RainDance, Angling For an IPO, Adds $16.5M From GE Ventures, Others

3/3/14Follow @benthefidler

RainDance Technologies has been steadily raising cash from private investors for a few years now. But with the addition of GE Ventures to its group of backers, the Billerica, MA-based company is signaling that its next raise just might come from Wall Street.

“We’re not able to confirm or deny that,” says RainDance CEO Roopom Banerjee. “However, GE Ventures does have a track record of investing in companies that certainly have created a lot of shareholder value in the public markets.”

RainDance is announcing today that it’s raised another $16.5 million by expanding a $20 million Series E round it put together in 2013 with new cash from its existing investor group, and new entrants GE Ventures and Northgate Capital. The cash is all upfront, meaning RainDance doesn’t have to hit any milestones to tap into all of it. With that cash in its pocket, RainDance, which provides tools used by research institutions and diagnostic companies, has now raised about $160 million in combined equity and debt financing since its inception in 2004.

Today marks the third separate funding announcement RainDance has made over the past 10 months. Myriad Genetics (NASDAQ: MYGN) joined the company’s $20 million Series E last April, and RainDance followed that up five months later by securing $35 million in debt financing from Houston, TX-based Capital Royalty. Banerjee said at the time that the company had “completely shored up the financing and balance sheet” through the debt financing, and was able to do so without diluting its equity shareholder base.

So why the new raise, and the equity dilution that comes with it? First, Banerjee reiterated what he said when we spoke in September: RainDance keeps growing faster than it thought it would. Though the company isn’t disclosing just where its revenue is expected to climb to this year—Banerjee says the company eclipsed a $20 million run rate in 2013—it’s now got two systems on the market, around 100 employees (up from 70 early last year), and its workforce is growing at a rate of 30 to 40 percent per year, a trend that is expected to continue in 2014.

Roopom Banerjee, CEO of RainDance Technologies

Roopom Banerjee, CEO of RainDance Technologies

“It’s a function of growing fast,” he says of the recent financings. “As you can imagine with new product launches, we’re building inventory, we’re building systems, we’re increasing working capital, and all the other financial machinery that’s required within the company, so we wanted to be better capitalized to be able to sustain that kind of growth trajectory and not leave any opportunities on the table.”

Still, that growth hasn’t led to profitability just yet. RainDance isn’t cash flow positive as of yet, and doesn’t expect to be for “the next couple of years,” according to Banerjee.

Banerjee says that the funding enables RainDance to bring on a strategic investor, GE Ventures, that has a number of industry relationships that might benefit the company. GE Ventures is interested in a cancer assay RainDance recently developed called ThunderBolts, and sees it as a “commercial partnership opportunity” with players in the imaging community, Banerjee says.

GE Ventures also happens to be an investor in a number … Next Page »

Ben Fidler is Xconomy's Deputy Biotechnology Editor. You can e-mail him at bfidler@xconomy.com Follow @benthefidler

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