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Internet of Things: BLEON's Filaroski eyes $1MM raise for Beacon entry
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Mark Russell Filaroski

NASHVILLE serial Tech entrepreneur Mark Filaroski doesn't aim to spend a decade or more on his newest startup. Been there, done that.

His earlier high-growth CompNation venture enjoyed years of prosperity, before suffering fatal strains amid the Recession-induced credit crunch.

Rather than gear for a long tough slog, BLEON CEO Filaroski has chosen to accelerate his new Bluetooth Low-Energy (Smart)-enabled beacon solutions business along a dramatically shorter runway, a stratagem he refers to as "essentially skipping the startup phase."

To fund that scenario, BLEON plans to raise $1MM in outside capital. The company previously raised $110K, $50K of which came from Filaroski, he confirmed. The startup was registered in Tennessee just seven months ago.

Filaroski and co-founder and COO Josh Reeder together have controlling interest in the company, with co-founder and CTO Jon Stirling holding the balance of equity.

BLEON's capital raise is to be led by Gaurav Khanna, a Bay Area investment adviser operating as Three Sigma Capital. In his dayjob, 30-something Khanna is virtual-engineering manager for Cisco and previously was a manager within Cisco's customer proof-of-concept laboratories, according to his LinkedIn profile.

Other BLEON advisers include Nicholas Holland, owner of Nashville-based CentreSource and Populr.me; and, Phillip Odom, a Nashville-based alumnus of Vanderbilt University School of Engineering and the University of Tennessee, with two decades' experience in technology development, startups and related fields.

Gaurav Khanna

BLEON's formal advisors now include attorneys with Franklin-based Thompson Burton, and local IP attorney Matt Schneller. BLEON banks with Avenue Bank. Filaroski's office is in a 5th Ave. North suite owned by Centresource.

Filaroski is still building his advisory team, and he told VNC he's in the early stages of considering both an accounting firm and outside general counsel.

He stressed that he is fast-tracking his BLEON technology startup toward the marketplace, where demand for iOS- and Adroid-compatible devices is projected to grow rapidly, and where he believes consolidation driven by strategic bidders is soon likely to erupt.

Based on its current financial modeling, by catching the beacon wave early-on, BLEON can reach an early-stage optimal valuation milestone for an exit within three years, he said.

To bolster that point, Filaroski offered data he received this week from consultant Gartner, which projects -- in the context of high-volume "Internet of Things" applications -- that the installed base of beacons is expected to grow from zero in 2013 and 1m units in 2014, to 6m units in 2016, 33m units in 2018 and 116m units in 2020.

Promoters of beacon adoption point to opportunities to enhance smartphone "awareness" of context and location, for richer user experiences in most industry verticals. (A good agnostic resource: Canadian Doug Thompson's BEEKn website.)

Today, the foremost competitors in the newly emerging Bluetooth beacon sector include Qualcomm spinout Gimbal (San Diego); and, Estimote and Kontakt, both Polish companies, said Filaroski.

BLEON has completed its ANKR-branded app for the iPhone and expects its Android app to be ready in January for its FCC and Bluetooth certification by a manufacturer. The iPhone app is already in the Apple store. Would-be users are now waiting for BLEON's beacon hardware, the first large batch of which is due out of production in March, said Filaroski.

Market-ready v1.8 ANKR devices are expected to be in the hands of five pilot customers by year-end, when work is completed by the China-based manufacturer that holds that pre-scaleup task. ANKR devices will be incorporated with or offered alongside the customers' own branded product offerings.

The initial users have agreed to try the devices under non-disclosure agreements, with distribution agreements the likely next step, said Filaroski. One international customer has made an upfront payment for distribution rights covering a single nation, which Filaroski declined to disclose, citing the customer's competitive advantage.

Though BLEON's China manufacturer may well have some incumbency advantage prior to full production, Filaroski told VNC that his long experience dealing with dozens of manufacturers globally has made him cautious in selecting "the" manufacturer for the longer haul, and he thus welcomes further approaches by potential partners.

Filaroski confirmed that Nashville-based BKON Connect is among his potential hardware producers, and the two firms have long discussed potential synergies, but no agreement has yet resulted.

By 2Q15, BLEON's initial ANKR products should be available for private-label customers who are likely to use the products for promotion and enhanced brand awareness, allowing BLEON to take some market share from USB tokens and other merchandising products.

On roughly the same timeline, an ANKR PRO enterprise offering will debut, addressing a wide range of enterprise asset-management and -tracking needs, he explained.

The Medical-Clinical market is to be a priority target for ANKR PRO, and the company sees opportunities in Apparel and Automotive sectors, as well, said Filaroski.

In what might now seem like an earlier life, South Portland, Maine-born Filaroski worked more than 11 years after he founded electronics and office products supplier CompNation, before he had to pay-off overhanging credit lines, shutter the growing company and, ultimately, file for bankruptcy.

Conceived by Filaroski in late 1999, CompNation's 2010 sales reached $13.2MM, with 26 employees, up from $6.9MM sales in 2007, according to the 2011 INC. Magazine 5000. CompNation was dubbed one of Nashville's "fastest-growing" private companies by the Nashville Area Chamber of Commerce, in 2010. Its corporate charter was deactivated in 2012.

In contrast, his newest venture is a relatively short-term consolidation play. Once in-market, Filaroski believes BLEON's Bluetooth Low Energy (BLE)-friendly offerings will attract the attention of larger corporate players.

In Filaroski's scenario, after BLEON has taken its "lost-and-found" asset-management and other Cloud-enabled consumer and enterprise products into the marketplace, strategic consolidators will vie to acquire the company.

Filaroski doesn't claim the bruises he suffered during his CompNation years have entirely faded. Yet, he says the lessons he learned at the helm of CompNation -- about such things as competing with Amazon and struggling in the face of Recession-borne downdrafts -- have proven priceless.

Moreover, Filaroski is very clear that he is putting to work in BLEON every lesson he's learned in the School of Entrepreneurial Hard Knocks.

Eventually, said Filaroski, he plans to share more about his start-ups and -downs with other entrepreneurs, as his contribution to the field, in which he has continually supported other startups. His LinkedIn profile is here. VNC

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Tags: ANKR, Avenue Bank, beacons, BKON Connect, BLEON, Centresource, Cisco, CompNation, entrepreneurs, Estimote, Gartner, Gaurav Khanna, hardware, iBeacon, Internet of Things, IoT, Jon Stirling, Josh Reeder, Kontakt, manufacturing, Mark Filaroski, Matt Schneller, Nicholas Holland, Phillip Odom, Populr.me, Qualcomm, software, Thompson Burton, Three Sigma Capital, University of Tennessee, Vanderbilt University

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