QuestLink Nabs $3M In Second Round –

AUSTIN, Texas – QuestLink Technology Inc., a company that allows engineers to purchase various prototype materials online, in November secured $3 million in venture financing.

Needham Capital Partners, the venture arm of a semiconductor-focused investment banking boutique, brought $2 million to the table as a first-time investor. Trellis Partners, QuestLink’s first institutional backer, returned with $500,000, and individuals added the remaining $500,000.

The company hopes to capitalize on an industry hampered by the lengthy amount of time it takes for an engineer to complete a project from concept to prototype.

QuestLink tries to speed the process by posting detailed information about various parts – such as integrated circuits and semiconductors – on the company’s Web site and allowing engineers to order small quantities over the Internet.

The new capital will go toward beefing up sales and marketing the company’s e-commerce effort, said John Long, a Trellis partner. The firm made a $950,000 first investment in QuestLink in December 1997, leading a $2 million round that included funds from SV Capital and individuals. QuestLink previously had raised a $700 thousand angel round in August 1995.

The three-and-a-half year old company has 16 employees in Austin and a two-person sales force in California, said President and Chief Executive Mike Shultz. QuestLink expects $1 million in revenue in 1998 and projects “north of $5 million” for 1999. If the company continues its growth trend, it will be in the black by the end of 1999’s second quarter, Mr. Shultz said.

Sales thus far have been solely in the United States, but QuestLink plans to extend its reach to Europe and Southeast Asia early this year, he said.

The company is pursuing strategic partnerships as well, he added, noting that two were “in the hopper.” Neither, however, had been signed by press time.

QuestLink obtains small quantities of engineering parts through major industrial distributors. The company’s sales might be considered piddling to its distributors, but there is a potential pay off in the future if prototypes are successful because distributors will know which parts likely are to become big sellers and what companies will need them.

It is difficult to estimate the size of QuestLink’s market, but Mr. Shultz pointed out that engineers have “extreme influence” on the brands and models of parts used in new products, likening their power to that of prescription-writing doctors. He estimated there are some one million engineers working in design automation software, workstations, integrated circuits and interconnect, passive and electromechanical components.

“This is a very narrow, very well-defined vertical market with huge economical leverage,” Mr. Long said.

If QuestLink is to succeed, it will be by differentiating itself from other parts sellers by focusing on engineers, noted Needham Associate Jack Iacovone.