Financial Services Software Company
The original operating model for the Company was to sell a $500,000 installed software solution, resulting in a long sales cycle and wide variability in revenues. The Company was losing money and looking for an investor to help absorb some of its losses when it came to Tunstall.
Tunstall challenged management to develop a less risky sales alternative for its clients and transform the offering to an application service provider (ASP) model and charge a monthly fee for its use. In addition, Tunstall assisted in the $9 million acquisition of a competitor so that the Company would have the only solution in the market. Tunstall raised $20 million of equity financing for the acquisition and the implementation of the new operating model.
By converting to a service/fee based model, the Company immediately increased customer penetration, eliminated long sales cycles and created a steady, predictable earnings stream based on usage rather than relying on the original model. These factors increased the Company's attractiveness to financing sources.