Globe Incubator panel reviews ImaSight

Where to begin? The Globe and Mail’s Incubator panel was recently given the task of sizing up a tech company called ImaSight. It is experiencing all of the classic challenges of a reverse takeover into a TSX Venture Exchange listing:

– capital constrained;
– didn’t raise nearly enough money via the public offering;
– suffering now from the burden of being public (cost), without enjoying the benefits of being able to raise public funds;
– legacy business serves as a distraction

Our panel was a bit dubious about some elements of the opportunity. High end imaging for vets isn’t a bad idea, but to retrofit hundreds of clinics seemed a tall order given the one-man-band nature of the industry. The good news, however, was that many customers of the product loved it so much that they were also shareholders.

That seemed like a good opportunity, and something for other small firms to replicate if they are experiencing challenges with fundraising. In this case, the cost of the retrofit of an existing ultrasound system scared off many otherwise interested potential clients. With an inability to use its own balance sheet to provide financing to its customer base, ImaSight was stuck. The dearth of small ticket leasing these days only makes it tougher.

Which brings us to the happy vet shareholder base. Who better to chip in some capital to provide the GMAC-type leasing division for ImaSight? If the company could raise $750,000 into a special purpose vehicle, it could sell a bunch of systems to Vets looking to buy on an extended payment plan. If the SPV investors could make 8% or 10% a year, they might be happy. And they’d be boosting the equity value of their company at the same time.

I think this idea could apply to many small companies. It isn’t quite “micro-finance”, but it might help stimulate incremental sales at ImaSight.

MRM