Boston Technologies received $2.5mil in debt financing couple of weeks ago and I was curios why they needed the cash as the company is profitable as far as I know. I had the opportunity to discuss this with BT's CEO George Popescu.
MG: Why did you seek funding and what do you intend to do with the cash raised?
GP: We were looking for funding for three main reasons:
- To add employees to support our growth,
- To grow our Infrastructure to support the increase in clients and transaction volumes,
- And finally, to fund New Product Development.
MG: What is Boston Technologies’ mission today? You are well known in the market for your MT4 Bridge, but what else is there?
GP: Our mission has been to build a one-stop-shop for a wide range of foreign exchange trading needs.
Our solutions range from specific execution and reporting enhancements to a fully turnkey end-to-end solution that can launch a new MT4 offering for banks, brokerages or even Introducing Brokers who want to start their own brokerage – all with minimal capital expenditure.
So, yes, Michael, we are indeed more than ‘the bridge company’.
MG: So, going back to my first question, specifically why did you raise funds for infrastructure?
GP: Our business is more than doubling every year, calling for more capacity to support many new customers. And as everyone knows, the market requires 24 x 6 highly reliable systems and excellent real-time support, and we aspire to always provide that, along with a focus on agility and innovation to be able to adapt to emerging trends.
As our transaction volumes have grown to $137bn a month, we understood the need to heavily invest in the type of high-performance infrastructure needed to support those volumes.
MG: And further, why did you raise funds for growing your staff?
GP: We have hired 38 new staff members in the last 12 months and we are continuing to hire developers, IT support, sales, marketing and system integration and implementation staff. We believe that we have been successful because we have invested heavily in assembling a team of people who are focused on delivering a positive customer experience.
Additionally, we recognize the benefits of offering a more personalized level of service by creating a local presence in several markets globally.
We have recently opened offices in London and the Middle East and we are currently in the midst of doing so in Japan, Korea and China as well.
MG: What are the funding terms (if you can disclose)?
GP: We received 2.5 million USD in venture-debt shared from 2 partners, Bridge Bank and Gold Hill Capital, at very favorable rates, without relinquishing ownership.
We feel that the due diligence performed by these world-class institutions, and the unique nature of the investment agreement, especially in today’s lending environment, is a solid endorsement of the future health and promise of our company, its prospects, and the potential of the market.
MG: What is new with BT - clients, developments, staff, etc.?
GP: In one word: growth! Growth in customers, growth in staff, growth in products. We grew at a rate in excess of 100% last year and we are targeting at least 100% growth this year as well. This is based on our existing core business only.
We have a total of 10 new products in our core-business pipeline. A few examples:
- an options platform with a similar model as our FX spot Trading Platform
- an institutional MT4 client terminal
- a depth of market add-on for MT4
- Enterprise Back Office solution
We established an affiliate company to supply prime brokerage services for our clients, with Liquidity provisioned by 7 of the world’s leading liquidity providers and delivered through our Best Bid/Offer aggregation technology. Because of this technology, we are able to offer some of the best spreads in the industry.
We also added depth and experience to our Senior Management team:
- Patrick Houle: Product Management Director
- Barry Clapp: VP of Sales
- Limor Joseph-Raz: Marketing Director
In the last few months we hired 8 new developers and we are migrating our development technology to a new cutting-edge development framework that will allow us to significantly increase the capabilities and performance of our technology while reducing development time.
MG: Is the MT4 Bridge still BTs flagship product (most of income) or are there others?
GP: Our MT4 bridge product represents about 5% of our revenue at this time.
The main product of BT is full outsourcing of everything a brokerage needs to offer FX trading.
We support the largest entities in the market, like FXCM, CitiBank, MF Global, GFT, and others, as well as small entities like Start-up Brokerages. We provide everything a brokerage needs at the level of quality that a large financial institution would require but at very reasonable cost due to the economies of scale we have been able to achieve.
We have over 70 people dedicated to support our customers and we have invested $10 million USD over the last 4 years in our technology and infrastructure. We have been able to attract some of the largest banks and brokerages in FX as customers specifically because they recognize, as we do, that this is the level of investment needed to support the sophistication behind their business. They can reap the full benefits of our cumulative investment for a fraction of the cost and redeploy the savings in their internal IT budget towards projects that will help them differentiate themselves in the market.
The results of using our outsourcing product are compelling and explain our growth: all customers offering BT powered trading platforms like MT4, have on average, seen a 50% to 100% growth in revenue in the first 12 months.
MG: What are future plans for BT - more specifically, what products is BT going to develop?
GP: For our vision, the market is lacking a trading facility that can transcend the credit limitations and counterparty risk of bilateral trading in OTC products. Creation of such an organized venue can facilitate a step function level of growth in the market and BT is positioned to enable this industry breakthrough.
As well, we are reaching out to institutional brokerages and other financial institutions outside FX, to include other asset-classes where our FX technology will add value. We have been looking into offering other platforms beyond MT4 and MT5 but it has been difficult to find good platforms with a flexible pricing model. I would be happy if more platform providers could reach out to us for an opportunity to work together.
