In its second year the ARK Challenge rolled out nine solid company startups before more than 35 investor groups on Thursday (Sept 5) at the final Demo Day at Crystal Bridges in Bentonville.
In a surprise announcement around 1:30 p.m. Clete Brewer, CEO of BlueInGreen, said there would be three companies chosen again this year for the $100,000 funding level. That is one more than the groups anticipated because Gov. Mike Beebe and Grant Tennille, executive director of the Arkansas Economic Development Commission, felt compelled to contribute.
Brewer joked that Tom Dalton, of sponsoring Winrock, did a little arm twisting, but not too much given the high caliber of viable business opportunities in the room.
Langhar, Info Assembly and Overwatch were the three teams selected by the investment panel following their eight-minute pitch presentations on Thursday. Being selected is a game changer for these early stage companies, most of which were not much more than idea just 14 weeks ago.
These teams were selected from a field of 92 applicants back in April, then whittled down to the nine who worked closely with ARK Challenge mentors and partners to get those ideas into scaleable prototypes and revenue generating businesses.
The program sponsors include: Fund for Arkansas’ Future, Gravity Ventures, Winrock International, New Road Ventures and Arkansas Development Finance Authority.
Passenger Baggage Xpress was the team chosen by the University of Arkansas RFID Research Center for the board member position. RFID Research Director David Cromhout said the board seat is worth $25,000 and it puts them in close contact with dozens of key leaders in logistics. PBX is based in Little Rock
Overwatch was the only local team selected on Thursday, showcasing the youngest participant in the competition, 17-year old Josh Moody, a senior at Little Rock Catholic High School.
Moody’s idea marries video game play with physical outdoor activity such as laser tag, airsoft and paintball. Moody said it’s a $70.4 billion market, $19.1 billion of which is combat video games.
His team members include Joe Saumweber and Michael Paladino, software developers who live and work in Bentonville.
“We were introduced to Josh through his dad, David Moody, an active investor in the local entrepreneurial community. The idea was all Josh’s and he had done a fair amount of research on the market potential,” said Paladino, chief technology officer for Overwatch.
Moody said he and his partners sat around the kitchen table for few hours sketching out ideas on napkins and scraps of papers and decided to toss their business concept into the ring for the ARK Challenge.
“We have come such a long way in the past 14 weeks. We have partnered with Cybergun for the gun hardware rights and distribution, which will give us access to online stores and 9,000 store fronts where they do business, including Cabella’s and Wal-Mart,” Moody said.
The Overwatch team said this first round of funding is about one-quarter of the amount they need to further develop the mobile application for Android and ramp up the manufacturing for the hardware. They were encouraged by several other investor groups who also showed interest in their venture after Thursday’s presentation.
Langhar is translated as “pure food”, according to Karanpreet Singh, co-founder for the Indian-based food solution company.
Singh was the only one of this three-man team presenting. Partners Pankaj Sharma, Pawan Saini and Sunil Kumar were cheering him on from their home base in Delhi, India.
Langhar is already up and running in Delhi generating roughly $2,000 per month in individual subscriptions and $10,000 each quarter for business subscriptions. The company provides web or mobile access to home cooked meals for pickup, delivery or dine-in experience in the chef’s home.
“There are fewer barriers in India, as it is legal to sell food that’s prepared in a home and there is a dense population of people of are accustomed to ordering prepared food,” SIngh said.
During his 14 weeks here in the U.S., Singh had the opportunity to meet with Tyson Foods and other food companies that do business in India.
Clint Lazenby mentored the Langhar team and said he was compelled to invest because he has seen firsthand the potential this company has inside India and possibly the U.S. Lazenby oversees international sales for ConAgra’s Lamb Wesson division and has worked in India.
Aditya Goel and Karthik Vaidyanath are seasoned professionals in their own right. Goel, of Orange County, Calif., most recently worked as a financial analyst for PIMCO. His partner crunched numbers and financial data for a large investment banking firm in India.
The financial duo said their company — Info Assembly— accelerates solid financial research, easing the cumberson data gathering process for relevant financial metrics which are then evaluated by analysts who make business and investment recommendations.
By using the Info Assembly software, Goel said investment houses, hedge funds and other financial investors can greatly reduce their research time. He said analyst productivity is raised to the point where less analysts are needed.
Info Assembly has worked locally with Greenwood Gearhart Inc. in Fayettevillle to gain insight into the features needed by smaller investment advisors.
Goel said there is a $1.9 billion U.S. market in which they can sell their solution, but they need to secure roughly $500,000 for marketing and manufacturing the software. He said the company has the ability to reach $1.2 million in revenue by the end of 2014.
Dalton told the crowd that work has already begun for next year’s ARK Challenge. He said the results have been so successful in Northwest Arkansas, there will be two competitions next year, one locally and one in central Arkansas.
A number of last year’s contestants attended Thursday’s Demo Day celebration.
StackSearch, one of the three winners chosen last year, just secured $260,000 in additional funding and continues to expand their enterprise recently adding a partnership with Elasticsearch for big data applications.
B’tiques, also selected a winner in 2012, continues to work expanding their startup. Fayetteville-based B’tiques works with small clothing retailers to help them promote limited quantity retail through a free mobile application that is shared through the retailer’s social media pages.
“We launched the mobile app three weeks ago and have signed up 15 small retail stores in Northwest Arkansas, Fort Smith and the Little Rock area. The feedback has been great and consumers like having a shop-mobile option,” said Will Carter, co-founder of B’tiques.
He said consumers often buy fashion on impulse because they don’t know they want it until they see it. B’tiques, according to Carter, will promote the hottest fashion trends on social media for the retailer and then make the product accessible via the mobile application. The customer can purchase the product online and either have it delivered or pick it up at the store at a convenient time.
Carter said the mobile application is free and easy to use for the retailer and consumers.
“We are paid a percentage of the sales generated from the application,” Carter said.
These former competitors said it was fun to sit back and watch this year’s challengers knowing the difference a year can make with funding and equally important mentoring from industry leaders that continually support Arkansas’ entrepreneurial sector.