traded publicly on the Norwegian stock
exchange (symbol: SOI). Its operations were
funded completely by SI ASA, to the tune of
approximately $3.5 million until a manage-
ment buyout on November 1, 2001. At that
time, SI’s CEO, Finn Backer, bought 81 per
cent of the company, and SI ASA retained 19
per cent of the company.
From 1997 to the buyout in 2001, SI was
a software distribution and services company
selling and supporting the products devel-
oped by SI ASA into the North American
market. These products included a customer
relationship management product, a business
intelligence product, and two document
management products. Revenue in this peri-
od was made up of license sales, professional
services, and support and maintenance rev-
enue, all related to this product set, and fluc-
tuated between $1 million and $2 million per
year.
In 2001, Finn Backer saw an opportunity
in a project developing with Fluor
Corporation, the world’s largest publicly
held engineering consulting company. The
project, originally driven by a document
management sale, expanded into an extended
opportunity for enterprise-wide project doc-
ument management and collaboration. SI
acquired the rights to an existing solution
from SI ASA and worked to customize it to
meet Fluor’s needs for project collaboration.
At the same time, Backer recognized the
potential for productizing and selling the
application as built for Fluor to others in the
project management space.
The Fluor project started in June 2001. By
October 2001, the project scope had
increased to encompass a global license for a
secure project collaboration product (that
would become SI’s Coreworx product). At
the same time, SI ASA had responded to
investor pressure to limit its exposure outside
its core Nordic market by reducing its inter-
est in SI to 19 percent, which marked the
beginning of SI’s transition into an inde-
pendent software development company
from a distribution and services firm.
Although SI had exclusive North American
distribution rights for SI ASA’s continuing
product mix, the future of SI was becoming
focused on developing its own products.
The Fluor project was a success. SI’s rev-
enues in 2002 were $3.1 million, of which
Fluor accounted for the vast majority. The
final delivery to Fluor took place in 2003. In
that year, Fluor made up $1.35 million of
SI’s total revenue of $1.65 million. This rev-
enue was primarily in the form of funded
development.^2 Through 2003 and early
2004, the company focused on ensuring a
highly successful implementation of the solu-
tion at Fluor, recognizing that this customer
would be the beachhead into the project col-
laboration market.
Despite this success Backer decided he
wanted to return to Norway. On May 11,
2004, Backer sold his 81 per cent ownership.
His payment for the sale was structured such
that he would receive approximately $2.5
million in a series of payments, some of
which were dependent on company perform-
ance, over the period October 2004 to
December 2008. This transaction was effec-
tively a leveraged buyout in which the pay-
ments to Backer would be made out of the
company’s cash flow.
Backer’s position was purchased by
Verdexus, a boutique investment firm.
Verdexus was founded in 2001 by technolo-
gy entrepreneurs to provide management
and financial services, focusing on manage-
ment buyouts and corporate divestitures.
SI was the first venture in which Verdexus
invested. The Verdexus partners, all seasoned
operators, became the senior management
team at SI. Immediately following the buy-
out, Verdexus and SI management and
employees committed to an investment
round to provide additional working capital
to the company. Finally, Verdexus and man-
agement invested $300,000 in a convertible
debenture in December 2004. The debenture
was convertible into common shares at the
price set by the next round of financing.
The capitalization table at January 2005
was as follows in Exhibit 1.530 ENTREPRENEURSHIP CASE