Courtesy of Konrad Group

Demand for Mobile Apps Fuels Konrad Group’s US Expansion

In the heart of Toronto’s Fashion District, in a sprawling 14,000 square-foot commercial brick complex, the creative talent, entrepreneurial spirit and on-tap beer are all flowing freely.

Home to Konrad Group, a privately owned mobile technology firm founded in 2010 by Geordie Konrad, his twin brother Bill, and fellow University of Toronto alumnus Hooman Bahador, the space is a far cry from the cramped quarters in the Park Hyatt Hotel on Bloor where the fourth-year students first launched their startup.

In just four years, the trio has grown Konrad Group into a multi-million dollar global company with offices in Toronto, New York, Chicago, and San Jose, Costa Rica.

With a team of 125 like-minded university graduates – 90 per cent of their hires are between the ages of 22 and 35 – Konrad designs and develops software applications (more commonly known as apps) for mobile devices such as smartphones, tablets and laptops.

The King Street workspace doubles as a playground for these millennial engineers, designers, marketing and advertising professionals. Ping pong and foosball tables, 80-inch TV screens, and yes, beer on tap keep the retention rate high.

So do the cutting-edge projects.

“We want to get involved with the most interesting things being built, cool projects that impact millions of people,” says Geordie Konrad, co-CEO, referencing a “sci-fi-esque” smart home automation project in New York which uses mobile technology to control lights, sound and security systems in homes.

In a high-profile Canadian partnership last year, Konrad helped the Canadian Broadcasting Corporation develop an interactive play-along app which lets viewers test their own wits on their iPad, iPhone or iPod touch during the television game show, Canada’s Smartest Person.

This January, Konrad signed a strategic alliance with the Canadian arm of the technology consulting giant Deloitte, to provide digital production support.

“We’re seeing a fundamental paradigm shift with the advent of mobile technology,” says Konrad. “Mobile is ubiquitous. It’s on the direct path of the technology revolution; it’s not a detour.”

Konrad Group poised to double their growth

And, with a growing client list of blue chip companies and big name brands in the enterprise technology space, including McDonald’s, MTV, Barnes & Noble and The Beer Store, Konrad is poised to double its growth again this year.

Transitioning from a three-person company with fixed costs to a global player capable of competing in a high-stakes enterprise market can pose some challenges though.

Chasing prime real estate to keep pace with growth is one issue (they’ve moved to six office locations in five years in Toronto alone). And, like many small businesses, the owners wrestled with finding financial institutions that could help support their growth.

“We’ve done this all boot-strapped,” says Konrad. “Banks are focused on traditional industries and don’t have programs in place to work with young technology companies.”

In late 2012, for example, he recalls trying to secure a large commercial contract with a U.S. customer where payment terms would be carried over a 60-or 90-day period.

“We were biting off a multi-hundred-thousand deal but the payment terms were prohibitive,” he says. “We did not have the strength to finance a project this order of magnitude, without a line of credit. Export Development Canada (EDC) backed us with an Accounts Receivable Insurance policy so we had lending value against these international receivables.”

Shannon McLuhan, a small business account manager in EDC’s Toronto office, remembers answering the call.

“They were young, with very few traditional assets that a bank would be comfortable lending against,” she says. “That was the turning point in our relationship – once they started to realize all EDC could do and give them advice they started calling me all the time.”

Growing their US operations

The tremendous growth that Konrad has experienced in New York has required a large new office and an expansion of the US team. Along with financing secured through the Business Development Bank of Canada for the expansion, EDC enhanced Konrad’s working capital facilities to finance their growing U.S. operations by providing a guarantee to their bank through the Export Guarantee Program against the company’s SRED (Scientific Research and Experimental Development) tax credits.

“If you had asked me three years ago about EDC, I would have had no idea,” says Konrad. “You tend to think of exporters as companies who manufacture ‘goods’, not digital innovation.”

“But we’re on a clear path to a $100 million business, and EDC fits into that plan by continuing its support to help foster business and grow tomorrow’s economy.”

Categories Technology & Telecom

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