CyanConnode order boom defies the doomsayers
Its share price is bumping along the bottom of the often turbulent pond that forms the UK stockmarket and cynicism abounds among some of the more pessimistic shareholders contributing to the LSE share chat service online.
Yet CyanConnode has just moved past the 71 million of orders worldwide landmark.
And in a fresh development it has engineered pole position in a Thailand market worth many billions of pounds.
It last week raised a further £8.6 million expansion capital and is recruiting; it has deep-pocketed, world-leading partners in territories where it is pioneering new platform technology that promises to provide the most proficient ever offering in narrowband radio mesh networks.
While its technology is used for smart metering and smart street lighting, these are just two of many potential applications for its platform as the Cambridge company becomes a genuine global player in industrial IoT.
Net proceeds from the new raise will fund future expansion by investing in staff, R & D and working capital to execute on the company's order book, pipeline and growth roadmap.
Harry Berry, who has raised millions of dollars for East of England innovators from global investors over the years, was appointed chief operating officer in July to execute on what was then a £21 million order book but which has now expanded significantly.
Berry has an enviable track record in building and securing investment for technology businesses on both sides of the Atlantic: formerly head of Brightstar – BT’s world-renowned corporate incubator – Berry is currently European partner for the global New Venture Partner group. As such, he can swiftly tell the difference between a potential tech titan and a turkey.
Berry is utterly convinced that in the not too distant future CyanConnode shareholders will be saying the company “is the best thing since sliced bread.”
He told me: “I am not here to tell people hype or lies. I am here because I am genuinely excited by the prospects for the business. I know what we are doing; I know where we are going and how we are going to get there. The strategy we are following for building business opportunities in emerging countries is absolutely spot on.”
He said executive chairman John Cronin had done an incredible job to engineer CyanConnode into a world lead against a backdrop that was far from simple.
“The company wouldn’t be in the wonderful position it is in had John not worked so hard and so smartly; he has put his own personal credibility out there and put his own money into the business and I would not be here – CyanConnode would not be here – had it not been for his unstinting belief, expertise and dedication.”
The business is a completely different animal now than when it started out as plain old Cyan, a microchip company, around 12 years ago. It is now up to 70 staff from 55 last year and has ignited a new recruitment campaign in Cambridge and internationally.
As well as growing fast at its Cambridge HQ, the company has ramped to around 11 people in India where it has just hired a managing director, and through the acquisition of Connode is approaching double-figure headcount in Sweden.
The world where CyanConnode customers work and live is switching to RF, the benefits of which the company’s industrial IoT platform is positioned to provide.
As such the opportunities for new orders are spiralling. And that is the challenge facing the business – delivering on those orders, which is why Berry was brought in.
“We couldn’t be in a better position,” says Berry. “Our order book and our partners around the world are telling us that.
“The world is moving fast and we have had to move with it. We have always had the capability in electrical meters and street lighting but we are working on expanding into gas and water meters and to upgrade the lighting model through a new application and making it more scaleable.
“Our technology is evolving to meet market demand and you will see developments on new applications later this year, perhaps into early next. You only have to look at the facts to see what a strong position we are in.
“The market for our technology is absolutely huge; the global market in terms of consumption is less than one per cent take-up for smart street lighting and two-to-three per cent for smart meters which leaves massive headroom in both for CyanConnode to exploit.
“John and I talk about the old Cyan and the new Cyan. It is a vastly different company today. There’s a lot of history with Cyan and a lot of people have not managed to shed that first base.
“Our strategy has been to operate in emerging countries and these territories cannot be approached in the same way as traditional markets. John and I have been there before; we know from experience how these tricky markets play.
“You cannot be certain exactly when they are going to take off but you need to be well placed in them when they do. And this is where I really take some comfort.
“We are entering and building in those markets via established, indigenous partners who are well financed and highly experienced and respected. I remember BT tried to build a global network without partners and it was a disaster.
“We have people in the countries we are targeting speaking the same language, with boots on the ground and they tell us they like the model where our role is to support them and help them deliver the technology – almost the ARM model.
“The aim is to eventually establish manufacturing in these territories because you don’t want to have to employ 50 or 60 people in every single country you operate. The skill, which I believe we have mastered, is to choose the right staff and partners in those territories to deliver the product in demand.
“We have multi-million pound companies on our team and we are their chosen partners, in India, the Philippines, Iran, Bangladesh and other countries.
“We have just closed on a new and powerful consortium in Thailand, packed with influential partners. This involves billions of pounds and thousands of people and we are now in both leading consortia in Thailand targeting new and lucrative contracts in our area of specialism in industrial IoT.
“If we were not getting the sales I would be deeply worried. We have just moved into 71 million of orders with more on the way. Piling up orders is not a problem; I have said for years that delivery on orders is a wonderful problem to have. It is a lot easier to deliver on orders than to win them in the first place.
“It must appear that we are having a mini reorganisation every six months or so but companies have to adapt and sometimes restructure to deliver on orders. The beauty is that we know when we have delivered on all our orders we will get substantial amounts of cash in and when we get more money flowing into the business everyone will be saying we are the best thing since sliced bread.
“I could make people a lot happier by stemming the flow of new orders; by focusing on the ones we have so the books look much rosier – but why would anyone do this when the markets are opening up in front of us and are there for the taking?
“Our strategy is to expand and grab the orders while they are there, not sitting back and shrinking.”
• PHOTOGRAPH SHOWS: CyanConnode COO, Harry Berry