COMPANY:  Machfu

LOCATION:  Germantown Innovation Center

FOUNDED: 2015

OVERVIEW: Machfu simplifies the complex landscape of Industrial Internet of Things (IIoT) by easily connecting data at the edge to IoT databases in the cloud for business analytics. Machfu grew out of a simple idea: that developing and maintaining applications in the industrial IoT world should be as easy as it is in the desktop world or the smartphone world.

GOAL: The company’s short-term goals are to create as much awareness as possible among the industries that having a standardized edge platform will bring substantial value. The less developers have to worry about the underlying plumbing in developing applications, the faster innovation can occur.  The long-term goal is to reduce the enormous system integration inefficiencies that exist in bringing industrial sensors and controllers to participate in the Internet-of-Things.

PIPELINE: Machfu has secured its first major OEM customer win – S&C Electric Company based in Chicago. The win validates the need for the company’s technology and the value it will bring to the end customers which are the utility companies. Machfu is using this win as a template in our discussions with other major OEMs.

FUNDING:  Machfu has secured its first institutional round. The funding will help with staff expansion and growth plans.

Q&A WITH CEO PRAKASH CHAKRAVARTHI:

The backstory of Machfu is interesting partially because part of your team has been working together for over 15 years. How did you decide to launch this company together?

The team has been together for over 15 years. We founded Eka Systems in 2001 and were one of the pioneers in mesh networking for the advanced metering market that grew big after the ARRA funding from the federal government. After Eka was sold to Cooper Power in 2010, the core team wanted to stay together and we founded a consulting company called Captiva to architect and implement IOT solutions for Fortune 500 clients. Our team has deep expertise in embedded systems as well as the business needs of many industrial segments such as Utilities, Building Controls, Oil & Gas, Water and others. During the course of consulting we realized our true DNA was in products.

Another realization that dawned on us was that we were solving the same problems over and over again. This is due to the fragmented nature of the industrial markets that were leading to tremendous market inefficiencies in system integration. Due to our depth in the technology and business needs of this space, we created Machfu with the aim of democratizing the space.

You recently lined up SBIR and Ventures funding. What can you tell us about those?

The Department of Energy awarded us the SBIR grant to create a software development kit that would enable rapid creation of new and innovative applications in the smart grid market. The office of Electricity Reliability and Energy delivery has a mission to secure the US grid and transition the legacy technologies and work flows to modern ways using web services that will bring substantial value. The transition must happen gracefully as there are trillions of dollars in deployed assets. Machfu’s platform paradigm fits nicely with this vision.

What attracted you to the Germantown Innovation Center?

Most of us live in this area and it made sense to apply to the Germantown Innovation center. At that time Ruth Semple and John Korpela who were managing the incubator companies were very supportive of our effort and understood what we were trying to accomplish. They continued to encourage us as our business model and plans evolved. We should be graduating soon and the experience as early stage entrepreneurs in this facility—now under the management of BioHealth Innovation–has been wonderful.

How do you feel about the present startup environment for technology companies in Maryland?

Maryland is an excellent place for early stage entrepreneurs. If you combine all the incubators, mentorship and promotion opportunities available from organizations such as BioHealth Innovation and the Maryland Technology Council with the early stage funding available from TEDCO and other sources, it is certainly a premier location for a technology startup in the US. What is lacking is the next level beyond the early stage. The eco-system for post early stage companies is not yet as robust as Boston or the Bay Area.

Where do you see your technology having the biggest impact?

Machfu’s technology will have the biggest impact in industries that rely on legacy protocols for communication. These include industries such as the utilities, oil & gas, water infrastructure, industrial automation etc. These industries rely on protocols such as Modbus and DNP that were developed a few decades ago prior to the Internet or modern security needs but are still being deployed today. The economics of transitioning these device to modern ways is staggering and yet the value capture is much needed.

What were the main challenges you faced when starting Machfu?

Some challenges are similar to what all entrepreneurs face – which is being under capitalized with a vision and no product. There are specific challenges when dealing with the Industrial space. The sales cycles are long and there is a large inertia in changing or even thinking beyond established ways of doing things. In addition, the early stage capital market has a lesser understanding and familiarity with the Industrials.

What makes Machfu different from other companies in the same market space?

Machfu’s team has extensive experience in engineering and management leadership in wireless and embedded software technology. The team has been working together in the IoT space for the last 15 years and has the rare combination of IoT vertical markets and embedded systems experience.

What are some of the current inefficiencies in your industry?

What we have in the market today are 50+ IoT cloud platforms. However, there is a lack of a device platform with standard APIs and segmented tool chains. Historically the IoT market (previously referred to as M2M, sensor networking etc.) has been a silo’d and fragmented market where a potpourri of hardware and software platforms were used by industrial OEMs (original equipment manufacturers) to address a particular business need. Very often one business unit within a company would implement a different hardware-software platform from another business unit within the same company. This device fragmentation is referred to as “million platforms with a hundred users each”. With a projected growth in revenues from $12B to $69B over the next decade for the industrial IoT, creating a standardized device platform will fulfill a substantial market need.

What are the near-term milestones for Machfu? When should we next expect to hear about the company?

The near term milestones are to secure a few more customer wins in the next couple of quarters.

What specific advice would you offer to a first-time entrepreneur?

I wish there was a universal secret sauce. Each adventure is unique. But I would broadly say “If you believe in it, stick with it, put together a team around yourself where the whole is much larger than the sum of the parts and find experienced mentors who believe in you.”

Learn more about Machfu at http://www.machfu.com/.  Learn more about BioHealth Innovation and the Germantown Innovation Center and other resources at www.BioHealthInnovation.org. Judy Costello and Nandini Arunkumar are available to answer your Innovation Center related questions.

Learn. Build. Launch.
BHI Q&A with Leverege, LLC. Co-Founder & CEO, Eric Conn

Company:  Leverege, LLC.

Location: Germantown Innovation Center

Founded: July 2014

Overview: Leverege is an Internet of Things (IoT) software company with a suite of cloud-based products that simplify and accelerate any IoT project.

Goal: Leverege aims to become the #1 destination for all things IoT. Learn. Build. Launch.

Pipeline: Currently working with numerous commercial companies in a number of verticals launching IoT projects for asset tracking, remote monitoring and control, energy management, security, and defense applications. Partner ecosystem is growing nicely and recently became technology partners of Google and AT&T. Anticipate increasing monthly recurring revenue associated with licensing of the cloud-based platform and sales of the accelerated IoT deployment package called Jumpstart.

Funding: A bootstrapped company that has been financed by the founders since inception. Revenues are increasing each month with a projection to be cash-flow positive by the end of 2017. Anticipate raising a Series A in Q1 2018 from a combination of traditional VCs and strategic investors to expand operations, invest in new products, and accelerate growth.

Recent Recognition: Winner of the 2017 Maryland Incubator Company of the Year Award for Best Software Company.

Q&A with Eric Conn, Co-Founder & CEO, Leverege

• First off, congrats on winning the 2017 Maryland Incubator Company of the Year Award for Best Software Company. Can you tell us what this means to you and your team?

Thank you! We are honored to have been selected for the award and really appreciate the recognition from our peers in Maryland’s startup ecosystem. The support we have received from the State, particularly Montgomery County through the Germantown Innovation Center, has helped us immensely and significantly reduced some of the normal financial burdens associated with launching a startup.

• Please share the backstory of Leverege.

Leverege was conceived and started by me and my close friend Steve Lee in the summer of 2014. Steve and I are both software engineers and have worked with each other for over 20 years in previous companies. We had always talked about starting a business together and finally, the time was right. I was wrapping up things with my prior startup Gloto and he was ready to move on from a long career at Raytheon Solipsys, a company I had helped start in the mid-nineties after leaving the Johns Hopkins University Applied Physics Laboratory. It was just the two of us for the first 6 months so we rented a couple of desks in a friend’s incubator in the Reston Town Center and started crafting our business strategy.  

• Why attracted you to the Germantown Innovation Center?

There were several reasons we chose the Germantown Innovation Center. The first was the proximity to each of our homes. I live in western Howard County and Steve lives in Alexandria Virginia so Germantown was approximately in the middle – although I have to admit my commute is much better than Steve’s since he has to cross the American Legion Bridge every day. The second reason was the amenities and support staff. The offices are very modern and the support staff is so friendly and helpful. The building also has excellent infrastructure such as high-speed internet and a computer room for our rack of servers – not to mention the high-tech coffee machine which is pretty vital to our productivity. The third reason was the very reasonable and flexible lease agreement. Expensive, long-term leases for traditional office space don’t’ really make sense for a startup trying to find its way and the per office/per month pricing that the GIC offered us really helped.

• How do you feel about the present startup environment for technology and life sciences companies in Maryland?

I think Maryland has done a great job in supporting early stage startups. There are many high-quality incubators such as the GIC and bwtech@UMBC (where we also have an office) and numerous resources are available if you need them. From a financial angle, there are grants and numerous early stage funding options through TEDCO, Anne Arundel County’s VOLT program, Baltimore County’s BOOST loan program, and the Maryland Venture Fund. Ultimately though it all comes down to making your own breaks and working incredibly hard on your business. There is so much competition out there and you really need to be on top of your game at all times.

• Where do you see your technology having the biggest impact?

The Internet of Things is all about bringing the physical and digital worlds closer together and improving people’s lives through remote sensing, data analytics, and automation. However, implementing an IoT project can be a daunting undertaking since it involves knowledge of sensors, wireless communications, cloud computing, and user interface design. We’re striving to remove some of the complexity from the equation by developing software products that make launching an IoT initiative much simpler, less expensive, and faster.

• What were the main challenges you faced when starting Leverege?

As a serial entrepreneur, I know how hard starting and growing a business can be. No matter how many times I do it, it never really gets easier. Funding is always a challenge and is something that keeps you awake at night no matter how large or small your company is. Knowledge of your market is also very important and finding the right product/market fit before you grow is paramount. Finally something I really stress is corporate culture. Hiring the right people who share your ideals and vision is the ultimate competitive advantage. Too many companies fail because they don’t pay attention to the most important ingredient in any company, the people.

• What makes Leverege different from other IoT companies in the same market space?

We differentiate ourselves from our competition in several ways. We run one of the most popular online educational sites about IoT called “IoT For All.” On iot-for-all.com, we post high-quality, unbiased content on a daily basis about technology trends in IoT as well as detailed explanations of key concepts. Our audience is growing rapidly and that site has helped establish Leverege as a thought leader in the industry and also provides an excellent channel for inbound sales leads. On the technology side, we employ high-fidelity simulation and easy-to-use self-serve tools to build IoT projects with higher quality in less time at a lower cost. Our team and corporate culture is also pretty incredible so our customer service is outstanding. We regularly have large customers and partners such as Cox Communications and Google tell us how impressed they are with our people, technology, and processes.

• What are the near-term milestones for Leverege? When should we next expect to hear about the company?

We’re laser-focused on execution across the board right now. We want to grow our IoT For All publication to 1M page views per month in 2017 and begin monetizing the site by the end of the summer. Our product roadmap is fairly aggressive and we hope to launch a full suite of our self-serve tools to select system integrator partners in Q3. From a revenue perspective, we are onboard several new customers right now and anticipate being cash-flow positive with 15 employees by the end of the year. We are also gathering all of the required diligence materials for our Series A raise in Q1 2018. It’s a very exciting time.

• What specific advice would you offer to a first-time entrepreneur?

Being an entrepreneur is certainly not easy but I wouldn’t trade it for the world. However, it is not for everyone. The collection of skills required to build a successful business is ever changing and the ride is never smooth. You must be prepared to work harder than you ever have, usually with less pay and certainly with less job security, and nothing will be given to you. That being said, the rewards of success are unmatched on a personal level. Just like with everything in life, the harder the battle, the sweeter the victory.

To learn more about Leverege. Visit their Website, Twitter, Instagram, Facebook, and LinkedIn pages.