Tuesday, February 2, 2016

Ed Healy talks about RF Code and how it raised Funding

Yet2Ventures, a venture firm specializing in the secondary market, sought to purchase Questmark Partners interest in RF Code in the fall of 2014. They secured their shares in a transaction that concluded in October 2014 and became an active investor in RF Code at that time.  That’s how we met Becker Chase, a general partner at yet2ventures. It worked out very well for us. yet2ventures’ energy and commitment to the company has been a positive step forward.

I joined RF Code in June 2014.  The company was started in 1997 in Arizona, originally under the thesis of capitalizing in the nascent market of passive RFID tags.  In 2005 Woody Hunt and Moshe Azoulay invited Intel Capital and QuestMark to join the company as investors.  The company evolved from a passive RFID company to a company developing battery-powered active RFID asset tracking technology. The company built a solid solution in the data center market and began winning business at IBM, HP, Vodafone, and other large enterprise companies. The foundation of the technology was solid and grounded.

The next wave of value creation in technology will be in the global deployment of real-time sensors in everything from toasters to trains - the Internet of Things.  The ability to read that data and make useful intelligence of it is what IoT is all about.  In 2009, I sold my last company, a semiconductor company specializing in short-range wireless communications, and began thinking about this on-coming wave in the IoT space.  In fact, I incorporated a company in early 2014 to begin development of a self-learning irrigation system comprised of sensors and software.  When RF Code approached me, I wasn’t interested in RFID. Upon further research and investigation, I became intrigued about the core technology at RF Code. They had built a data-gathering machine of middleware, data mapping, and applications for managing assets and environmental operating conditions in a data center. It was an internet-connected, sensor-based platform feeding data into data center operations and into the information technology service system. I quickly realized that this technology had the underpinning of an IoT-based SaaS technology using internet-connected sensors.
Last year we transitioned the company from a hardware-centric company to a subscription-based SaaS company with recurring revenues. We manage the physical assets in the data center as a service. From when an asset arrives until it’s decommissioned and everything in between we can tell the client where the asset is, how it’s being used and analyze whether it is being used efficiently.

Additionally, we provide the data center with sensors that measure, report, and alert operators on such things as temperature, humidity, air pressure, leaks, power, etc.  Data centers can easily deploy these sensors throughout the facility (without wires) and turn on our software in hours. We are at the forefront of using connected sensors in the data center. 

I spoke to many investors last year.  We were telling our story to see if it resonated with the investment community.  It did – in spades. We explained how we were transforming RF Code.  Just about every investor we spoke with was excited about our story and all were interested in our deal.

How did you find investors?

I found many of the investors we spoke with through my own personal network.  Intel Capital has a strong network as well as does yet2ventures.  It’s all about networking. I had a lot of folks coming to me as well, telling me they heard the RF Code story and asking for a meeting.  It’s all about being out there, engaged, talking, telling your story and building your network so that when the time comes and you are ready to raise funding you have a group of investors who have heard your story and can validate your progress. Most of the folks we have spoken with are west coast or east coast guys.

For valuations we look at companies similar to ours. For new investors we look beyond the money to what value they can bring.  The investor should be able to help you achieve an exit. You don’t want to be in the mode of raising Series B, then Series C, Series D and so forth. We are looking for experienced folks in M&A that can make difference.

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