COMMENTARY: Connections and relationships truly matter
By Tom Ballard, Chief Alliance Officer, PYA
You’ve heard the phrase, “Words matter.” Well, so did a few other factors including connections and relationships, along with founder persistence, in the successful announcement that local start-up Active Energy Systems Inc. made this week about its $1 million milestone-based investment from a consortium of funds (see yesterday’s teknovation.biz post here).
The company, co-founded by Knoxville native Mitch Ishmael and Levon Atoyan, is commercializing an advanced cooling solution with built-in energy storage to provide building owners with lower cooling costs, reduced carbon emissions, and strengthened cooling resiliency. For starters, Active Energy has successfully navigated the process of securing more than $2.4 million in federal Small Business Innovation Research (SBIR) grants through the U.S. Department of Energy and National Science Foundation (NSF). Not only were those dollars critical to advance the technology, but that also provided an attractive cap table for investors.
But, that’s just one part of a series of activities that no doubt played an important role in helping Ishmael and Atoyan gain important knowledge, better understand the landscape, and make the connections that helped convince investors to be a part of this week’s announcement. It’s a story of hard work, persistence and patience that begins about five years ago when Active Energy Systems was selected as one of the three members of the inaugural cohort of the “Innovation Crossroads” (IC) program operated by Oak Ridge National Laboratory (ORNL).
Even though Ishmael grew-up in Farragut and had a few interactions in the past at ORNL (see March 12, 2018 teknovation.biz article), he had been away at college for a decade, first at Rose-Hulman Institute of Technology and later at Cornell University. Soon after the first cohort started its two-year fellowship in late May 2017, Ishmael began to be introduced to an entirely new network of individuals, and those connections would prove very valuable.
One of those individuals helping with the introductions was Tom Rogers, then ORNL’s Director of Industrial Partnerships and Economic Development, who was assigned to lead the IC program. As local readers know, he has a background in economic development from his earlier roles at TVA and the Oak Ridge Chamber of Commerce and served for more than a decade as the President and Chief Executive Officer (CEO) of Technology 2020, an organization focused on supporting tech-based new ventures.
Getting your name widely known is important, and that’s something that the Active Energy team has done along with delivering results that leveraged additional funding and convinced people to spend time helping the team. Whether it was opportunities such as being one of 20 finalists in the highly competitive 76West Clean Energy Competition in 2018 in New York or presenting at the Knoxville Technology Council’s inaugural “KTech Summit” in August 2019, Active Energy seized on those occasions before COVID-19 stopped so many events beginning in March 2020.
The start-up also looked for ways to gain more knowledge like participating in the NSF-funded I-Corps South program offered by the University of Tennessee (UT) Research Foundation and UT Knoxville’s (UTK) Anderson Center for Entrepreneurship and Innovation. That program is focused on the all-important concept of customer discovery . . . will someone actually pay for your product. Active Energy also participated in the “Energy Mentor Network” operated by the Tennessee Advanced Energy Business Council in partnership with Launch Tennessee.
The start-up was one of the three recipients of funding in September 2019 from the brand new TennesSeed Fund that is managed by Three Roots Capital, ironically one of the firms that is involved in the just announced $1 million investment. And, as noted above, the start-up’s team has used on two occasions federal SBIR awards and the State of Tennessee’s matching grant program administered by Launch Tennessee to keep a fairly clean and undiluted cap table.
In another irony, Active Energy reconnected with Tom Rogers, now President and CEO of the UT Research Park, when the start-up became one of the inaugural members of the Spark Innovation Center. The latter is focused on companies ready to commercialize their technologies. As a participant in the program, Ishmael and Atoyan also connected with John Bruck, Spark Director and a member of Queen City Angels, another of the just announced $1 million investors. And, to add more to the importance of relationships, the Spark connection led to Coleman Adams of Boston-based Clean Energy Venture Group which was the lead investor in the new funding round.
So, you no doubt have noticed by now that certain names – individuals, organizations and programs – are in bold, red type. You probably already correctly guessed that this was not an accident but intentional. The point is that knowing people, both as individuals and as leaders of organizations, and getting connected to their network of connections can make all of the difference in the world to a start-up. Having a vibrant set of individuals and organizations focused on growing the tech-based ecosystem is also very important. The Active Energy story at this stage in its still young life shows what can truly happen when those in an ecosystem work diligently and collaboratively, just like the old adage of a “finely-tuned car,” to help start-ups.
In the case of the Knoxville-Oak Ridge region, the really good news is that Active Energy is just one of those emerging success stories. There are others to still have the spotlight cast on their great progress.
