Networking alliance puts spark in tech sector

February 21, 2006

In his State of the Union address, President Bush placed special priority on battery research as a route to energy independence. Virtually as he spoke, a little Peoria startup, Firefly Energy, was being awarded a $2.5 million U.S. Army contract for a novel type of carbon-foam-plated battery that might be one more step in that direction.

Its mission is two-fold: develop a substitute for ordinary batteries in Humvees, radar units and other equipment in Iraq that has been failing because of extreme desert conditions, and supply hybrid power that could turn Army vehicles, with noisy gasoline engines, into silent sentinels for nighttime stealth patrols.

Startup funding for early research came from Caterpillar when it spun off the infant company. Money also was received from local venture capital investors. Now Firefly sees the Army contract as its first commercial order -- and a vital shot in the arm.

Making the case in Congress

Behind the scenes, the victory was just the latest from adroit spadework performed by Tom Thornton, president of the one-year-old Illinois Technology Development Alliance.

"Tom is an amazing networker," says Byron Denenberg of Chicago's KB Partners, one of Firefly's VC backers. "He's been extremely effective in reaching Congress and making our case for support that won this contract. From this springboard, we're now raising $10 million of Series B equity funding to build a plant there in Peoria, and move into production."

Taking an idea from the research lab to full blown commercial reality has been Thornton's life over the past decade. A native of Ottawa, Ill. and educated at the University of Wisconsin, he became assistant to U.S. Rep. Dennis Hastert (R-Ill.).

In 1994, he was tapped as president of the Illinois Coalition, a nonprofit group of 300 local tech companies and educators seeking to boost the state's lagging position in global technology.

The coalition evolved into the ITDA about a year ago, and Thornton revamped its mission to play a more pragmatic role as an aggressive intermediary to speed the commercialization process.

A bright-eyed, boyish bundle of energy, Thornton, 40, in one year jump-started the process and built impressive momentum. Since last January, he and his team of five facilitators and tech consultants helped 45 clients (Illinois R&D companies seeking pro bono advice and contacts) to raise more than $4 million in federal grants and $28 million in VC and angel financing. It aided another 35 companies by linking them to ITDA partners such as Battelle Institute and private corporations. It also worked with state and local authorities to develop the new DuPage National Technology Park.

Funding for ITDA came from a $1 million Small Business Administration grant, a $1.5 million Naval Research grant, $100,000 in local corporate contributions and $60,000 from local foundations. He expects higher amounts from all of these sources in 2006.

Thornton says this will propel ITDA toward a goal of raising $40 million this year for its clients: $10 million in federal contracts and more than $30 million in venture capital.

"What we're now doing is starting to provide initial financing to firms, help other investors assess the risks, and offer a blessing on the deal," he says. "This happens to be an extremely creative, exciting time in Illinois. Our local corporations are spending over $10 billion a year on pure R&D, and our universities are spending another $1.6 billion. But many of these projects are shelved because they don't fit the core business of the company. If the commercial potential can be seen, it can be unlocked."

44 projects pending

Firefly is one example among 44 pending projects, while another, Uponus Corp., a Chicago software company, invented a means of compressing encrypted data for transfer between government agencies.

"They've out-competed Silicon Valley," says Thornton, who helped Uponus secure $250,000 in angel startup funds and is on the verge of landing VC and federal money.

Next month, another Thornton initiative will launch a nine-month course designed to prep R&D startups on creating a business plan and seeking capital.

And how do you apply for ITDA help? Call Thornton or his team at (312) 229-1970 or see www.ITDA.biz. They'll hear your story, find experts to appraise your chances, and steer you to likely funding or tell you to stop wasting your time.

Reprinted with permission from Chicago Sun-Times.