Zapa taken out of liquidation with €1.1m investment

ZAPA TECHNOLOGY has been bought out of liquidation and the new owners are investing €1.1 million in the firm. They say this will create 15 jobs over the next 12 months. The company had appointed a provisional liquidator last month.

Technology entrepreneur Brendan McDonagh has taken a controlling shareholding in the Dublin-based company and is the new chief executive. His investment is supported by Tom Morrisroe, with whom he co-founded in 1999 the telecoms software firm Arantech.

Funding has also been sourced from Delta Partners and two other private investors.

Zapa Technology develops services based on near field communication (NFC), which is a short-range wireless technology for exchanging data. It can be used to make store payments, collect loyalty points and rewards or redeem coupons and special offers.

While Zapa had previously focused on developing smart tags, Mr McDonagh said the company would change its strategy to work on integrating NFC technology for payments into mobile phones.

The investors’ initial fund of €1.1 million will support the recruitment of 15 new employees in research and development, customer services and sales and marketing roles, adding to Zapa’s eight existing staff.

NFC was first developed in 2002 and is growing in popularity. Momentum is gaining particularly in integrating it with mobile phone SIM cards, backed by a growing number of technology providers.

One of the most prominent is Google; its Wallet app stores a user’s credit card details on their phone, letting them pay for items at designated stores by tapping their mobiles.

Mr McDonagh said he was not concerned that the presence of technology giants such as Google would dent the market opportunity for Zapa. “In our experience to date, in terms of Arantech, small and innovative companies can move much faster than the very large established players,” he said. “The ambition of the company is to become a global player in this market.”

Zapa was founded in 2009 by businessman John Nagle. It had begun installing point-of-sale terminals to read the smart tags at various retail outlets around Ireland and Britain. It was unable to secure funding of more than €15 million needed to build this infrastructure.

The company went into liquidation in October owing more than €700,000 to trade creditors and having accumulated losses of €6.5 million.

Mr McDonagh said the previous business model was very capital intensive and instead Zapa would look to form profit-sharing deals with network operators. He said this would allow the company to build the necessary payment terminal network rapidly, while spreading the risk.

For this, he will look to tap into his background in the mobile sector. He and Arantech co-founder Mr Morrisroe built the company up to a leading position in providing technology for mobile network operators to manage how customers use their services.

That business was acquired by US company Tektronix Communications for an undisclosed amount in 2009.