Date: Apr 14, 2008 Author: Tom Henderson Source: Crains Detroit (
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By Tom Henderson
Sensicore Inc., one of the state's most successful companies in raising venture capital since it was spun off from the University of Michigan in 2000 but which struggled to generate revenue from its handheld water-testing devices, has been sold to a division of General Electric.
The deal is expected to be announced this week. Terms have not been disclosed.
GE will keep the company in Ann Arbor and fund product development and growth. The company employs about 17 full-time equivalents. Sensicore produces handheld sensors that can detect and quantify 18 different chemicals in about five minutes, and it has a Web-based data system that allows municipalities to monitor data on water quality in real time from sensors at a variety of locations.
"I think it's a fabulous opportunity for GE. They're uniquely capable of bringing off a much larger market penetration than a private company is capable of," said former President and CEO Malcolm Kahn, who joined Sensicore in 2002.
"Taking this to the municipal marketplace needs significant funding, and GE can provide that," said Kahn, who left Sensicore on March 31, the day the deal closed.
CFO Christine Gibbons will remain with the company on an interim basis while GE brings in its own management team.
Sensicore was the first startup for Ann Arbor-based Ardesta L.L.C., which was founded in 2000 by Chris Rizik and Rick Snyder to focus on emerging micro- and nanotechnologies. Previously they had founded another VC firm, Avalon Investments.
Sensicore's sensor-based technology was developed by Richard Brown, a former professor of electrical engineering at UM who is now dean of engineering at the University of Utah.
The company kept investors interested because of the potential size of the global market for testing water quality. It received $3.4 million in startup money in February 2001, $1.1 million in 2002, $12.1 million in 2003 and $12 million in 2005, for a total of $28.6 million.
In addition to Ardesta, Sensicore got money from New York-based Topspin Partners L.P. and three Silicon Valley VCs: Firelake Capital Management, NGEN Partners L.L.C. and Technology Partners.
"I'm happy with the results," said Rizik when asked if the sale price would mean a good return on Ardesta's undisclosed total investment over the years. "I'm happy, in part, because this is an important technology -- clean water in the next decade is going to have the importance fuel and energy does now.
"GE is the right partner to take this and blow it up. To have GE come in will allow Sensicore to grow a lot faster than it would have been able to on its own."
"I've been following the technology very closely since 2002. We've been waiting for the technology to be ready to roll out," said Michael Routh, general manager of Colorado-based GE Analytical Instruments, a unit of GE Water and Process Technologies, which is part of GE Infrastructure, which had 2007 revenue of $57.9 billion.
Routh said GE Analytical will use the Sensicore name for at least the short term. He said an eventual name change is likely. "GE is building a brand around GE Water and Process," he said.
In 2004, Sensicore got a $1.5 million tax credit from the state of Michigan as part of a $4.7 million expansion of its headquarters and lab space. When it announced the credit, which runs through 2012, the Michigan Economic Development Corp. said it would lead to 338 jobs, 156 directly at the company and the rest in jobs that would be related to the company's business or as a result of spending by employees.
The company had 15 employees then, and it grew at one point to about 45, according to Kahn. It shrank again as it concentrated on bringing core products to market.
He said Sensicore currently provides sensors and Web monitoring to about 65 municipalities
In an interview with Crain's in 2006, Kahn said 2005 revenue was about $100,000. He projected 2006 revenue of $2 million and 2007 revenue of $15 million.
While both GE and Sensicore declined to disclose revenue, "We never got close to those figures," Kahn admitted.
Tom Henderson: (313) 446-0337, thenderson@crain.com
