Ministry of Health email vendor latest tech firm sold offshore

Crossware, an Auckland maker of a software platform for customising email signatures with the likes of compliance messages or even advertising, has been sold to German firm eKomi.

The sale is the latest in a flurry of NZ tech company sales to offshore buyers this year (see foot of article).

And it’s yet another example of how a (now phased out) Crown funding scheme has been used to develop intellectual property that’s ultimately gone to an overseas owner.

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Founder Per Larsen said he had exited the company with the deal, which closed on September 30 and could not comment on the price or other details.

But in a January interview with the Herald, Andersen said Crossware’s revenue was around the $3 million mark and growing by around 20 per cent per year – indicating the sale price would be well below the Overseas Investment Office’s $100m threshold.

Companies Office records show Andersen as the only shareholder prior to the sale.

Berlin-based eKomi did not give a purchase price in German media coverage. The company created a platform for managing online customer reviews, but recently raised funds for a series of acquisitions to diversify.

In January, Larsen said his company had 18 staff in New Zealand, plus four in sales overseas – three in the UK and one in the US.

Local staff will remain after the sale, bar the already departed Andersen.

The founder said Crossware was used by 1.2m staff at some 3000 organisations globally.

International customers included Chiquita Brands, French multinational ad agency Havas, Shiseido and Abu Dhabi’s shipping port operator, while the Ministry of Health was Crossware’s hero client in NZ.

Larsen said the use of “container” technology in Microsoft’s cloud meant larger customers could operate Crossware without their emails going through any third-party servers – a privacy and security safeguard.

The founder said Crossware’s sticker price was $1 per user per month with customer pricing available for larger customers. The $3m revenue figure indicated there were a number of bulk discounts in play.

Andersen said his company’s major break came in 2014 when they were approached by Microsoft to provide a signature solution for global sports marketing corporation IMG.

Some 90 per cent of its revenue came from offshore by 2021.

Crown funding

In 2019, Crossware became one of the final wave of companies to qualify for a Growth Grant worth up to $5m per year from Crown agency Callaghan Innovation (the grants were then phased out in favour of a universal R&D tax break).

Growth Grants covered 20 per cent of qualifying, NZ-based R&D, indicating that Crossware, with its revenue around $3m, would only have been eligible to claim a fraction of the potential total of $15m over the three years of its grant (Callaghan has been asked for a total).

The grant period expired in March this year.

An early Callaghan grant, awarded for 2014-16, saw Crossware receive $68,815.50.

String of offshore sales

The Crossware deal is the latest in a string of offshore tech sales this year,which has included Wellington video game maker A44’s sale to a UK fund, robotics specialist Rocos’ sale to a US firm, the $100m+ sale of EzyVet, plus the sale of Vend ($455m), Timely ($135m), Seequent ($1.45b), mobile gaming outfitNinja Kiwi ($203m), Intraheath Systems ($22m) Education Perfect (in a majority-control deal valuing the firm at $455m) and the $500m Hawaiki Cable (a deal now in front of the Overseas Investment Office), while December saw the sale of local retail hero Mighty Ape to Australia’s Kogan for $128m.

Last week, Auckland BioSciences managed to buck the trend, buyingAustralian rival CellSera.

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