More ?Angels? Sought for Start-ups at Genesis

Chuck Chalfant, president & CEO of Space Photonics Inc. in Fayetteville, is not quite to the point where he’s seeking venture capitalists like the 10 who just supplied Virtual Satellite Corp. with $3 million. But Chalfant said he does plan to look for “Angel” investor assistance in the future.

Clients of the University of Arkansas’ Genesis Technology Incubator like Space Photonics and David Nelms’ Integral Wave Technologies will likely be the next high-tech firms hoping to tempt local investors.

Space Photonics has targeted late this year for the release of several new fiber optic components aimed at the niche avionics and space-born systems market. It has a slightly slower growth plan than VSC, which is focused on a specific product that needs to get to market quickly.

Northwest Investment Group LLC, as reported Feb. 21 by ArkansasBusiness.com, has made it possible for VSC to develop, demonstrate and commercialize its virtual satellite system in Fayetteville.

Without local venture capital, the firm and its expected manufacturing, marketing and research jobs would have had to move elsewhere.

The investors, most of whom gathered Feb. 28 at Genesis to announce the development, include UA Athletic Director J. Frank Broyles, Athletic World Advertising President Gregg Ogden and prominent developers Jim Lindsey, Mark Marquess, Vic Evans, Gary Brandon and Greg House.

Bob Friedman, director of Genesis, is chairman and president of VSC. His technology uses existing satellite resources to create Internet and high-quality television applications. Broyles said Friedman was the project’s biggest selling point.

“When I saw Bob Friedman’s history,” Broyles said, “I wanted to be on his team. And there were others who wanted to be on his team, too.”

Fayetteville Mayor Dan Coody, Genesis Director Otto Loewer, ITI-Communications & Electronics LLC President Bob Winkelman and other faculty were also on hand.

To date, Space Photonics has received four Small Business Innovative Research grants totaling $2 million. The company, a spinoff of ONI Systems Inc. of San Jose, Calif., got its start in February 1999 by developing satellite interface cards that can process heavy data. The firm expects to earn $700,000-$800,000 this year for R&D it’s doing for NASA and the U.S. Department of Defense’s Air Force Research Laboratory.

Chalfant, a Booneville native, is banking on the return potential of his network interface cards and fiber optic transceiver components. The products convert electronic signals into optical signals that can pass over fiber lines.

Space Photonics has also come up with a 12-channel interface which has a much greater capacity than the industry-standard one-channel version. One practical application for the component is for heavy traffic intraoffice or local area networks.

“We’re planning to pursue venture capital next year probably in the $500,000 to $1 million range,” Chalfant said. “It will fit our growth plan more at that time.”

Nelms, Integral’s founder and chief technology officer, soon plans to begin manufacturing thin film passive components for electronics, like the hundreds used in every cell phone. He is talking with venture capital firms in Texas and California.

But funding from one of those sources almost guarantees Integral would have to move to that area. Timing is crucial because Nelms’ product is similar to the Virtual Satellite in that it needs to get to market quickly.