Long Beach Ticketing Software Provider Will Move to Irvine This Month
Paciolan Systems, a ticketing software provider, plans to move its headquarters from Long Beach to Irvine this month, just a few freeway exits away from one of its biggest competitors, Costa Mesa-based Tickets.com Inc.
The company, headquartered in Long Beach for more than 15 years, has signed a five-year lease for a two-story, 40,000-square-feet building at Von Karman and McGaw avenues,doubling its office space in anticipation of growth. Privately held Paciolan (pronounced pack-ee-OH-lan) employs about 120 people and expects that count to hit 160 by June.
“One of the major reasons the company relocated to OC is we felt that Irvine was one of the premier addresses for recruiting,” said Matthew Witte, executive vice president.
The announcement hits a few months after 20-year-old Paciolan received its first round of outside funding, said Jane Kleinberger, the company’s chief executive.
In August, Marwit Capital LLC, an investment firm in Newport Beach, led a group of five venture capital firms in the $10 million round. Witte, who headed the group, said investors were attracted to Paciolan because it has always been profitable and they felt it was in a great position to take advantage of the biggest change to hit the ticketing industry: the Internet.
“The concept of a ticket, which historically was a piece of cardboard that you used to get into an event, is undergoing dramatic change,” Witte said. “Instead of it being a form of admission, it’s really a gateway to a whole series of offerings that previously simply weren’t available.”
Those services include letting customers print tickets at home, check views from potential seats and exchange tickets digitally.
Paciolan put the capital toward technology development. It plans to go for a second round of funding in the summer, in the $10 million-to-$15 million range, and use that cash for technology research and development.
Despite facing a more capital-constrained environment, Witte does not anticipate a problem in raising the money.
“It is more challenging than it was a year ago, but I think that Paciolan has a very compelling story,” Witte said.
Paciolan got its start licensing back-office software systems to large organizations that wanted to sell tickets. It has about 220 customers, ranging from professional and college sports teams, to performing arts centers and museums, which reportedly generate 85 million tickets a year. Big names include the St. Louis Rams, San Diego Padres, University of Notre Dame and San Francisco Ballet.
While continuing that push, Paciolan began offering an e-commerce system, which enables it to collect a transaction fee for each ticket sold online.
That additional revenue stream, coupled with massive consolidation in the ticketing industry, has caused Paciolan to “turn up the volume” and get “more aggressive” in the marketplace, said Kleinberger.
Paciolan is up against troubled Tickets.com, which sells tickets directly to consumers and ticketing software to groups and venues, and Ticketmaster Corp., a unit of USA Networks Inc., New York, the dominant firm in the field. Ticketmaster soon will roll out a system that allows customers to purchase tickets over the Internet and print them out from their computer desktops.
Tickets.com, which had acquired 11 software licensing companies to go up against Ticketmaster, is working to streamline operations for efficiency (its head count is down to about 460 from 1,000) and battling a falling stock price.
Paciolan is not too worried about the competition, Kleinberger said. She recognizes that “no one could sell out a Ricky Martin event faster than a Ticketmaster.” But she says her licensees are more focused on cultivating relationships with their customers,not quickly selling out one-time entertainment events, which is Ticketmaster’s specialty.
Plus, Witte said, Paciolan has gone head-to-head with Tickets.com at least 15 times in the last year and won every time. It also recently signed on two former Ticketmaster customers, the Arizona Diamondbacks and the San Diego Padres, Witte added.
“Just in the last month, we’ve taken away at least four accounts from Tickets.com and we’ll probably take eight to 10 more in the next month,” Witte said.
The reasons, according to Witte, are that Paciolan has a good reputation for fulfilling its obligations and there has been a definite shift away from the “middleman”,ticketing distributors,because venues want to build relationships with their customers and they don’t want them hit with extra fees.
In the meantime, Paciolan also will explore possibilities of going public in a few years.
“Venture capital firms had to understand that to us an IPO is not the goal, it’s the reward for having done the job well,” Kleinberger said. “I couldn’t partner with people that wanted to be on a mad dash for the public market.”
“We’re in a high tech sector, but we’re interestingly an old economy company,” she added. n
