Failure to Success: The AGEIA Story
Marcia Mellitz, President, Center for Emerging Technologies
The very first company to reside in the Center for Emerging Technologies (CET), a technology-focused business incubator based in St. Louis, was a company called MinMax, which was designing an advanced telecom switch.
Paul Min, the CEO, and a few of the other engineers then were on the faculty of Washington University in St. Louis’s engineering department. Min’s father’s cousin, who was big in the Korean semiconductor industry, chaired the company’s board and was charged with raising $3 million in Korean equity dollars. That effort, however, failed when the Korean economy dived and the two of them entered into a major feud over control. As a result, three VCs who were looking at investing possibly up $6 million were scared off, and the company failed.
Within a couple of months, several engineers with the company came to us at CET and asked if they could have space to start another company to develop a different switch.
In a little over a year, they had raised $75 million in equity backing and had grown from four or five employees to over eighty people, plus they managed one hundred contract programmers in India. Their VC investors had hired experienced industry people to manage the company and they set up their administration and marketing offices in Massachusetts.
The R&D group (which included the founders) graduated out of CET and moved into 40,000 square footing of space in an office building in St. Louis. They then raised another $80 million. Unfortunately, the telecom market dived and even though telecom companies liked their switch, no one was upgrading. The company couldn’t hold on and folded.
The industry people went back to industry. The same team of founders came back to us at our incubator and asked if they could start another company in CET. They didn’t know what it would be but they knew their expertise was in designing systems on chips and they were going to stay away from telecom.
Their prior lead VC, Apex Ventures, in Chicago was right on their heels waiting for them to decide what they were doing. So two years ago they created AGEIA Technologies, Inc. to develop the first system to use physics principles to deliver more realistic graphics in video games. So far they have raised about $70 million with Apex along with several other funds. Their innovation was cited as a winning technology by an industry journal and Dell is featuring it in their ultra high-end limited edition console.
AGEIA represents the nationalities of the founders: American, German, Egyptian, and Indian, with an extra “A” on the end. The French one got left out. They have used contractors in China as well as India to get this done. They have managed the company quite well themselves and are now a growing CET company.
I like to tell this story to point out that some companies will fail, including some in CET. But as this story of AGEIA and its predecessor companies demonstrates, funding still came in despite past failure. It certainly was a tremendous learning experience for everyone involved and an ultimate success.
By the way, Paul Min also went on to found another company and is doing well. At our incubator, we have had several really special companies that were once dead in every way but their name on the door, but were resurrected with an infusion of money and a new strategic direction. We let them stay while all this was happening, and in almost every case, they became thriving companies.
© 2007 Marcia Mellitz. All rights reserved.