Software firm secures financing for further growth

LogicBay plans to add workers, new markets

Ten months after moving his young software company from Cleveland to Rhode Island, a Cranston native and Bryant University graduate has secured financing to grow the business.

John Panaccione, president and CEO of LogicBay, said he relocated the three-year-old operation last September so he’d be closer to home. Now, he said, the company will look to raise capital to hire more employees and break into new markets.

‘‘We’re not there yet,’’ Panaccione said, ‘‘but [the financing] provides us with some ability to grow.’’

LogicBay’s ‘‘Performance Center’’ software provides an Internet-based platform for dealer or distribter training, replacement-parts ordering and other customer-service support, for a variety of products. The software also gives users news and updates about the products to which it is applied.

Now, the Business Development Company of Rhode Island, a non-bank lender based in Providence, has given LogicBay a five-year, $425,000 loan to refinance previous debt from Cleveland-based National City Bank, Panaccione said.

LogicBay also received a line of credit from Silicon Valley Bank that enables it to borrow up to 80 percent of the value of its receivables, or up to $650,000, Panaccione said, and thus create faster access to working capital.

The company’s software already has attracted such big-name customers as Microsoft, Siemens, Caterpillar, Hewlett-Packard, John Deere, Freightliner and Nissan, according to LogicBay’s CEO.

‘‘So we’ve got some marquee names and we’re doing some large-scale stuff with those folks,’’ Panaccione said. ‘‘Those larger companies have the biggest problem when you [consider] their global distribution channels to sell and service products around the world.’’

‘‘Think about Caterpillar equipment, for example,’’ he said. ‘‘Their growth is happening in Asia, because of all the construction over there – and how does a company in Peoria, Ill., properly support people who sell and service their equipment in Asia?’’

LogicBay offers its software on one-year to three-year service contracts, rather than licensing the technology to customers outright. This so-called ‘‘software-as-a-service’’ market was $2 billion in 2004, and is expected to grow to $12 billion by 2010, according to Panaccione.

The private company is in a ‘‘hot’’ market and became profitable in a relatively short time, netting gains in its third year (2005) with revenue of $5.4 million, he said. The CEO has been open about the company’s success as he tries to convince investors the growth will continue.

Panaccione said he hopes to raise “$1 million to $3 million” in venture capital over the next several months, funds he plans to use to fuel his company’s growth over the next three years. LogicBay now employs 22 people, he said, and it plans to hire five more over the next year, as managers and software engineers.

LogicBay is poised to attract more business from middle-market companies and U.S. government contractors and agencies, Panaccione said, having refined its technology to fit the budgets of smaller companies. It is a ‘‘service-disabled veteran-owned small business,’’ a designation that gives it preference on government contracts.

Panaccione was an officer and paratrooper in the U.S. Army from 1986 to 1992, serving in the first Gulf War and jumping out of airplanes 65 times, which left him with back injuries, he said. Another owner of LogicBay – Richard O’Connor, who lives in Seattle – has a partial disability as well, from when he served in the Vietnam War.

Panaccione, the CEO, graduated in 1986 with a bachelor’s degree in criminal justice from Bryant, where he participated in the Army ROTC program. He completed his MBA at the Smithfield university in 1994.