Mid-year update: Keeping tabs on five startup industries in Northwest Arkansas

by Jennifer Joyner (JJoyner@nwabj.com) 498 views 

Earlier this year, the Northwest Arkansas Business Journal used input from informed observers of the area’s startup scene to tag several startup industries as areas of projected growth and development for the region’s entrepreneurial landscape in 2017, with intent to track progress of startups in each industry throughout the year.

Here are mid-year updates in the realms of high technology, medical technology, e-commerce, software development and last-mile solutions.

High-Tech Innovation
For high-tech operations requiring intensive, long-term research and development, commercialization and — as a result — success can be years in the making.

“It isn’t like developing an app or a services model,” said Matt Francis, president and CEO of Ozark Integrated Circuits in Fayetteville. “It just takes more time, and you have to be prepared to pivot.”

Ozark IC, founded in 2011, now seems to have hit its stride. Its products are used within several industries, and new funding has helped it enter the aerospace and downhole/geothermal markets.

“2017 has, by far, been our best year to date,” Francis said. The company, which makes microchip sensors that can withstand extreme environments, is now working on projects funded by a $750,000 Phase II grant from the U.S. Air Force and two $150,000 Phase I grants from the U.S. Department of Energy.

In addition to “getting the ball down the field” on those projects, customer engagement has been a key area of development so far this year, especially since Ozark IC tapped into an industry association, the Distributed Engine Controls Working Group, Francis said.

The company reports revenue so far to be 25% to 40% better than expected, and it plans to grow its eight-person staff by two to four in the next year. Ozark IC is one of several high-tech operations that have come out of academic research at the University of Arkansas in recent years and set up shop in the Arkansas Research & Technology Park.

WattGlass, which makes anti-reflective glass coatings for solar panels and lighting fixtures, earlier this year closed a Series A funding round led by a global science funder DSM Venturing on an undisclosed amount. The company expects to be profitable for the first time by the end of this year, said CEO Corey Thompson.

The solar energy company Picasolar is “well underway” with a $3 million funding round to complement last year’s $2 million matching grant from the U.S. Department of Energy SunShot award, CEO Douglas Hutchings said.

“The challenges of fundraising in Arkansas are well-documented, but we continue to make progress,” he said.

If the company does not raise the money, it will start to look at selling or at licensing the technology, though Hutchings hopes it doesn’t come to that.

“We are working hard to make sure that Picasolar grows here locally because we believe it provides the most benefit for our stakeholders in addition to being in-line with our personal objectives of advancing opportunities for science-based ventures in Arkansas,” he said.

Medical Technology
Several healthcare technology companies have emerged in NWA over the last five years, and NOWDiagnostics of Springdale has been pegged by a number of sources as a leader in the arena.

Rick Webb, creator of the Bentonville-based innovation network Grit Studios, believes NOWDx and a few others are on a path to having global impact. Webb has invested in NOWDx through NewRoad Capital Partners in Rogers. NOWDx has more than 35 products in the pipeline, and the company’s AdexusDx blood pregnancy test is now in the Food & Drug Administration application process to become an over-the-counter product, said vice president of marketing Liz Slape.

The company has seven grant applications in with the National Institutes of Health and also has brought on new customers this year and has “expanded penetration with our largest healthcare system,” Slape said.

Ascendant Dx, also in Springdale, is in the clinical trial phase for its primary product, an early-stage breast cancer test that looks for markers in teardrops, and CEO Omid Moghadam said the company is getting interest from investors in addition to potential partners from a wide variety of places, including India, Turkey, United Arab Emirates and South Africa.

“The social impact of an inexpensive, accurate and fast breast cancer diagnostic is getting the attention of high-profile (nonprofits) in the space. We are looking into collaborations,” Moghadam said.

Fayetteville-based Lineus Medical is gearing up for submission of its SafeBreak I.V. — purported to reduce IV dislodgment — to the FDA sometime this year, said CEO Spencer Jones. The company also is near closing a $1.25 million Series A fundraising round, lacking about 10%, Jones said.

A number of NWA e-commerce startups have gained traction with a national customer base in recent years, including the apparel company Lauren James in Fayetteville.
Lauren James, founded four years ago in June, has made some big hires this year, including adding a couple of new executive positions.

Mailena Urso, former vice president of marketing and content for Collective Bias in Rogers, is now chief marketing officer, and Brady Sharp, former senior manager of business analysis and administration at Furniture Factory Outlet, is chief information officer. In hiring a CIO, the company is looking to invest more in data analytics, said Lance Stokes, chief operations officer.

Near the beginning of the year, Lauren James hired Jennifer Harmeyer, former account manager for Vera Bradley in Kansas City, as national sales director for the collegiate licensing department, Lauren James’ fastest growing category. All in all, the company has added close to a dozen staff this year and is also looking at projected annualized growth in the 60% to 80% range, Stokes said.

“2017 is still a growth year. We’re growing our business’ top line across all channels. We’ve upgraded our systems and added to our production capacity,” Stokes said. “All this will propel us into a huge growth year in 2018.”

The online tuxedo rental company Menguin of Fayetteville also reports growth so far this year. CEO Justin Delaney said the second quarter of 2017 was “its most profitable quarter ever,” though he declined to share specific numbers. The company, founded in 2014, also launched dog tuxedos.

Software Development
The software company RevUnit in March bought the Las Vegas digital agency Teamvvork, in effect tripling RevUnit’s workforce in that city.

The company also moved into larger office spaces, both in Las Vegas and downtown Bentonville, where it now hosts the Exchange, a collaborative space for area startups.
Also in 2017, RevUnit has added to its leadership team at both the vice president and director levels and brought on a chief financial officer. From a work standpoint, it is “actively working on growing capability in artificial intelligence and machine learning” and is “looking forward to moving from proof-of-concept to production with a number of those ideas.”

Lofty Labs President Casey Kinsey said the Fayetteville software startup is “focusing a lot this year on developing our Cloud Services practice in partnership with Amazon Web Services.”

Last-Mile Solutions
In May, Chef Shuttle, the primary startup the Northwest Arkansas Business Journal was watching in the last-mile solutions realm, was acquired by the Minneapolis-based competitor Bite Squad — leaving a void in terms of last-mile startups gaining traction in the area.

Webb, who is also former senior vice president of global business processes at Wal-Mart Stores, said last-mile solutions holds potential for NWA, because Fortune 500 companies in the region are focused on the subject.

“Wal-Mart is always looking for a way in this space,” Webb said. “I think last-mile is an area NWA should be world-famous for.”

Grit is working with a West Coast startup on piloting robot food delivery and is planning a conference on the last-mile in the coming months “to assemble a group of thinkers/doers and begin to claim the space,” Webb said.