NetChemistry is everyone’s picture of a tech start up. The president sports a Hawaiian shirt and shades. Techs run around with no shoes on. A toaster sits on a dorm-size fridge in the supply room next to a network server, across from shelves filled with value packs of paper clips, file folders, flats of Diet Coke and a box of Heinekens.
The company also produces technology and just closed $5.5 million in funding.
But these guys are no hacker chumps, burning though venture capital, trying to find a business plan.
NetChemistry has projected revenue of $10 million for this year and, says CEO Alfred Lutter, “It’s a profitable $10 million.”
NetChemistry makes transactional web sites for financial-services companies.
“We understand that intimately, because that’s where we came from,” said Justin Becker, the company’s senior vice president of sales.
NetChemistry was formed by members of the technology group at E*Offering, when that online investment banker moved its operations to the Bay Area.
“Nobody wanted to move to the colder climate,” said Chris Cruttenden, NetChemistry’s president.
Starting the charge was Cruttenden, who was a VP of marketing at E*Offering. When E*Offering planned its move, Cruttenden said to his dad, E*Offering founder Walter Cruttenden, “We have to do something with these guys,” according to the elder Cruttenden.
(Walter Cruttenden also stayed behind when E*Offering moved north. He’s no longer an officer of the firm.)
Chris Cruttenden was working within a few feet of Lutter, who was a CTO at E*Offering, and after he heard the plan, they went to work.
They recruited Tyler Hesse for NetChemistry’s COO. Hesse managed the web development team that authored the E*Offering Internet and intranet web sites. He also surfs with Chris Cruttenden and some of the techs. They also recruited Edward Meador as CTO. He developed information technology projects at E*Offering and Southern California Edison. NetChemistry also recruited some of the E*Offering techs.
“We got to keep that team together,” Lutter said.
NetChemistry makes web sites that need a transactional segment for financial service companies, such as investment bankers, insurance companies, equities and bond brokers, and automobile finance firms. It developed the web sites for Angelstreet.com, an online investment bank, for MuniDirect, an online site to register bonds for auction. Net Chemistry also is working on a reporting system and data warehouse for a 15,000-plus-broker insurance firm.
NetChemistry developed an auction site through Auto Trade Center (ATC) for Honda Finance so dealerships can electronically buy the lease-ended vehicles, which are owned by Honda Finance. Honda Finance has to sell about 200,000 cars a year.
NetChemistry is working with two more auto companies on similar web sites and is pursuing more.
“We now have the background to go after the other car companies,” said Justin Becker, the senior vice president of sales for the company.
NetChemistry got $5.5 million in funding from Cruttenden Partners, headed by Walter Cruttenden. Walter Cruttenden also helped out in other ways.
“I gave them free space and free advice,” he said.
NetChemistry is in the old E*Offering building where Walter Cruttenden keeps his office. The building also houses Angelstreet, an online investment firm that employs some former E*Offering employees.
The Cutler Group and a few other local investors also participated in the funding.
“We have a nice list of names that want to see us succeed,” Chris Cruttenden said.
Lutter said that even though NetChemistry is expected to generate earnings on $10 million in revenue this year, it still needs the money to grow at the rate it plans.
“I don’t think there is anything stopping us from having 100% growth. Demand is so huge,” Lutter said.
NetChemistry employs 19 people, the majority engineering or IT specialists. It plans to have 60 employees by the end of the year.
“We’re looking for superstars,” Lutter said.
Recruiting 40 IT people is a tough task in this tight labor market, but Lutter is confident.
“We’ve done it before,” Lutter said. As E*Offering’s CTO, he saw the ranks of his technology team swell from zero to 48 employees in six months. Chris said E*Offering’s overall employee count went from 10 to 140 in the same time (this included brokers, investment bankers, and analysts).
NetChemistry is also in acquisition mode, looking for professional-services firms, and are closing in on a deal for a financial-services company. It has already made an investment with ATC and plans on taking shares of companies in trade for its products.
