Pappajohn winners weather stormy economy
Saturday, September 11, 2010 7:00 AM
This year’s finalists
• Cabin Coffee Franchising Inc., Clear Lake
• Energy Control Technologies, West Des Moines
• Growth Design Energy Mt. Valley LLC, Mt. Valley Township
• IDx LLC, Iowa City
• J & J Solutions Inc., Iowa City
• LuCELLa Biosciences Inc., Ames
• Pathovacs Inc., Ames
Shortly after Curt Carlson accepted the $25,000 first-place award in the John Pappajohn Iowa Business Plan Competition last year, he flew to Los Angeles to oversee the use of his company’s BodyViz software on the set of the hit television show “The Biggest Loser.”
Both events were great exposure for an Iowa start-up company and its product, said Carlson, president and CEO of Visual Medical Solutions LLC.
“It’s an intriguing new model that we’re bringing out,” Carlson said of BodyViz, which provides three-dimensional, full-color visualizations of MRI and CT scans. Using an Xbox game controller with the software, a surgeon can navigate a 3-D image of a patient’s MRI prior to performing a procedure. Alternatively, a high school student can use it to learn about anatomy.
The Pappajohn competition “was great recognition for the business plan we put together and the entire model,” he said. The $25,000 in additional money for the company was also “a tremendous help.”
In the past 12 months, the Ames-based software company has begun generating revenue from sales of BodyViz systems, which about a half-dozen hospitals across the country have purchased. The company is now branching out to offer the systems, which can range from a low-cost PC version to full-room setups, to schools.
Though Visual Medical Solutions is one of just four companies that have won first prize in the annual Pappajohn business plan competition so far, it’s among 327 Iowa companies that have participated in the competition since it began in 2006.
“We really consider so many more of our businesses to be winners than just these finalists,” said Randy Pilkington, director of the John Pappajohn Entrepreneurial Center at the University of Northern Iowa. “We find that businesses say, ‘We’re so glad we did this.’ It’s not just an exercise we put them through. The process of competing really makes them focus and develop a better business plan.”
Last week, seven finalists chosen from this year’s 54 competing companies presented their business plans to a panel of 15 judges. The top three companies will be notified on Tuesday and will be recognized at the Iowa Entrepreneurs Conference and Venture Forum in Des Moines on Oct. 5.
Pilkington serves on the panel of judges, along with the other four Pappajohn Center directors, the eight regional business accelerator directors and one representative each from the Small Business Development Centers and the Iowa Department of Economic Development.
The number of competitors has decreased from previous years, he said, but the quality of the business plans submitted has improved substantially.
“I think it’s because (more businesses) know how to find the technical assistance that they need,” he said. “And the competition has become a lot tougher; it’s getting more difficult to select winners.”
Pilkington said that on average, 25 to 30 percent of the competitors had not previously worked with one of the Pappajohn Centers or a regional accelerator, so applicants are often referred to the appropriate center to receive assistance with their business plans.
The winning businesses appear to be holding their own. Pilkington said he doesn’t know of any finalists from the previous years’ competitions that have gone out of business, and “quite a number of them have taken on investors,” he said. “Most of these ventures have been pretty self-sustaining.”
Shift in focus
Due to the economy, the past year was “very difficult” for iSEEK Corp., an Ames engineering software company that won the inaugural Pappajohn business plan competition in 2006. The company’s software product, CADseek, enables manufacturers to conduct online searches for parts based on their shapes. Its initial client, Deere & Co., uses the software at approximately 30 of its operating sites worldwide.
The recession forced a major shift for the company, which had planned a significant ramp-up of its sales efforts two years ago.
“After assessing the situation of our customers’ ability to make large commitments for software purchases, we decided to change the focus from scaling up to maintaining, and to continue the sales effort at the level we had in 2008,” said Abir Qamhiyah, iSEEK’s CEO.
Despite the recession, iSEEK was able to add several big-name corporations to its client list in the past year, among them Embraer S.A., a Brazil-based aircraft manufacturer, and Paccar Inc., a Bellevue, Wash.-based truck manufacturer. The company also developed a new data management software product, CADseek Pegasus, which extends its software’s search capabilities to enable clients to quickly pinpoint suppliers for particular parts throughout their supplier networks.
As a technology start-up company, “we see (staying in business) very much as an achievement,” Qamhiyah said. “Bigger businesses have come crumbling down. But we kept ourselves lean, and we kept our technology innovative. And we never slowed down on increasing functionality and new product development.”
Qamhiyah said it has been difficult for many manufacturers to consider making software investments, and impossible for others.
“When you hear the company contact on the other end of the line say he doesn’t know whether he will be laid off in the next month, it’s pretty tough,” she said. “Or there would be budget freezes, so the company couldn’t have any new spending for technology.”
Though iSEEK maintained the same level of employees it has had since 2008 – six – the company leveraged its sales force by forming alliances with resellers, Qamhiyah said. “We knew we had to hit the ground running in 2010,” she said. “It was a great investment in 2009 to bring people into the network.”
One such alliance iSEEK formed was with Impac Systems Engineering LLP, a Houston-based information technology reseller whose clients include oil and gas companies. “This year we are in the process of closing on a couple of contracts in that industry, and that is very rewarding for us,” she said.
Visual Medical Solutions, whose largest customer is The Methodist Hospital in Houston, has also installed a BodyViz system in Iowa at the Marshalltown Medical & Surgical Center.
After BodyViz was featured on “The Biggest Loser,” interest in the system spiked, Carlson said.
“We probably had our page hits for our website go up 400 percent after that show,” he said, from hospital systems as well as from individuals who were facing medical issues and wanted to apply the BodyViz technology to their own scans.
“Right now we’re too small a company to be able to handle that kind of consumer market,” Carlson said. “But we want to get a version on (Google’s cloud computing application) eventually for a browser-based version.”
One of the biggest new markets for BodyViz is education. In July, the Iowa Virtual Reality Education Pathfinder program, an initiative to bring virtual reality systems into Iowa classrooms, selected BodyViz as the core component for that program. Eight high schools have begun using BodyViz through that program this fall.
Using BodyViz, students can don 3-D glasses to view actual views of human anatomical conditions such as bone fractures and tumors, and can navigate around the visualization using a familiar tool – an Xbox controller.
“We’re hoping to roll it out to the vast majority of districts in the state,” Carlson said.
Carlson estimates that about 30 percent of data on the Web is now images. “What we’re finding with BodyViz is that imaging is so ubiquitous that we’re able to cross into multiple markets,” he said. “Not only education, but also potential clients such as veterinary clinics. We have also had interest from trial lawyers and medical malpractice lawyers.”
Much like iSEEK, Visual Medical Solutions has formed reseller partnerships across the country to supplement a small employee base. “We’ve got about 15 contributors, many of them are part time,” Carlson said, among them resellers and a couple of programmers in California. The company recently hired Scott Rodenburg, an Iowa State University graduate who had interned for the company, as its business development and operations manager.
Carlson said the company is now at the point where it will seek additional outside capital. “We’re scaling up; there’s no question about it,” he said.