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RALEIGH … With revenues on the books and paying customers, ArrayXpress is on the prowl for some venture financing.
ArrayXpress still funds its capital intensive equipment needs by obtaining substantial upfront payments from its customers, says Michael Zapata III, chief executive officer.
Founded last year, the North Carolina State University spinout headquartered at the school’s Centennial Campus incubator already has 10 paying customers, says Zapata. ArrayExpress makes sophisticated analysis and diagnostic tools that fit on a device the size of a microscope slide. “We’re a genomics science company with diagnostic products and gene expression services,” Zapata says.
Zapata says the company is about ready to stop flying under the radar as it looks for private angel backing of from $500,000 to $1.2 million.
“It’s a situation where we don’t absolutely have to have the money,” Zapata says. “But we have clear opportunities and could get better margins if we bought additional equipment. We’ve defined other products we can pursue. We think the opportunities are worth taking a bit of dilution (though private equity investments).”
The equipment needed to make and analyze results from the tiny laboratories is pricey, though, says Zapata. But, he notes, customers have expressed confidence in the startup’s products in the best way possible. “We’ve been able to do it because our customers are impressed enough to make substantial up-front payments,” he says.
The company has substantial revenues from sales and has boot-strapped its development so far. Zapata says the model is similar to that of Triangle-based Gentris. “We didn’t copy their model, but it helped validate ours as a strategy,” says Zapata.
Zapata tells LTW the company has been focused “on proving ourselves, getting reference customers and getting to positive cashflow. We’ve singled out a strong board of directors and we’re building an advisory board.”
ArrayXpress is working on updating and expanding its Web site and issuing press releases about its accomplishments, including its first customer to renew a contract. Zapata says the company will reveal customer names and new board members in coming weeks.
Founding director of the NCSU TEC program in 1995, Zapata left it in 1998 to become “head mouth” at LIPSinc, a TEC graduate company that developed and sold software to synchronize animated mouths with the words spoken. It based its software on technology developed in NCSU’s computer labs.
LIPSinc closed on $9 million in venture and had 50 employees at its peak. It closed its doors during the aftermath of the tech boom, but is current running under former mangement as a “cashflow positive LLC, functioning as a licensing company,” Zapata says.
“The decision was made while there was still cash in the bank to scale it down so the company never had to go into bankruptcy. The assets were all transferred to a LIPS LLC. No return for the investors yet, but it is still in business and several of us are managing it.”
Duke tests VIBE
Duke University will test a software product called VIBE made by Williamsburg, VA-based Incogen, says vice president of business development, Don Van Dyke. VIBE is one of four products the company sells.
Van Dyke notes that Sun Microsystems Inc. has made VIBE available as part of its Starter Cluster for Bioinformatics and Incogen has also become part of Apple developer programs. It plans to announce several initiatives with Apple in the second half of the year.
“We are nearing completion of our National Science Foundation-funded Phase I project for using the VIBE software as a bioinformatics teaching platform. As part of this project, VIBE was evaluated at several universities in bioinformatics courses taught during last semester.”
If you are a bioinformatics educator and would like to participate, contact Incogen at firstname.lastname@example.org.
Van Dyke, who is based in Raleigh, formerly ran his own company, BioScience Market Analysis Associates, which is on indefinite hold.
Incogen is based on research by a Clemson, SC University scientist.
Van Dyke says Duke will be in the pilot program testing the educational use of VIBE, a cross-platform tool for visualizing bioinformatics data without needing to learn scripting.
Incogen, founded in 1998, has no debt and no equity funding. “It’s been profitable since its inception,” says Van Dyke. “The company has done an excellent job of getting grant money for research and development.”
It has landed $7.5 million in grants with several additional ones pending, he says.