Date: Sep 07, 2011 Author: Malia Spencer Source: bizjournals (
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RedZone Robotics Inc., the Lawrenceville company that got a special shout-out during President Obama's CMU visit in June, has closed on its largest funding round to date, bringing in $25 million in series C investment.
The round was led by Baltimore-based ABS Capital Partners Inc. a private equity firm that specializes in late-stage growth companies. As part of the deal General Partners Bobby Goswami and Laura Witt will join RedZone's board of directors.
The company, which is up to 75 employees and customers in 39 U.S. states and 35 countries, intends to use the money to expand its sales force and product lines as well as accelerate its geographic footprint, said CEO Eric Close.
The company has been seeing consistent growth and after the president's mention, Close said they got more inquirers and higher exposure.
RedZone sells a system used by municipalities or other organizations that maintain wastewater infrastructure that helps to manage those assets. The company has robots that can explore underground wastewater pipes and collect vital data on the health of that infrastructure. That information is fed into the company's management software and customers are able to easily see the information and use it for maintenance decisions.
More than 200 municipalities worldwide use Redzone's system, Close said. RedZone's customers tend to be local-level government so the company isn't as sensitive to shifts in federal funding swings.
"For us it's just being able to get customers that may be slower to adopt (technology) and helping them to adopt best practices," he said. "The key is we provide fantastic savings. ... We are advocates of smart spending at it saves (customers) money in the end. We help them migrate from a reactive and responding to failures to being proactive."
By being proactive a municipality can get ahead of a potential failure or better plan maintenance budgets.
The RedZone deal is the first Pittsburgh area investment for ABS, Goswami said.
"For us what was exciting about it is the worldwide infrastructure problem is a big one that really every municipality across the country is facing at a time when cities and towns are facing pretty tough fiscal times and RedZone's offerings allow these municipalities to do what they want and need to do," Goswami said. "We viewed this as a great opportunity and it's a unique technology and set of services that the company provides and the most important thing for us as investors is on top of all that they have a management team we think is terrific."
But now that Goswami and Witt are both on RedZone's board it will be easier for the firm to keep an eye on the Pittsburgh tech sector, he said. The company looks for late-stage companies so potential investments would already have a product on the market and momentum going and ABS comes in to help scale.
In the case of RedZone the company is generating revenue and seeing strong sales and growth in earnings before interest, taxes, depreciation and amortization. The company doesn't release financial details, Close said. From ABS' perspective, RedZone has just scratched the surface of its market potential.
For those that don't remember, RedZone was founded in 1987 by Carnegie Mellon University robotics professor (and legend) William "Red" Whittaker as a spin-out of the university. Initially, the company made robots for specific projects for the military or hazardous cleanup sites. Close and others acquired the company out of bankruptcy in 2003 and in 2004 refocused it on underground infrastructure and assessment management. The last funding round was in 2008 when the company brought in $7 million led by Smithfield Equity Partners.
