City firm gets cash to tackle $100-B problem

By Stephen Llewellyn – Daily Gleaner | link to original article

A Fredericton company has received more than $600,000 to expand its sales of high-tech packaging that protects electronics from the damaging effects of static electricity.

KnowCharge Inc. is getting $200,000 from the New Brunswick Innovation Foundation and $438,000 from the First Angel Network, an Atlantic Canada-based investment company. It’s looking to hire four new employees.

« It’s a culmination of a lot of hard work, so it feels really, really good, » said KnowCharge CEO Robert Morrow.

« We literally started with a small piece of paper that came out of a lab at the University of New Brunswick, and now we’re working with large paper mills and box converters, and our first product is now getting out and into the hands of the customers.

« We’re just shy of two years since the initial NBIF investment, and we’re already seeing some serious business opportunities coming to us, from a sales point of view. »

It’s estimated up to one-third of all product failures are caused by electrostatic discharge, costing the global electronics industry tens of billions of dollars each year.

KnowCharge’s conductive paper technology puts the static protection directly into a product’s packaging, keeping the electricity away from the product and preventing any potential loss. The paper can be made in any colour.

Morrow said the company has two full-time employees and one on contract, and it hopes to hire at least four more right away.

« By the end of this year we should be seven, possibly eight, depending on whether or not we pull in an extra management position, » he said.

He said the company will use the new funding to move on to the next phase, which is all about executing on the sales side.

Morrow said the company has a few pilot customers it and now it wants to scale up.

KnowCharge doesn’t have its own manufacturing facility.

« We actually contract that work out, » he said. « We’re a sales-managing company. »

The company’s protective paper is being manufactured by a specialty paper mill in Vermont, said Morrow.

He said he would like to work with a mill in Canada, but the industry here has no spare capacity due to years of downsizing.

Initially, the company is focusing its sales effort in North America, but eventually it will move into the much larger market in Asia, he said.

KnowCharge is privately owned and Morrow said it will be two or three years before they consider the idea of going public.

He said the company is staying in Fredericton.

« We’ve still got some fantastic things coming out of our R&D strength, » said Morrow.

The research is happening at the University of New Brunswick.

« We’ve been following KnowCharge’s progress since the day NBIF made their first investment in 2009, » said Ross Finlay, co-founder and director of the First Angel Network.

« To get an investment from FAN, especially early on, means the members really believe in the company’s potential for success. »

He said his investors are interested in KnowCharge because it’s commercial-ready with a unique product that could solve a $100-billion problem for the electronics industry.

« What do you think? » laughed Finlay, when asked if that makes a company an attractive investment. « The low-hanging fruit is $100 billion. »

Finlay said he has no problem with KnowCharge planning to keep its headquarters in Fredericton.

« I believe they can grow in Atlantic Canada, » he said. « His business model allows him to serve his customers around the world from where he is. »

Finlay said the New Brunswick Innovation Foundation’s confidence in the company made a big difference when it came to the investment decision.

Calvin Milbury, president and CEO of the New Brunswick Innovation Foundation, said KnowCharge has made significant progress since winning a $50,000 investment at the organization’s 2009 Breakthru Business Plan Competition.

« Raising capital through co-investment is a major part of our corporate strategy, and we look forward to doing more with FAN, » he said.