The backstory of ARUtility LLC, a 2018 startup that just graduated from the Conquer Accelerator program at Michigan State University, is one of how a boss found how one of his hires talked to his cat so interesting he decided to go into business with him.
Alando Chappell became Joseph Eastman’s boss at the Lansing Board of Power and Light in 2014. “I was looking to hire an engineer. I interviewed him, I loved him and brought him on board,” he said. “He was an excellent engineer.”
One Monday in 2017, Chappell asked Eastman what he had done over the weekend.
“He said, ‘I was bored, so I created an app that speaks to my cat,'” recounted Chappell.
With the app he created, while he was on vacation Eastman could call home and talk to his cat through a toy robot.
Chappell thought there was a more practical thing to be accomplished than talking to cats and got Eastman to write some code that would help them with a fantasy football league, which became a kind of beta version for the next software Eastman would write for the company they would launch.
The “AR” in ARUtility stands for augmented reality, and the company’s technology allows those doing utility work in the field to download a 3D image to a smart phone or tablet of the various buried cables, gas lines or water pipes below where they are about to work, preventing dangerous and expensive accidents during excavation.
“The idea for the company came from being out in the field on a project with a natural gas pipeline that was hit by an excavator,” said Eastman, the company’s president and CEO. He got his civil engineering degree from the University of Michigan and is a licensed engineer with 14 years of experience inspecting gas, water, sewer and electric lines. One role at the Board of Water and Light included being project manager for the program that replaced lead service lines in the city, and he previously worked as an engineer for the Holland Board of Public Works and the Michigan Public Service Commission.
One day, he was performing an on-site inspection for a water-main installation. Markings on the ground had been inadvertently removed, and the contractor struck an underground gas line, which spewed natural gas over the site, caused the evacuation of nearby residents and cost project delays and tens of thousands of dollars.
“We just saw the need. You’d see the same issues all over the state,” said Eastman.
“Being a manager, you look at the number of injuries, the number of accidents, the number of delays. We knew if we took a known problem and created a process to reduce accidents, we’d have something amazing,” said Chappell, the COO, who has more than 20 years of experience in the field and a bachelor’s degree in organizational management.
Utility industry estimates that accidents involving damage to buried utilities cost more than $1.5 billion globally and cause more than 400 deaths.
Before the two launched ARUtility, Eastman, as he did with the app for his cat, wrote all the software code. “We needed a minimally viable product, which took a lot of hours,” said Eastman. Since then, he has written four or five upgraded versions.
Soon after they launched, they presented their business plan at The Hatching, a pitch competition for startups hosted by the Lansing Economic Area Partnership, the Michigan Economic Development Corp. and the Lansing SmartZone. ARUtility won the event and the grand prize of $2,000. That also led to an award of $3,200 from the MEDC’s Business Acceleration Fund, which they used to buy pop-up banners and rent booths at trade shows and to pay for a video they could send to potential customers.
The company has applied for a patent on its technology, whose app pulls information from a utility’s geographic information system as well as other industry data bases.
In August 2019, ARUtility was honored with the Vendor To Watch Award at the annual Smart Water Summit in Scottsdale, Ariz., which drew 56 smart-tech vendors vying for awards in three categories. ARUtility won its award in a vote of more than 100 utility executives in attendance.
The company was chosen to participate this summer in the fifth annual Conquer Accelerator program, an intensive 10-week program for five startups that helps fine tune their business plan and marketing, provides mentoring and other support and working space. Twenty-nine companies applied for the program, which is run by Spartan Innovations, a subsidiary of the MSU Foundation.
The program also came with an investment of $20,000 from Red Cedar Ventures, the foundation’s investment arm.
“I really like the experience of the founders. Both have worked in the utility space for years. It’s a unique technology, a disruptive technology that is already getting traction in the market,” said Jeff Wesley, Red Cedar’s executive director.
ARUtility graduated from the accelerator in August, and Eastman and Chappell decided to remain at the VanCamp Accelerator in East Lansing, east of campus and part of the University Corporate Research Park, another subsidiary of the MSU Foundation.
Having graduated from the accelerator program and having put together a strong pitch desk, Eastman and Chappell are arranging upcoming pitches for equity funding with such organizations as the Grand Rapids-based Grand Angels, Invest Detroit and Ann Arbor-based Augment Ventures.
On Sept. 10, Eastman and Chappell did a Zoom pitch for capital to Plug and Play Ventures, a highly respected VC firm in Sunnyvale, Calif. that focuses on seed- and early-stage funding for tech companies. Typically, the VC firm invests $150,000 in winning companies at its pitch events, which also includes a 10-week stint at its accelerator in Sunnyvale.
The next day, Eastman and Chappell got the word that they had been accepted into the accelerator, which starts at the end of the month, for what will be a virtual accelerator this year because of COVID-19. They have not been told, yet, about the size of an investment.
ARUtility was one of 200 companies invited to start the Plug and Play process, with 20 making the cut for an in-depth pitch.
On Sept. 15, the company was one of six early-stage companies pitching for funding at a virtual event hosted by Red Cedar Ventures and the Grand Rapids SmartZone.
ARUtility generates revenue through the software-as-a-service model, charging customers either per local meter for electric companies or per customer for other utilities.
The company has three pilot programs currently, with the Lansing Board of Water and Light and in Zeeland and Plainfield, and Eastman says he is in discussions for pilots in the UK, Australia and Canada.
ARUtility has one major customer in South Melbourne, Australia, fieldGO Pty. Ltd., which provides companies to monitor in real time projects in the field. It has some 300 customers globally, and they can choose to use ARUtility’s technology, too. If they do, ARUtility gets paid a fee.
Eastman said the company is looking to hire two full-time developers. He and Chappell are currently the only two employees.
A big part of ARUtility’s pitch for funding is a key partnership with Redlands, Calif.-based Esri, a global leader in cloud-based location intelligence and mapping. ARUtility has been named as an emerging business partner in the company’s startup program.
Founded in 1969, Esri’s software is deployed in more than 350,000 organizations, including 90 of the Fortune 100 companies and all 50 state governments.
Its startup program allows promising emerging tech companies to incorporate its location analytics into their services and solutions for free for up to three years. The program is open to companies with less than $1 million in annual revenue.
ARUtility projects revenue this year of $147,000, $2.2 million next year, $9.8 million in 2022 and $22.2 million in 2023.