Oak Ridge National Laboratory’s (ORNL) Shaun Gleason and Mike Paulus were less than two years into their new start-up – ImTek – when a National Institutes of Health (NIH) solicitation provided just the sort of fuel required to rapidly accelerate their business.
Paulus said that the 2000 solicitation called for the development of a high-throughput, whole animal imaging x-ray CT system.
“We won against a company that was soon to be acquired by GE Medical,” he said. The award came with a purchase order of just under $1 million for the installation of two upgraded machines that were to be dubbed the MicroCAT 2.
The award also caused the duo to shift from full-time at ORNL to part-time to produce the upgraded device and meet the delivery schedule.
Gleason recalled in an interview with teknovation.biz that he was in Washington, DC on September 11, 2001, attending a small animal imaging conference while also working to install the first Microcat 2 at the NIH headquarters. It was clearly a very sobering experience.
“We saw the smoke from the Pentagon at the conference site,” he said. When Gleason tried to reenter the NIH facilities to complete the installation the next day, he noted that “security had changed in the intervening days,” and it was much more difficult to get their equipment cleared.
The installation was completed, and ImTek sold a total of 15 Microcat 2 devices in the next few years. The company was also able to diversify its product line thanks to a federal Small Business Innovation Research program award to develop a single photo emission computed tomography (SPECT) scan.
“That became our second imaging modality,” Gleason said.
Thus far, the duo said that they had used upfront payments and grants, along with their own money, to fund ImTek. As 2001 came to a close, they recognized that “we needed a larger partner” if ImTek was to grow and eventually be acquired. The opportunity came at a Radiological Society of America national meeting in Chicago.
“We took our little pop-up display” to the large conference, Paulus laughingly said. “Our chief competitor had been acquired by GE, so we reached-out to Philips.” The latter had a global presence, but it took a strong interest in the start-up from Knoxville.
“They became our exclusive sales and marketing team,” Gleason said.
Ramping-up the company’s sales also involved fully utilizing family members. This was easy, according to Paulus, because “we were totally aligned with our family values.”
“We hired my dad as our installation person,” Paulus said. “Shaun’s wife was our CFO (Chief Financial Officer), and my wife handled purchasing.”
By 2004 the company was poised for acquisition. Paulus said they considered two options. One involved a higher financial upside, but required the owners to relocate. The other allowed them to remain in the region, but was less lucrative.
“We chose not to relocate and disrupt our families,” he said. “It made more sense to be part of a local company.”
CTI Molecular acquired ImTek in November 2004.
NEXT: Post-acquisition and lessons learned.