Deal Radar 2009: CAST

Today’s Deal Radar focuses on a company that has used an alternative financing path than what we normally see. CAST makes an application intelligence platform that acts as a software assessment engine, going far beneath the business process layers of an application to analyze its architecture. The company claims that its product, CAST, has the ability to analyze entire mission-critical applications from the inside out and feels that their unique proposition is that they “fill in a real pain for IT managers” in helping them track quality and measure developer output.

Currently, CAST has amassed a large array of analyzers — 30 languages natively analyzed plus a universal analyzer that has been configured to accommodate more — that can parse through any multi-technology application in the business IT environment. Although the company admits that some competitors can do the same in C and Java, CAST claims that none can tackle a full business application top-down.

The company’s pricing depends on the size of the team working on each business application as a measure of the size of business that CAST helps the executive manage. The price is per TM (team member), or contributor, to the business application.

CAST claims a TAM of $10-15 billion in terms of overall application intelligence and feels that their product can be used in any industry or context in which there is custom software development. However, the company has been focusing on IT-intensive verticals such as telecommunications and cable service providers, utilities, insurance, banking, institutional finance, government, and logistics and transportation service providers. Their target segments within an organization are the business IT leaders, often VP-level applications executives or CIOs.

Though growth was flat between 2004 and 2006, as CAST aimed to transform itself into a global player, the company has grown 35% over the past two years. Today, CAST boasts of nearly 650 customers concentrated largely but not exclusively in Europe and North America. Customers include ADP, Airbus, AT&T, AXA, the US Department of Homeland Security, Credit Suisse, FDA, IBM, Marathon Oil, Patent & Trademark Office, and Société Générale.

The company started with seed funding of $50,000 from 1990-1996. CAST remained largely self-financed, relying on consulting and specialized tech expertise to finance initial R&D effort over its first five to six years. In May 1999, the company got €4 million from an IPO on Euronext against 20% of the capital. CAST did not take any VCs on board, and management held 80% of the company at that time. In April 2002, it received €7 million through a PIPE with a long-term partner. It received another €4 million-plus in a different capital increase. CAST did not disclose the name of the ‘long-term partner’ or specify what the different capital increase meant. At present, the founders and employees hold more than 40% of the company’s shares.

CAST, which posted $44 million in revenues in 2008, said that raising money is a possibility in 2010 in order to accelerate market penetration and boost growth if market conditions improve. Though the company is looking to grow, it ruled out the possibility of being an acquisition target for the moment.

Suggested Readings:
*Deal Radar 2009: xTuple
*“BI Appliances” are Entering the Fray
*Oracle and SaaS: Inevitable

This segment is a part in the series : Deal Radar 2009