Just as the software it develops is concealed within the small computing devices that use it, so too has Accelent Systems Inc. been inconspicuous in the marketplace.
That’s about to change.
A jolt of $5.5 million in fresh venture capital will put the software developer at the forefront of the competition, says Dr. Yung-Fu Chang, president and CEO of the Fairlawn technology firm he launched in 1997.
The fuel source is M Group Inc., a Michigan-based venture capital company that seeks out tech companies needing investors with fat wallets for marketing and growth endeavors. The sizable sum will help implant Accelent’s image in the marketplace by way of a strong sales and marketing team, advertising dollars and trade show funding.
John Imboden, Accelent’s vice president of operations, says the funding will also enable Accelent to form the technical support team it needs to sufficiently support the new customers it expects to gain. A significant amount is being spent to enhance Accelent’s Web site, to facilitate software availability via the Internet and to make the site one that has potent marketing pull.
Imboden says that when he and Chang made their pitch for dollars at the Cleveland Innovest Conference — an annual event that brings entrepreneurs and venture capitalists together — they were seeking $3 million in funding.
“When we saw folks there who were looking for $100,000, we were thinking, ‘Gosh, will anyone give us $3 million?’” he laughs.
M Group, based in Birmingham, Mich., is a private investment company with $30 million in committed capital, and was hungry to hook up with an enterprising area tech group that had a competitive advantage.
“We found Accelent attractive because they’re a highly skilled, terrific bunch of guys with a tremendous product that’s patented, and nobody else in the marketplace has it,” says Josh Mondry, vice president of M Group Inc. “That gives them a strong competitive advantage that can dramatically change the market.”
Imboden says he and Chang were swayed by the fact that M Group has a regional presence and wanted to be involved as more than just an investor.
“They weren’t a big east or west coast firm looking to dump money in. They wanted to cultivate a company in this area and in our marketplace — the Internet and software arena.”
Accelent creates customized BIOS software for developers and manufacturers of hand-held or portable computing devices using the Microsoft Windows CE operating system. Chang explains that Accelent’s software allows the hardware in small computer devices to communicate with the operating systems that run them.
M Group saw that as the kicker.
“We’re in the post-PC era, and here are these guys targeting hand-held devices that are going to be an even larger market than the PC market was,” says Mondry. “They have a unique skill set and a product that will help make them a leader in that area.”
Imboden says he and Chang were pleased to find investors that are hip to the technology, and savvy about the marketplace.
“We believe they are a team of professionals we can work with in a day-to-day business relationship,” Imboden says, explaining that, as part of the deal, Mondry and another M Group principal, Greg Buck, now share board seats.
M Group also gained a percentage of ownership in Accelent.
“There were shares of preferred stock that were granted as part of this transaction, and they got an interest in our business. But we’re still a private company and Accelent’s management and employees retain the majority of shares,” he says.
The alliance brought funding fuel and fresh insight, says Imboden. In reviewing Accelent’s existing strategic plan, the new investors identified other marketing and development directives to pursue.
“They validated some of our original thinking on different approaches for having Web-accessible software tools that would escalate the business tenfold over what it was originally being projected at,” Imboden says.
That’s what boosted the original $3 million investment to $5.5 million, says Mondry. With great confidence in Accelent’s future, M Group essentially combined a first and second round of funding up front.
“Based on the sales and development directions of the company, we wanted to make sure we didn’t undercapitalize it and that we gave ourselves the opportunity to make a big splash in the market, develop the organization properly and not have to run back to the well,” says Mondry.
Imboden says Accelent’s new objective to make its software tools available on the Internet will, in turn, raise sales revenues.
“We’d love it to be a Mecca for all development engineers to look to when they are thinking about developing Internet access devices of the future,” Imboden says.
Along with the retailored marketing strategy came revised revenue goals. Last year, Accelent reached $1 million in revenue. That number is expected to be $5 million by the end of this year. The quest is to hit sales marks that will raise eyebrows in the marketplace.
“They’d like to see us hit the $100 million mark as quickly as possible, like in a two- or three-year timeframe, because when you start hitting those type of sales achievements that rapidly, quite a few folks become interested in turning you public or buying you out,” Imboden says.
As part of M Group’s exit strategy, an IPO may be on the horizon.
“They feel that either a buyout or IPO is a very realistic opportunity,” Imboden says.
As for the principals of Accelent, Chang and Imboden intend to keep building their business, remaining firmly rooted in Akron. After all, they’ve already made a home for 20 employees.
Imboden assures, “We’re working to build a team here that has the talent and technology to develop this type of software product and be a viable player in the marketplace.”
How to reach: Accelent Systems Inc., (330) 864-2300
