XLerant Raises $3 Million Series B Financing

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Providing ongoing support to our portfolio companies is one way that CI is able to help these companies advance and succeed. This week CI portfolio company XLerant Inc. of Norwalk announced that it had raised a $3 million Series B round of financing, led by Chrysalis Ventures and also involving Connecticut Innovations, which contributed follow-on funding of $900,000 to the round.

We’re delighted to have made this follow-on investment. CI has supported the company since 2007, when we made our first investment. We have continued to work with the company and are pleased to have a new partner in Chrysalis Ventures.

XLerant replaces traditional, restrictive spreadsheets with an easy-to-use, yet sophisticated, budgeting and planning application — BudgetPak. Customers often choose BudgetPak because it drives greater fiscal ownership among managers and allows leaders to align financials with organizational strategy.

To view XLerant’s press release, click here.

Pauline Murphy
Managing Director, Investments

Proposed Legislation Seeks to Stimulate Investments in Emerging Growth Companies

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 William Kilgallen
Counsel, Wiggin and Dana LLP

Frank Marco
Partner, Wiggin and Dana LLP

Late last year, a number of initiatives were introduced in the Congress that have the potential to stimulate investments in emerging growth companies by both reducing restrictions on the manner in which those companies may seek funding and by easing regulatory burdens imposed on these companies both during and following the fund raising process. For a summary of this legislation, click here.

Building Intelligence for Enhancing Energy Efficiency in Commercial Buildings

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Andreas Savvides
Co-Founder and Chief Scientist, Seldera LLC

Building intelligence is rapidly becoming an important resource for achieving and maintaining energy efficiency in commercial buildings. As renewable energy deployments and energy-efficiency upgrades are expanding to deliver cleaner and cheaper energy, ensuring that energy is consumed constructively can help maximize these benefits. If the intelligence existed to eliminate a few consumption redundancies dynamically, that might in fact result in higher and more immediate savings than other, more capital-intensive retrofit projects. The development of building intelligence can facilitate this by monitoring and reporting consumption at the sub-system level, developing models of occupant activities and supervising the overall building energy performance.

Even the most energy-efficient technologies stand to benefit from real-time energy awareness information to fine-tune heating and cooling operations, adjust lighting conditions, shut off unused equipment and ensure that all systems are performing within their energy specification.  Additional intelligence and decision support can also give a boost to the thousands of buildings that already have digital controls.  In situations where digital controls are less than a decade old, it may not make sense to replace them.  Instead, a lightweight sensing and decision support retrofit solution, such as the one developed by Seldera, can work side by side with the existing building automation system to automatically “turn the knobs” towards energy savings.

Seldera’s Building Dynamics is a low-cost retrofit solution for managing energy consumption in commercial buildings. It uses a collection of wireless sensors to monitor building usage and electricity consumption. The collected data is processed by Seldera’s Information Processing Engine (SIPE), which takes automated conservation measures and generates actionable information for the building managers. Seldera’s product offers an ad-hoc metering and sensing solution supported by an online Web portal that enhances the sensing and decision-making capability of existing building systems. It provides electricity consumption accountability, intelligent messaging and automated performance reporting that can also be applied to energy performance contracting settings. The solution can be applied directly to existing buildings, but it is also available in OEM form for equipment manufacturers and energy services companies to integrate in their products and services.

The core technology behind Building Dynamics combines load analysis with behavior analytics to exploit the dynamics of building usage and drive deeper savings. This orthogonal axis to energy efficiency can secure immediate savings regardless of the age of individual building controls. This is particularly important for commercial buildings where a modest investment in building intelligence can yield as much savings as a rooftop solar array.

Seldera’s technology is currently in pilot phase. For more information or to participate in a free pilot installation offering consumption insights and identify savings opportunities, please contact info@seldera.com.

iGrill Cooking Thermometer Now Part of Omaha Steak’s Steak Time App

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Jennifer Gutierrez
VP, Marketing & Customer Relations, iDevices LLC

iDevices LLC, the creator of the award-winning iGrill Bluetooth® cooking thermometer at www.iGrillinc.com, is announcing the integration of the iGrill functionality into the Omaha Steaks’ Steak Time iPhone app. “Steak Time,” Omaha Steaks’ free app that debuted earlier this year, provides the tools for preparing and serving the perfect steak every time. iGrill, a temperature probe cooking thermometer with a long range Bluetooth® connection, has been integrated seamlessly to upgrade the Steak Time app, now giving the user the ability to cook by temperature, as well as by time. 

The iGrill function enhances the Steak Time app by allowing the user to monitor the internal temperature of the items being grilled or smoked up to a distance of more than 200 feet, making it ultra-convenient for slow roasting and smoking food preparation.

Key Features of the iGrill-enabled Steak Time app from Omaha Steaks include:

  • Multiple cooking timers and temperature tools allow users to set food preparation timers directly from within recipes and view active times and temperatures from anywhere in the app.
  • The conversation cards feature provides a host of interesting facts and questions to help liven up the dinner discussion.
  • Social media integration allows users to share recipes and tips with their friends on Facebook and Twitter. It also allows Facebook users to see their friends’ posts on a world map showing locations.
  • “Buy Now” buttons appear in grocery lists allowing them to purchase Omaha Steaks products.
  • Ability to browse the Omaha Steaks store from within the app. 

The Steak Time app is available for free from the App Store on iPod touch, iPhone and iPad, or at www.itunes.com/appstore. Steak Time users can purchase the iGrill temperature probe directly through a link within the Steak Time app.

Creators of iGrill to Introduce “iShower” Water Resistant Bluetooth Speaker at CES 2012

Also, from iDevices, the iShower (www.iShowerinc.com), is a water resistant, Bluetooth-enabled speaker that plays music directly from all Apple devices (including iPhones and iPods) and Android devices. iShower mounts in your shower or can be taken to the beach or pool for up to 15 hours of safe listening.

iShower will be officially launched at the Consumer Electronics Show (CES) in Las Vegas this week, January 10-13, 2012, and will be available for purchase at www.iShowerinc.com and other select retailers in March 2012.

CI Plan to Deploy $250 Million Approved

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Today we announced that Connecticut Innovations’ board approved a plan to deploy $250 million over the next five years. The $50 million per year that CI will deploy over this period consists of $25 million per year from the State of Connecticut, along with a matching $25 million per year from CI itself, contingent on CI investment returns.

The new funding will enable CI to strengthen its support of Connecticut’s entrepreneurs and emerging high-tech businesses. Specifically, the funding will enable CI to expand existing initiatives, create new programs and step up efforts to recruit businesses to the state – actions that will ultimately generate high paying jobs, bolster our technology-based economy and accelerate Connecticut’s recovery from the current economic slump.

We are very excited to begin deploying these funds. We expect that over the next five years our activities will help create and retain 15,000 jobs, leverage more than $500 million in private funds, increase federal SBIR awards and Phase III commercialization funding for Connecticut companies by $60 million, sustain at least 200 new technology companies and fuel a culture of innovation in Connecticut.

To learn more about this deployment plan, please review our press release.

Peter Longo
President and Executive Director

Innovation Ecosystem Draft RFQ

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The State of Connecticut is working with entrepreneurs, economic development organizations and institutions to build a world-class system of support for innovation and entrepreneurship. Over the last six months members of Connecticut’s innovation community collaborated to design a framework for this system, which will involve a matrix of organizations and both public and private investment. Before releasing the official Request for Qualifications (RFQ), the State would like input on this Draft RFQ. Please review this document and send all comments and critique to innovationct@gmail.com by 5pm, January 13.

Thank you!

Kip Bergstrom Deputy Commissioner
Department of Economic and Community Development

The Dinosaurs

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Carissa Ganelli
CEO and founder, Commerce Drivers LLC

Why would a mobile commerce startup founder entitle a blog post “The Dinosaurs”? Am I referring to the Steven Spielberg “Jurassic Park”-type dinosaur? No. I’m referring to very successful business people who have a wealth of traditional business and maybe even startup experience but know very little about tech startups. They exude confidence in their advice and recommendations because, after all, they’ve built successful businesses. The dinosaur part comes into play when they try to apply rules from the past to today’s tech startup environment. 

My partner, Jeff, and I have two offices: one at the library and the other at the local Starbucks. We met Dinosaur #1 at Starbucks. We’d seen him there talking loudly on his mobile phone on a few occasions. This time, Jeff struck up a conversation. After discussing his grandchildren, where his ancestors came from in Italy, and how he started a blockbuster national bank – yup, he really did start a bank – Dinosaur #1 told us that the most important thing an entrepreneur needs is cash. Really? Gee, whiz, I thought I’d get by on just my smile. He then tells us to raise capital we need to show that we’ve made a substantial investment in the business – and we need to get money from friends and family. Hmmm…the old “friends and family” round, huh? Let’s see, as Jeff says, “My friends and family are three kids under the age of 6 along with Visa and MasterCard.” Jeff and I have the most money of each of our respective friends and family, and that’s not saying much. Thankfully, a friends and family round is no longer a requirement for tech startups with incubators and angels willing to invest in just an idea. I’m not saying it’s easy to get funding, just that a friends and family round is no longer a requirement.

Dinosaur #2 had sold the company he founded to a gigantic multimedia publishing behemoth for $690 million. During our meeting with him, as soon as I started my pitch, he interrupted and said that we needed a video. Huh? A video? What kind of video? His brilliant idea was to produce a video where we could show a time clock ticking away to show it takes consumers 3.5 minutes to purchase something from their mobile phones now but only 30 seconds to purchase with our express purchase platform. A video? A countdown clock? What investor is going to sit through a 4-minute video? What is this… the ESPN highlight reel? He was also full of encouraging comments and advice, such as, “No offense, but you two are not 24-year-old CalTech engineers. You are just two guys with business cards.” I didn’t bother pointing out that I’m not a guy at all. My personal favorite: when he asked us how much we’d invested of our own money and we quoted a five figure number, he responded, “So you’ve invested [expletive].” Yup, he really used a crude description for a male body part. Okay maybe that doesn’t make him a Dinosaur – just offensive. He then proceeded to tell us that he doesn’t know much about mobile, but a guy who works for him, named Ed, “is 29 and knows everything there is to know about mobile. Ed lives on his mobile phone. If Ed thinks you’ve got a good idea, then we’ll talk again.”

Dinosaur #3 was a former VC who’s started his own SaaS company and put in $600k of his own money. He started the meeting by saying that he had no experience with smartphones or mobile commerce, so he wouldn’t comment at all on the validity of the product. Instead he would provide feedback on the other aspects of the plan. To prove his point, he pulled out his Blackberry that’s had a cracked screen for over a year. He told us our plan was too long and we needed to keep it to 15-20 pages.

So, here’s what I’ve learned from Dinosaurs: they have some good advice that you should heed. They also have a bunch of outdated or inaccurate info that you would do well to ignore. Where to draw the line is up to your good judgment. 

Good advice:

  • Cash is important to a startup. The number one reason startups fail is due to running out of cash.
  • You might need a demo (not a video) to show the PowerPoint-phobic how the product would work in real life and to show your product is beyond the idea stage.
  • Your pitch deck should be around 15 pages. You need to provide a good overview of the concept with supporting facts like market size, barriers to entry, and deal terms to whet the investors’ appetite. Investors can request more detailed information from you if they are interested in pursuing it further.

Not such good advice:

  • You must do a friends and family round before anyone will invest in your business.
  • You should fold up shop because you’re older than 24 and aren’t engineers from CalTech. In fact, it’s a myth that most entrepreneurs are young. TechCrunch had a post in late May entitled “Is There a Peak Age for Entrepreneurship?” (http://tcrn.ch/m8I23l) that indicated only 11% of entrepreneurs are 24 or under. Phew, there’s still hope for me.
  • You need a video if you’re in any field other than TV/film production.

Here are some tips to identify Dinosaurs:

  1. Has a contact database consisting of a notebook with business cards taped to the pages. Dinosaur #1 had the notebook with my and Jeff’s business cards taped inside. I can’t make this stuff up.
  2. Mentions video and countdown clock in the same sentence and isn’t referring to ESPN.
  3. Is proud of carrying around a Blackberry with a cracked screen for over a year.
  4. Relies on Ed as the gatekeeper for all things mobile. 

When would a tech entrepreneur ever even cross paths with Dinosaurs? It’s more common than you would think. Especially if you’re located anywhere other than Sand Hill Road. We may not run into them at the sexy incubator or at Startup Weekend, but we’ve run into them at the library and Starbucks (the Great Equalizer) as well as through our network. 

It’s not an “if” you meet a Dinosaur but a “when.” So, it’s best to be prepared.

NOTE: Commerce Drivers LLC is a tenant of the CTech IncUBator@University of Bridgeport. The company is developing highly efficient ecommerce technology. Its flagship product, LightningBuy, is a mobile commerce and ecommerce platform that enables consumers to purchase physical products in just a few clicks from any mobile device or computer without registering or creating an account.

Tips for Life Sciences Companies Seeking Funding

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A recent blog post on MEDCITY News highlighted a few federal funding sources that life sciences companies may wish to explore. These funding sources include the Department of Defense (Army in particular) and Center for Medicare and Medicaid Innovation. The author also provides pointers on how to enhance one’s chances of landing the funding.

Here is a link to the piece by Brandon Glenn of MedCity News.

Peter Longo
President and Executive Director

2011 New England Venture Summit

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At the New England Venture Summit on Wednesday, December 14, Connecticut Innovations was well represented. Patrick O’Neill participated on a clean-tech panel, I acted as a judge for company presentations in the technology sector, Pam Hartley distributed information at the Connecticut Innovations table, and Adrian Horotan and David Guerrera, our newest investment team member, networked with other venture capital investors and scouted for entrepreneurial businesses seeking to build and grow their companies in the great state of Connecticut.

It never ceases to amaze me – there is no shortage of great ideas and enthusiastic entrepreneurs and investors willing to bring those ideas to market. I spent my day in the tech sector (there were also life science and clean-tech tracks), which boasted a great diversity of companies and business models. I spoke with entrepreneurs whose business ventures span social networking, crowd sourcing, disaster recovery, fabless semiconductors, wireless applications, software etc. Companies from across the United States, Israel, Finland and Canada were in attendance.

One of Connecticut Innovations’ portfolio companies, Innovatient Solutions, of Farmington, Connecticut, presented to an audience of potential investors. Innovatient Solutions was formed in January 2010 by three seasoned executives to develop, design and market the next critical phase in health care delivery. The company has developed a patient-centered information system to provide quality care management tools for the care team to dramatically improve the patient experience. It connects patients to their care team, to their friends and families, and to other systems in a facility, all from the comfort of their own bed and through a medium they are already comfortable with, their TV.

In addition to company presentations, the conference also included several panel discussions. The panelists, various VC professionals, shared their insights and recommendations with the group. Some notable remarks included:

  • It is more likely for a company to be acquired than to tap the public equity markets for a liquidity event. The years 2010 and 2011 set records for the number of acquisitions of venture-backed companies. This activity may have been overshadowed, however, by the few – but high-profile – IPOs that took place, including the IPOs of Groupon, Pandora and a few others. To weather the difficult economic times and until the current level of uncertainty subsides, Fortune 500 companies are sitting on more than a trillion dollars of cash but will eventually put this money to work.
  • When should entrepreneurs start thinking about an exit? One panelist suggested as soon as the entrepreneur starts thinking about starting the business. Venture investors want to know what the potential options are for an exit and want to ensure the entrepreneur is not neglecting this important aspect of business strategy.
  • Due diligence should be a two-way street. Particularly in early-stage investing, entrepreneurs should seek to partner with investors that bring more than capital to the table. Each investor has specific interests, goals and time horizons. You should make sure these are aligned with the development and growth plans of your business.
  • Several venture investors frowned on the use of formal written business plans. They are out of date the moment they are written and are rarely, if ever, updated and revised. PowerPoint presentations, for some, are a more effective means of communication, as they are better able to keep pace with the dynamic nature and fast-changing evolution of any entrepreneurial venture.

There have been, and continue to be, some grim statistics related to early-stage venture creation. However, attendees at the New England Venture Summit – entrepreneurs, investors and service providers – were universally optimistic. This is an exciting time to start a business.

The Connecticut Innovations team looks forward to following up with the many new contacts we made.

Merry Christmas and Happy New Year!

Douglas Roth
Investment Associate

Changing Our Minds

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Ken Coleman
CEO, C8 Sciences

Our mission for C8 Sciences is to change the lives of millions of people of all ages. In the past couple decades, neuroscientists have expanded enormously their understanding of brain function and plasticity; an exciting new “brain fitness” industry has been born and is growing rapidly. Our founder, Dr. Bruce Wexler of Yale, is recognized as a world leader at the forefront of this revolution, and we are excited to be creating products based on his work that will take us, and the industry, to the next level.

Dr. Wexler focused on early childhood education for his first product because the need for improved education tools is enormous, and he knew his technology would work particularly well for young children whose brains are just developing. Two years ago he collaborated with Dr. Jinxia Dong of Peking University, who is recognized internationally for her research in sports training science, to develop the intellectual property that is now the basis of our first product: C8Kids. C8Kids integrates a set of computer exercises designed to develop the core cognitive capacities that are the foundation of learning, with a structured set of physical exercises that reinforce the same neural systems. Two years ago, the first prototype of C8Kids was tested in Beijing with a group of children ages 5-9, with the remarkable result that their cognitive abilities, as measured by four NIH-standard cognition tests, improved by the equivalent of a 10-point increase in IQ in the space of four weeks.

In the past year, we created a cloud-based system architecture and developed a web-delivered, functionally expanded version of the original prototype. This past summer we tested C8Kids in a summer program with New Haven Reads, a nonprofit tutoring program in New Haven, with promising results. We’re now completing pilot programs in Bristol and Hamden, and preparing for commercial release.

I’m particularly excited by the potential contribution our product can make to improve early childhood education in this country. Government officials and educators today recognize that the enormous investment that has been made to improve our educational system over the past decade since the enactment of No Child Left Behind has produced alarmingly poor results. In my view, this is partly because too much money has been spent delivering the same traditional course content, perhaps in a more creative or interactive way, rather than delivering truly new technology that changes the learning paradigm. 

Our C8Kids program is a fundamentally different approach – a content-independent, brain-based pedagogy – that works directly to develop the brain’s capacity to learn and thereby better prepares children for learning the “content-based” curriculum. In our country, where large numbers of young children, particularly those from disadvantaged backgrounds, come to school unprepared for its challenges and are unable to keep up, C8Kids has the potential to level the playing field and give everyone a chance to succeed. This has enormous implications for their schools, which now spend a disproportionate amount of their resources on special programs, for their parents, and of course for the futures of the kids themselves.