blur Group, who listed on AIM in October 2012 with a £4m placing (see here), is raising £7.6m from a placing of new shares. The money will be used for new customer acquisition and to develop the services-commerce (s-commerce) platform that its B2B business services online exchange runs on.
The company listed very early in its lifecycle when it was still loss making as it wanted access to funds to help it build scale. Since then, growth has been impressive but losses have also climbed rapidly - operational losses rose from $675k to $1.87m (blur reports in dollars) for the year to December 31 2012 (see blur Group pays the price for top line growth). It maintains it is operating in an emerging market - worth $1 trillion according to its own estimates - and is working hard to secure first mover advantage. Investors have faith in the company - the share offer was oversubscribed - but it will have to manage its cash burn rate with care.
blur joins SaaS pure-plays Salesforce.com and Netsuite who have also gone to the markets to raise funds for continued expansion in the still developing SaaS market (see here). Investment and growth are not issues for cloud-based companies, sight of profitability is the missing part of the equation.