You’ve got to hand it to the executives at Zefer, a Boston Internet consultancy — they know how to raise cash.
Back in 1999, when venture capital was falling from the sky for online startups, Zefer managed to stun industry observers with a $100 million round from the Chicago venture firm GTCR Golder Rauner.
Last year, when the market for technology stocks collapsed, Zefer twice postponed, then ultimately withdrew its IPO — yet managed to console itself with another $20 million kick from GTCR.
Now, at a moment of deepening gloom for online consultancies, with even industry bellwether Sapient drastically lowering expectations, Zefer has managed to catch lightning for a third time.
This time, Japanese hardware maker NEC Corp. has ridden to the rescue to lead a $48 million investment, with some of the cash coming from Golder Rauner. NEC, a $48 billion company that sells computers as well as network and electron devices, will partner with Zefer on research projects on emerging technologies — especially wireless projects. The companies will also develop joint sales and marketing campaigns.
Zefer said it would use cash for general purposes and to pay down some of its substantial debt.
CEO Bill Seibel called the NEC deal “a unique opportunity,” adding that it “will allow us to leverage NEC’s tremendous technological capabilities and expansive global services to provide our clients with additional short-and long-term value.”
Zefer spokeswoman Sara Buda said NEC’s massive R&D division would allow it to add services the consultancy couldn’t provide on its own. She said projects would initially focus on wireless technologies, one of the few areas promising substantial growth over the next few years for the struggling consultancy sector. Wireless is also of notable interest for financial service clients that Zefer has targeted, such as Citigroup Inc. and Citizens Bank.
Other research projects remain uncertain, with Buda saying they’d be “driven by client need.”
For its part, NEC had been looking for a U.S. Net consultancy that could help it expand its reach to large North American corporations that are developing online and wireless strategies.
Akinobu Kanasugi, president of the NEC Solutions division, said, “As we looked at the tremendous opportunity presented by the U.S. Internet professional services market, we were drawn to Zefer’s strategy-led business model, strong industry and technology expertise and proven ability to create and implement large-scale, adaptive business solutions for Global 2000 companies.”
The Boston firm has not been immune to the Net consultancy downturn. Last month it laid off about 120 people, or 15 percent of its staff.
Buda said Zefer turned a profit in the fourth quarter, but she declined to speculate on whether the privately held consultancy would break even this quarter, when revenues across the sector are expected to plummet.
In any event, the NEC deal should provide badly needed resources to help the company manage during a rough stretch.