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XR Ventures Adventure
GRAND RAPIDS — Last September when X-Rite, a global provider of technology solutions that measure light and color, announced it was forming a venture capital group, some thought it would simply be a "venture" to help the company grow. Now, XR Ventures LLC has taken off on its own and already the Grand Rapids-based venture capital fund is gaining national attention.
XR Ventures has made headlines for its investments across the country, extending its reach to California and back through Michigan. The homegrown fund, which is the first of its kind in the area and already has helped one local company, also should fit nicely with Gov. John Engler's plan to draw high-tech firms to Michigan. Those also are some of the reasons the Grand Rapids Business Journal's Editorial Board named XR Ventures as one of its Top 10 Newsmaker of the Year nominees.
The fund will invest in companies that develop and manage new technologies, many of which will lead to the future market growth of X-Rite. XR Ventures also will assist X-Rite in the identification of new strategic technologies and partnerships.
"In order to grow beyond our current markets, it is imperative that we be able to identify, create and manage the development of new technology-based businesses. XR Ventures gives us the opportunity to do that without inhibiting our current development and acquisition strategies," said Rich Cook, president and CEO of X-Rite.
Partners in the venture capital group include X-Rite, Dr. Peter Banks, managing partner, and James Knister, partner. Banks and Knister have extensive experience in small company start-ups, technology management and investing. Both have had careers as executives in technology companies and have participated extensively in technology initiatives.
Knister recently retired as senior vice president of Donnelly Corp. and now splits his time between Holland and Florida. He has served in several senior management positions and has extensive hands-on experience with technology venture management, IPOs, and merger and acquisition activity. Knister also brings to the fund his service on the boards of X-Rite, Donnelly, ILIXCO Inc., IO Display Systems Corp. and Sentinel Safety Products.
Banks is the former president and CEO of ERIM International Inc. of Ann Arbor. Before joining ERIM, Banks was professor of electrical engineering and dean of the college of engineering at the University of Michigan He has been a faculty member at Stanford University and the University of California, San Diego. Currently, Banks serves on the boards of Tecumseh Products Co., X-Rite and several start-up companies.
Knister told the Business Journal that XR Ventures looks for certain characteristics when making an investment decision. "There are four things we look at when deciding to make an investment in a company."
The four key elements the fund looks for are:
- Early stage investment opportunities, including defensible intellectual property.
- Investments within the areas of telecommunications, microsystems in the area of optical communications and biomedical analysis, Web infrastructure and other emerging technologies.
- Strong management group.
- Protectable technology.
"In addition to seeking out new technology opportunities and intellectual properties, XR Ventures helps in the development and success of its acquisitions and investments. Many high tech companies are putting strategic venture capabilities in place to accelerate the pace of new technology exploration and development," said Banks. "We are dedicated to investing in new technologies and markets in support of the long-term economic expansion of X-Rite."
Knister said there are a number of development tools at XR Ventures' disposal.
"As an external investment and development organization, we are able to use a variety of co-investment opportunities enhancing growth technology and innovation," he said. "The acquisition of intellectual property or partnering with those that are exploring and exporting leading edge technology puts us in a unique position to adapt them for the markets we choose to serve."
XR Ventures has made a number of strategic investments including an equity investment in Grand Rapids-based Trident Technology Inc. that will help position Trident as a leading technology solutions and software provider in the United States and international markets, according to Tanya Patino, vice president of marketing for Trident.
"Trident accepted the capital from XR Ventures at the first of the year and we will continue to utilize it to expand our markets throughout the Midwest, nationally and globally, as well as in the areas of marketing and infrastructure," she said. This includes a new office the company recently opened in South Bend, Ind., headed by Kevin Walters of the United Kingdom. Trident hopes this office will grow its business in Indiana, Illinois and Ohio.
Patino said that besides the money, XR Ventures also offers a wealth of experience and business connections.
"We have given them (XR Ventures) an equity position and in return we have received a capital investment, suggestions, expertise and a long-term partnership," Patino added.
XR Ventures gave an undisclosed amount to Trident Technology, and Patino said the relationship is one that will continue into the future. "We have not determined an amount or time frame but we will continue to work with XR Ventures and there may be additional gifts in the future, over time," Patino said.
XR Ventures also has made investments in a company on the leading edge of the micro laboratory field. The venture capital group joined the first round of venture funding for HandyLab Inc., which produces a "lab on a chip" from its Ann Arbor headquarters. According to the company's founders, HandyLab is developing a revolutionary microlaboratory to allow physicians and other health care practitioners to quickly obtain critical diagnostic information at the point of care.
The "lab on a chip" product will be able to fit easily in the palm of the hand and will be able to interface with relevant medical information systems, as necessary. Currently, clinical applications are being investigated that would allow physicians with a critical need for real-time assessment and treatment strategies to more readily access the required information to make those determinations. A recent industry study suggests that most physicians are now forced to wait 36 to 48 hours for such data.
"The investment of HandyLab launches us into another major technology-rich area of the market," said Cook, X-Rite's CEO.
In addition to the two ventures the capital fund already has supported, there is HoloVision, an investment made on behalf of X-Rite, and five other investments across the country, mainly in California, according to Knister.
Banks added, "We are making rapid progress in developing our portfolio and this is good news for X-Rite, XR Ventures and Grand Rapids."