Costa Mesa-based software developer Verys LLC is launching up a seed fund that will invest in emerging technology-focused companies, and the fund is backed with proceeds the company received from its early-stage investment in Irvine’s Parcel Pending, which sold last month for more than $100 million.
Verys provides software, consulting services and staffing for companies. It was formed in 2012, right around the time its founders took a stake in Parcel Pending.
“The strategy going forward is to take half [of the campany’s] money from the Parcel Pending sale and reinvest that into local startups,” Verys Chief Executive Chris Antonius told the Business Journal.
“Not all of them are going to be a home run,” he said.
Fortune was apparently on their side with Parcel Pending, a 6-year-old firm started by Lori Torres, a former executive in the multifamily division of Newport Beach-based Irvine Co.
Her company uses electronic lockers and proprietary software to store and access delivered packages.
A fee-for-equity deal inked more than six years ago with Torres turned into a 1% stake in the Irvine-based company, according to Antonius.
The software developer was the company’s first investor, before local investment network Tech Coast Angels backed the then-startup shortly after Torres began the company in 2013.
The Business Journal last week chronicled the initial $1.25 million investment, which generated a nearly 20-fold return for Parcel Pending’s initial investors; approximately $25 million.
Verys officials said they took home about $1 million in the sale of Parcel Pending, which is being used for the new seed fund, called Verys Capital.
Apps, Esports
The fund has already added some new early-stage firms to its portfolio.
Verys Capital has taken a minority stake in five companies and has zeroed in on the booming esports segment as a target, according to Antonius.
It has backed Love for Sports, a sports-minded dating and networking app; and Book a Jam, an app platform for musicians, bands and others looking for rental facilities.
“We want to be a minority shareholder. We don’t want to set valuations,” Antonius said. “We want to ride along with a more mature investor.”
The company is primarily looking to strike more fee-for-equity deals but is weighing other strategies.
“Now that we have some money in Verys Capital, we might actually do some investing in businesses [where] we’re not doing the development work,” Antonius said.
UST Background
Verys’ software is used by clients that need technology help in areas such as application development, web design and cloud services.
Antonius and co-founder Mike Zerkel, who serves as president, previously worked at Aliso Viejo-based information technology service and outsource provider UST Global Inc., one of OC’s largest private companies with estimated annual revenue of $800 million.
Zerkel climbed to president of global sales and marketing at UST, helping grow its business from an idea to $500 million in annual sales with customers that included blue chippers, such as Walmart Inc. and Costco Wholesale Corp.
Antonius, a former executive director of the Digital Media Group at Sony Pictures Entertainment, served as UST’s business head of media, entertainment and technology.
Company officials said that Verys’ revenue grew 50% last year to nearly $20 million. It projects the top line will climb another 25% this year to about $25 million.
Clients include American Airlines Inc. in Dallas, Kia Motors America Inc. in Irvine, Stearns Lending LLC in Santa Ana, Foothill Ranch-based Oakley Inc. and Irvine-based Edwards Lifesciences Corp. (NYSE: EW), OC’s largest public company by market cap.
Strong demand has led Verys to expand locally and nationally.
Verys in 2017 moved from a 5,600-square-foot office near John Wayne Airport to a 16,000-square-foot space in Santa Ana near the Costa Mesa (55) Freeway and Dyer Road, where it now employs 110 workers, a heavy mix of mostly software designers and engineers.
It entered the year as the 25th largest software maker in OC ranked by local employment, according to Business Journal research.
It is eyeing another location for expansion, most likely the Dallas area, home to big client American Airlines.
“Something in the neighborhood of 3,000 to 5,000 square feet,” Antonius said of the expansion plan. “And about 25 employees.”
