Edison keeping the faith in online trade

TraderTools is rumoured to be in the running to buy electronic communications network LavaFX, according to a market source.

It is thought the initial price tag for the platform was in the region of $40 million, but all the offers that were coming back were significantly less. Other companies that were also looking at acquiring the Citi-owned platform included FXCM (FX Week, March 9).

Earlier this year TraderTools announced that it closed a $7.5 million round of financing on December 30, 2008 (FX Week, January 19). Edison Venture Fund based in Lawrenceville, NJ, invested $7 million, while company management invested $500,000.

The New York-based technology vendor said at the time proceeds would be used to expand sales, marketing and development of TraderTools' liquidity management platform. "TraderTools is accelerating growth even in today's volatile market-place, with a technology platform that addresses an immediate market need - liquidity management in institutional FX," stated Edison general partner, Chris Sugden at the time.

Since its establishment in 1986, Edison has provided capital and value-added services to IT business to expansion stage, for example generating revenue of $5 million-$20 million. It says initial investments range from $5 million to $8 million, and that it acts as a sole or lead investor in financings up to $10 million. In addition to providing expansion capital, Edison funds management buyouts, recapitalisations, spinouts and secondary stock purchases.

Edison's successes have included Axent, Dendrite, Marcam, MathSoft, POMS, VirtualEdge, Visual Networks, Vocus and many other information technology businesses, which have a combined market value exceeding $5 billion. Edison currently has $550 million under management and says it is actively making new investments.

The venture capitalist has been an investor in online trading company Gain Capital since 2001 (FX Week, October 29, 2001). At that time, Bruce Luehrs, a general partner at Edison said it had invested in Gain for three reasons: "The opportunity of online FX trading; Gain's established leadership position in the space; and their proprietary trading technology."

It is thought that if it succeeds in acquiring the platform, TraderTools will white-label the technology back out. TraderTools was unavailable for comment.

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