How We Got the Money--Hi-G-Tek: Find Several Sources

February / March 2007 By: Jonni Dron Volume 5 Number 1

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Keeping track of product inventories as they travel from point A to point B is an essential part of business for any organization. However, until recently, it was difficult to tell exactly where a shipment was once it left the warehouse.
New technology developed at Pacific Northwest National Laboratory in Richland, Wash. and licensed by Hi-G-Tek in Rockville, Md., has made it possible to not only track inventories, but even detect their status or condition in real time.
Originally established in Israel in 1989 to develop low-power, advanced microelectric products for biomedical and military applications, Hi-G-Tek has become a global supplier of active radio frequency identification applications. The journey of taking their company to the global market meant striking a deal with Battelle to license the patented RFID technology developed by researchers at PNNL.

In addition to licensing the technology from Battelle, Hi-G-Tek needed to move their base of operations from Israel to Rockville. To make this possible, the company required a substantial monetary investment. The owners of Hi-G-Tek approached L Capital Partners, a venture capital firm out of New York.

L Capital Partners struck a deal with Battelle Ventures, L.P. and its affiliate, Innovation Valley Partners to invest $10 million to finance Hi-G-Tek's operations out of its new headquarters in Maryland.

Regarding the decision to fund the Hi-G-Tek deal, Battelle Ventures General Partner Ralph Taylor-Smith said, "Hi-G-Tek's electronic tags, locks and seals allow for unprecedented levels of real-time security and —€˜sensing' of key assets, whether they are stationary or in transit, indoors or outdoors. When combined with asset location or any common long-range communication system, such as cellular, radio or satellite, Hi-G-Tek's products immediately deliver mission-critical data to the customer, anywhere in the world."

"For example, a customer in New York would be alerted immediately if a hatch or valve on a fuel tanker in Bogota, Colombia is opened or just tampered with, or if the temperature, pressure or other critical aspect of the cargo is at any given moment outside predetermined normal limits."

Battelle Ventures was aware of Hi-G-Tek because of their exclusive license agreement with the firm's sole limited partner, Battelle Memorial Institute. "We knew who they were," said Taylor-Smith, "but hadn't closely looked at them because the company was in Israel and our fund invests only in U.S. companies. So, when L Capital Partners said they were interested in reestablishing the company here, we took a deeper look."

Battelle Ventures was attracted to Hi-G-Tek's opportunities for multiple applications in multiple markets and joined L Capital Partners in the deal and a search for a new CEO, who turned out to be Larry Blue, recently of Symbol Technologies.

Blue has almost 30 years of experience in management with RF and microprocessor technology. He says, "Hi-G-Tek's sensors deliver, for the first time, full visibility from the physical asset to the control center. We, in essence, electronically extend the senses; you not only can see an asset, but also —€˜touch,' —€˜taste' and —€˜smell' it, as if it were right in front of you."

Hi-G-Tek's products not only provide military applications, but could also provide tremendous benefit to commercial applications. Blue says that according to National Cargo Security Council statistics, the United States alone loses close to $25 billion a year from cargo theft.

For more information on Hi-G-Tek, Inc., go to www.higtek.com or Battelle Ventures, go to www.battelleventures.com.

Jonni Dron is a communications specialist at Pacific Northwest National Laboratory.