-flow positive, said incoming CEO Michael Byers. The funds will allow a modest expansion into consulting services, and keep the company’s balance sheet healthy, he said.
Large companies’ pain in a down economy is driving growth for Highroads faster than expected, Byers said. If growth continues apace, Highroads may consider an IPO or other exit as early as February 2010, he added.
“(The economy) is the wind in our sail right now in this environment,” Byers said. “The Fortune 500 companies are clearly looking for ways to reduce spend, and health care is a great place.”
Formerly chief operating officer at the company, Byers replaced fellow company founder Paul Daoust, who has become the company’s non-executive chairman after occupying the corner office for four years.
Founded in 1999 as IE-Engine Inc., the company changed its name to Highroads in 2005. The $750,000 tranche of funding secured in January brings the company’s total funding to $40.8 million.
In 2007, Waltham-based ABS Ventures bought out a former Highroads investor, the venture arm of the Royal Bank of Canada. ABS joined in a $9 million Series C round and took a seat at the board table, said ABS managing partner Bill Burgess.
The latest tranche of funding was intended to dampen “potential volatility” in the company, Burgess said. “We really did a top-up to the last round to make sure the company had the wherewithal to focus on its business and not focus on where it can pinch pennies.”
Potential customers’ pain makes them receptive to a money-saving pitch, Burgess said, but that’s not enough to start talking about an exit just yet. He said filing for a public offering just in case an IPO window opens briefly, as California-based OpenTable Inc. did last month, is out of the question. “The capital markets environment, from my perspective, is way too unstable for me to want to go through the process and expense of preparing for an IPO when uncertainties are huge,” he said.
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