Munich, Germany-based Fast Electronic GmbH, maker of videotape-editing equipment and software-protection devices, looks set to become the first German company to be listed on the US Nasdaq market. Disillusioned with Germany’s lack of support for high technology companies, the firm’s founder and chairman, Matthias Zahn, is looking to the US for venture capital funding, and […]
Munich, Germany-based Fast Electronic GmbH, maker of videotape-editing equipment and software-protection devices, looks set to become the first German company to be listed on the US Nasdaq market. Disillusioned with Germany’s lack of support for high technology companies, the firm’s founder and chairman, Matthias Zahn, is looking to the US for venture capital funding, and has set up a holding company, Fast Multimedia Holding Inc, in Delaware. The company is in its ‘quiet period’ now, unable to comment on the flotation or the future under US regulations, but this suggests that the offering, possibly some 25% of the company’s shares, is coming down to the wire. Zahn founded First Electronic in 1985 to make hardware to prevent illegal copying of software. In 1989 the company ventured into multimedia, developing hardware and software to enable conversion of analogue video into digital signals that can be manipulated on a 80486 personal computer. The result was Video Machine, a low-cost desktop editing system aimed at corporate users, which at $3,200 is said to do the job of $30,000-worth of traditional studio editing equipment. Movie Machine is the Windows front-ended consumer product, priced at around $400, that can transfer camcorder videos on to the personal computer so that the user can do basic editing. Both the British Broadcasting Corp and France’s La Cinquieme television have bought Video Machines. In September 1994, in preparation for the US offering, the company dropped the name Fast Electronic, and split the multimedia division into a separate company, Fast Multimedia AG, and the software security arm became Fast Software Securities AG. Since the introduction of its multimedia products in 1990, Fast’s sales have more than quintupled, and 1995 forecasts for multimedia alone are around $70m, against 1994 combined sales of $50m.
Worry the German banks
But this growth seems to worry the German banks, which have been reluctant to fund the company right from the start, and slow to increase its line of credit to fund continued expansion. Zahn is heading for the US for two reasons. Firstly, he believes that Nasdaq is much more suited to companies like ours than the German exchanges, because it understands the needs of high technology businesses and is more prepared to look at future potential than past results. Secondly, the company needs to penetrate the US multimedia market, which Zahn said is 10 times bigger than Germany’s. As well as looking for capital to develop and grow the company’s US presence, Zahn has set up a US subsidiary, Fast Electronic US Inc in Redwood City, California and believes it is important for it to be close to the developments in Silicon Valley. It would seem that the company’s young, informal and somewhat chaotic style is more suited to California than the more formal, traditional Bavaria, and the jeans-clad Zahn intends to split his time between the two countries. Although he is looking to the US for future growth and venture funding, Zahn plans to maintain a large research and development operation in Germany because it is a good place to turn a prototype into a product. He explained that Germany’s schools produce talented engineers, and also there are few multimedia rivals to lure away good staff. Main candidates to underwrite the offer are Roberston, Stephens & Co, Hambrecht & Quist, and Alex Brown & Sons.