November 2007

Calgary’s Redwood Technologies gaining momentem

Published on CanadaIT.com, November 19, 2007

By Maclean Kay
Troy Media Corporation

CALGARY, November 19 /Troy Media Corporation/ What began as a simple conversation almost four years ago is now a million-dollar investment. 

Norm Gaskarth, the Founder, Chief Technology Officer and President of Redwood Technologies, was working as a consultant in the telecom industry back in 2003 when he was approached by a “large, well-known” law firm asking if there was a way to document and itemize their mobile phone bills.

“Their BlackBerry bills were out of hand,” Gaskarth said, “and their IT people said there was no way to track them.”

Though he had built software solutions before, Gaskarth wasn’t sure how to tackle this particular problem. The law firm had only asked him if he was aware of an existing program (he wasn’t), but that led to “tossing around some ideas for developing something. I just had an idea that this was something I could perhaps look at,” he said.

Today, Redwood is the developer and provider of momentem, a software solution that allows handset users to tag and allocate calls to designated cost centres in real time with a few keystrokes. With the software, companies and individuals can track expenses and costs on their mobile phone bills. But the steps from idea to marketable product were anything but easy.

Initially, Gaskarth and friend Igor Visser spent some spare time writing and designing a partial solution, just to see if the idea was workable. “If we could make one or two core functions work, then a bigger solution was plausible,” he said. 

It took two weeks, but he and his friend both arrived at the same conclusion: this might just work.  Unfortunately, designing a solution is merely the first, and often easiest, step. Finding the money to create a saleable product is the second, and more difficult.

The original concept involved developing and selling momentem to the legal industry where the demand first originated. After some initial testing of momentem’s potential with a law firm in Calgary, Redwood began searching for early-stage financing but found raising money for technology in southern Alberta to be difficult. 

“We had one investor at $10,000,”  Gaskarth said. “Everyone else (who invested) contributed $500 or $1,000.” 

Investors were hesitant to invest because of the company’s focus on such a small market, and with an undeveloped product to boot.  It didn’t take Gaskarth and his team long to realize they needed help. 

Calgary Technologies Inc. (CTI) introduced Gaskarth to Terry Hughes, CEO of otaView and a wireless industry expert with long experience in companies such as Vodafone.  Hughes immediately “fell in love with the product” but also realized it would never succeed without being re-focused.  

The first problem, according to Hughes, now Redwood’s CEO, was the intended market.

“I knew that the sales cycle for the legal vertical market was long and dull, and was never really going to make money for Redwood,” Hughes said. He wanted to expand the market to . . . well . . . everyone.

But that meant a new distribution strategy. How would Redwood connect with its new, and much larger, market? The answer seemed self-evident: working with the mobile phone carriers.

But that would take money. 

“We needed serious, large money (to proceed further),” Gaskarth recalled.

So Hughes started pitching momentem everywhere he could: Rogers Pitch for Profit, the BC Angel Forum, the Banff Venture Forum, as well as groups and individual investors.

One of the investors wanted them to move to BC but Redwood opted to stay in Alberta and keep searching. They were eventually successful at convincing one group of angel investors to take the leap into the tech sector.

Mark Behrman and Bone Creek Capital immediately understood the product and the opportunity it offered. They agreed to initiate a funding round of $1 million.

“We typically invest in oil and gas products,” Behrman said. “We had seen some tech proposals, but we don’t really understand that market. We’re more efficient investors if we stay in our comfort zone.  We (aren’t usually) prepared to allocate the time and resources to understand (other sectors).”

But Hughes’ pitch, he said, presented them with a “clear description of what the market needed, and how the product fills that need. We all understood that we’d quickly subscribe (to momentem) as customers, not just investors.” 

Redwood is now moving ahead with its plans to roll momentem out to the general public through selected phone carriers and as an Alliance Member with Research in Motion (RIM), the makers of BlackBerry. 

You might say that the momentem is building.

SOURCES