Lebanon Startup Cleans Up in Contest

Sunday, October 04, 2015
Manchester, n.h. — “C’mon, everyone let’s give it up!”

Jamie Coughlin is working the audience like the warm-up act before the taping of a TV show. He’s dressed in the tech entrepreneur’s uniform of black jeans and open collar shirt, extends his arms like he’s leading a revival meeting, and smiles at the swell of enthusiasm.

Coughlin, the director of entrepreneurship at Dartmouth College, is playing emcee in a staging area inside one of the renovated red brick Millyard buildings along the Merrimack River in Manchester for a competition among tech entrepreneurs to win a $100,000 in funding from AOL founder Steve Case. Each of the seven finalists — including two from Hanover and one from Lebanon — gets four minutes to pitch their business plan to Case and a panel of three other tech industry players, including Segway inventor Dean Kamen, Hanover venture capitalist Matt Rightmire and intellectual property lawyer Julie Samuels.

The afternoon pitch session is the culmination of a caravan roll through Manchester’s emerging tech industry organized by Case’s Rise of the Rest project, a campaign he’s backing to draw attention to overlooked pockets of entrepreneurship around the U.S. Manchester is the 18th city Case and his entourage have visited in their blue-painted Rise of the Rest tour bus, with media along for the ride, during a day that included lunch and with Gov. Maggie Hassan, a tour of a Manchester tech incubator, meet-and-greets at local successful tech companies, and a pit stop at the downtown Red Arrow Diner.

“This is about celebrating great companies off the beaten track,” Case reiterates about Rise of the Rest’s purpose whenever he stands before a new group of people on the tour. “Seventy-five percent of venture capital goes to three states: California, Massachusetts and New York. The other 47 states fight over the remaining 25 percent. We’re here to change that. … Forty million jobs have been created over the past three decades in the U.S. by startups,” Case says, citing research from the Kaufman Foundation.

The finalists competing for Case’s $100,000 were winnowed down from about 50 applicants and represent aspirants ranging from proposals still in the conceptual stage to companies already in business and attracting customers. New Hampshire wants to dispel its image as a state abandoned by manufacturers and the home of risk-adverse Yankee investors for one as a place to “Live Free and Start,” as the slogan for the Hassan-led initiative to make it easier for startup business touts it.

Can-do optimism and cheerleading rules the day. If anyone remembers that Case’s AOL, which at its peak was the gateway to half the Internet users in the country through the then-novel phenomenon of email and chat rooms, merged with Time Warner in one of the biggest debacles in corporate history and then plunged in value as broadband supplanted dial-up access, no one mentions it. Case now heads Revolution LLC, a Washington, D.C., investment firm with stakes in 41 different startups.

On Thursday, Case’s focus was the entrepreneurial tech “ecosystem” in New Hampshire and state officials celebrated the arrival of his bus tour as if it were a foreign delegation

“New Hampshire is well suited for entrepreneurship,” Hassan told a gathering of business executives, entrepreneurs and higher education administrators during a paper plate lunch of sandwiches and “fireside chat” at Bridges House in Concord. But as the state with the lowest tax revenue per-capita in the country, entrepreneurs shouldn’t set their hopes on much in the way of public funding in New Hampshire for their ventures as happens elsewhere. Dartmouth’s Coughlin said the state has pledged a total of only $107,000 to its five regional incubators — whittled down from Hassan’s original $250,000 proposal.

Instead, Hassan pointed to the quasi-public Business Finance Authority, which helps to arrange credit availability and financing for businesses from banks and investors, as one example of how the state aids the private sector.

With little money available from public sources, funding from investors like Case becomes all the more crucial for startups, especially given the limited number of venture capital firms operating in the state. “Access to capital is the biggest issue for startups,” Coughlin said.

For Case, whose net worth Forbes magazines pegs at $1.36 billion, spending $100,000 on a start up will not drain his wallet: The money represents less than than three days of income, assuming an ultra-conservative return of 1 percent. But for a startup whose principals are scraping money from family and friends, the sum is a windfall that can make a palpable difference in getting to the next step.

“I know exactly what I would do with it. I have a fantastic data scientist I could hire full-time,” said Tim Dybvig, co-founder of Hanover-based Calibrater Health, which has developed a real-time survey for a patient’s experience following his or her visit to the doctor.

Dybvig and his partner, Adam Groff, an assistant professor at the Dartmouth Institute, designed the software for the simple question-and-answer text message that is sent to a patient’s mobile phone following their appointment. The survey gives medical providers instant feedback tracking patient outcomes and flags for the provider any potential problems that need attention.

Dybvig, 34, from Princeton, N.J., said he always wanted to be entrepreneur, ever since he graduated with a degree in computer science and English from Middlebury College in 2003. He has spent the time since planning for the role by working at a New York startup and Lebanon-based biotech firm Adimab, where he was the second hire.

In fact, it was Adimab co-founder Errik Anderson who introduced his former employee to Groff — the two first met for coffee at the Dirt Cowboy in Hanover, where Groff sketched out his idea for a real-time patient feedback survey to Dybvig. Twenty minutes later they were holed up in Groff’s office diagramming the concept on a whiteboard. Since launching last fall, Calibrater Health now has a handful of customers in five states.

“I’ve been arming myself with tools and knowledge to start companies,” Dybvig said in an interview before making his pitch to the panel of judges.

The vast majority of startups fail, and at several points on the Manchester tour striving entrepreneurs are reminded of the grim statistics: 80 percent of all startups never make it past the fifth year. Case said it took nearly a decade for AOL to hit 1 million subscribers. When it launched in 1985, only 3 percent of the U.S. had online access and were online for just one hour a week.

“My parents would call up and say, ‘Steve, this doesn’t look like it’s working. What’s your Plan B?’ ” Case would relate, eliciting laughter wherever he was retelling the story.

The Hanover-Lebanon area, along with Manchester, are the two biggest startup hubs in New Hampshire. In fact, when Dartmouth was looking for a director of entrepreneurship last year as part of reorganizing its entrepreneur program, it recruited Coughlin, a Bedford, N.H., native and former head of Manchester’s ADI Innovation Hub, an organization that fostered early-stage tech startups and later evolved into the incubator Alpha Loft.

Coughlin arrived in Hanover in time for the opening of the Dartmouth Innovation Center, a ground-floor space on Currier Place where college and graduate school students and even non-Dartmouth community members can meet and swap startup ideas. It is where Dartmouth’s Tuck School of Business second-year student Robert Thelen met Dartmouth junior and computer science major Orestis Lykouropoulos last fall during the Dartmouth Entrepreneurial Network’s “startup weekend.”

Thelen, 32, a former program manager with the Air Force from Wisconsin, had an idea for a smartphone app that would make it possible for people in a room instantly to share their social media profiles and contact information — the digital equivalent handing someone your business card and resume. Thelen said he got the idea for the app when he returned to Tuck and couldn’t keep track of the names of all the people he met at the endless rounds of business school social functions and events.

Thelen teamed up with 20-year-old Lykouropoulos, a Dartmouth junior and computer sciences major from Athens, Greece, to refine the concept, named Fliq. Lykouropoulos used his computer skills to design Fliq’s user interface. The pair landed in second place out of 45 teams pitching their ideas during the weekend and went on to win a $5,000 Den Founders Grant. Now in beta testing phase, the Fliq team also was among the finalists selected to pitch their startup to Case and the panel of judges.

A $100,000 investment from Case would be “huge,” said Thelen, whose wife, Sarah Thelen, has been overseeing the development of Fliq’s software. “The word ‘bootstrap’ doesn’t begin to describe us,” he added, noting that a six-figure cash infusion would shave six to nine months the beta phase. “It wold be a great start to fulfilling our dream, but even if we don’t get it we’re moving forward,” he said.

For Case, the world is now entering the “third phase” of its digital transformation that began 30 years ago. The first phase during the 1990s was the building of the Internet infrastructure and users getting online access. The second phase, which ran from 2000 to 2015, was the shift to mobile with smartphones and apps. And the third phase is about “integrating the Internet seamlessly into everyday life” through it being a component in health, education, transportation and food.

“All those areas are going to be disrupted significantly,” he said.

Ironically, however, one of the three finalists from the Upper Valley doesn’t have much to do with the Internet, smartphones or “disrupting” entrenched industries. FreshAir Sensor Corp., which has developed a device that uses polymer technology to detect cigarette smoke and other chemicals in rooms and other enclosed spaces, is based on simple-to-grasp concept.

The company, operating out of Dartmouth’s Regional Technology Center incubator in the Centerra Resource Park in Lebanon, is the brainchild of Joseph BelBruno, a professor of chemistry at Dartmouth, and Jack O’Toole, a former operations officer in the Marines and 2014 Tuck graduate.

FreshAir’s sensors send information via Wi-Fi to the customer, allowing hotels, schools, property managers, rental car companies and others to detect smoking in prohibited spaces that pose a danger, dirty facilities and cost money to clean up. The company already has raised more than $3 million in funding from investors, including Dartmouth, and the devices are already entering the market.

O’Toole earlier in the day,acknowledged that $100,000, wouldn’t make a lot of difference for FreshAir getting to market given the funding it’s already received. But the money would give it some cushioning during its ramp-up phase and income starts flowing.

Last up to make their pitch is FreshAir Sensor, with O’Toole wearing a Dartmouth-green button down shirt. Although smoke detectors have existed for a long time, he tells the judges, FreshAir has taken the concept farther with a device sensitive enough to read the airborne chemicals and detect the substance in the air. At the moment the devices can discern cigarette and marijuana smoke, but FreshAir is working on another huge environmental toxin: formaldehyde.

“Originally we believed hotels that would be interested,” O’Toole said. And while that proved to be true, he noted, “we’re getting a lot more from property management companies.”

O’Toole told the judging panel that the devices cost $129 each and FreshAir would charge a $4 per month per unit monitoring fee — which given the number of hotel rooms in the country quickly adds up to a stunning revenue stream. O’Toole said that more than 1,000 potential customers have already expressed an interest, representing 1.6 million devices. He projected figures on an overhead screen and noted that FreshAir could be generating $300 million in free cash flow after reaching certain benchmarks in sales.


“My ears perked up when I heard $300 million in free cash flow,” Case said. He also adds he “likes the diversity” of FreshAir’s team, which includes a female chemist and two engineers from Ghana and Burkana Faso, all Dartmouth graduates.

The judges adjourn to make their decision and Coughlin reminds the room that no matter who is awarded the $100,000, “they’re all winners.”

A few minutes Coughlin emerges from behind a screen.

“Manchester, we have a winner!” he announces as the audience claps loudly.

Case maneuvers to the center, practiced in having awarded 17 previous investments, and ratchets up the tension a notch with a cliffhanger preamble.

“It’s a company that can put New Hampshire on the map,” he said. “If they innovate successfully, they can build a great company, create a lot of jobs and change the world, because they are dealing with something that is really important to us in terms of health, making sure we and our kids are in safe environments … Please give it up for … FreshAir!”

The room suddenly reverberates to the blast of the Rocky III theme song, Eye of the Tiger, as all seven members of FreshAir’s development team crowd around Case, shaking hands and holding up a giant replica of a $100,000 check with the company’s name scrawled in the “payable to” line.

“We’re really excited what we can do with these sensors by making life healthier for everyone” O’Toole said as the music and applause combine to bring the contest to a climatic conclusion. The FreshAir team poses for a group picture with Case and holding the giant replica check.

The audience is urged to hang around afterward, mingle and help themselves to refreshments. The audience is out of their seats and heads to the complimentary bar set up around the corner.

John Lippman can be reached at 603-727-3219 or jlippman@vnews.com.

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