Sponsored Article
Cash injection for RF technology
14 August 2009
Around 18 months ago, Nujira was in the process of planning for Series C funding as the company transitioned from being a technology development company into a commercial organisation.
At such a critical stage for the business it was crucial to ensure that its complex and technical ultra-high efficiency RF power amplifier technology operated efficiently and effectively, which meant that the company needed to invest in high quality test and measurement equipment. However, high quality equipment comes with a high level price tag.
As a venture capital funded company backed by 3i, Amadeus Capital Partners and Bank Invest, Nujira’s challenge was to optimise its capital as far as possible. The challenge for Nujira was to balance its working capital needs with its projected headcount growth as it recruited a workforce of skilled engineers.
Partnering with test and measurement equipment specialists Microlease at this key time in the company’s development allowed Nujira to develop the best possible solution, without overstretching its capital. Now Nujira’s products, including the Coolteq modulator, can increase the operating efficiency of base stations and transmitters by up to 50%; almost double the level offered by incumbent solutions.
With 30 engineers employed at the outset, each requiring continuous access to a number of high value assets, the need to purchase all the required equipment would have proved a significant financial burden for Nujira. However, buying used equipment would have resulted in severe compromises on quality and performance. With maintenance of existing equipment already a challenge, this would have added significantly to the total cost of ownership.
In addition, the company was also facing additional pressures including managing its burn rate and a short time to market. Bernard Morgan, Nujira’s CFO explains: "Purchasing the equipment would have diverted much needed funds away from other areas of the business, so we looked into the possibility of renting equipment."
Having thoroughly explored all the test and measurement equipment providers, creating a preferred supplier matrix, Nujira selected Microlease as its rental partner. "There were a number of factors that made Microlease stand out for us," explains Morgan. "Firstly I was convinced Microlease had the capacity and the inventory to support Nujira in its requirements for complex and technical equipment and to continue to support the company as it grew. They also had the support infrastructure to provide calibration and to turn equipment round within a matter of days."
Nujira was keen to establish a preferred supplier relationship where all of its equipment came from one supplier. Having been selected as that supplier, Microlease proposed a way to help in funding and maintaining the new equipment needed, as well as examining what could be improved with the previously purchased equipment.
The solution that Microlease proposed provided Nujira with three means of acquiring equipment.
• New and used test assets were provided through an operating lease with services built-in, over a term of three years
• Some of Nujira’s existing equipment was purchased by Microlease and leased back to the company over a term of three years
• Rental support for assets requiring calibration or repair was provided, thus ensuring uninterrupted performance for engineers
Morgan adds: "Microlease led the way in proposing a solution. It was a very consultative process and we were particularly impressed by the level of innovation included in their recommendations. For example, Microlease suggested buying our equipment off us and leasing it back, which was something we would not have expected."
Whereas traditional leases would have looked only at interest costs and credit rating, Microlease’s understanding of the market for test and measurement instruments allowed for a more innovative and cost-effective solution.
By assessing the duration over which the equipment would be needed and providing a solution that matched this, Nujira only pays for the period it uses the product, rather than its entire life cycle. As Microlease could take a residual value on the equipment after Nujira returned it, the lease would be off-balance sheet, thus increasing working capital further.
The initial results were impressive. The solution allowed for an extension of four months working capital, freeing up resources for other key investments. The new equipment was quickly deployed and thanks to the support and calibration aspect of the contract, Nujira can be certain that it will have fully functioning equipment every moment of every day, reducing cost and minimising downtime. For example, Nujira requested a highly configured Analyser at 5pm, which Microlease was able to deliver at 7.30am on the following morning.
Now 18 months on and Nuijra is still singing Microlease’s praises. "Looking back over that past 18 months I can say with confidence that the initial aims have absolutely been achieved," enthuses Morgan. "Microlease is an important partner to us. They have been able to accommodate all of our equipment requirements throughout our relationship."
As the company maintains its growth and its requirements for equipment increase, Nujira continues to rely on Microlease. "Since 2002 our equipment inventory has doubled with all the equipment acquired on similar contracts to those we signed initially. Microlease has more than lived up to our expectations and as Nujira continues to grow and has a demand for test and measurement equipment, Microlease will remain our number one supplier that we will look to for all our equipment needs," concludes Morgan.
Contact Details and Archive...
Related Articles...
Most Viewed Articles...