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Business Observer Friday, Jun. 21, 2019 4 months ago

Virtual vindication: Tech firm's gutsy decision to stay put pays off

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Armed with potentially revolutionary technology, Immertec took a big risk when it rejected money from Silicon Valley so it could remain in Tampa Bay.
by: Brian Hartz Tampa Bay Editor

Paralyzed by indecision about a pitch for funding he was to deliver later that day, Immertec co-founder Erik Maltais found himself roaming the streets of downtown St. Petersburg and handing out $5 bills to anyone and everyone who would listen to his elevator speech in the pre-dawn hours May 1.

On the line? $100,000. His audience? Steve Case, founder of AOL, and Jeff Vinik, owner of the Tampa Bay Lightning.

No pressure, right?

“I realized, ‘Oh my god, I have to shift my paradigm — right now,’” Maltais recalls. “‘I have to get outside perspective. I am way too close to this, and everybody I know who could give me advice is sleeping.’”

Immertec, a pioneer in the area of virtual reality training for doctors, was up against seven other Tampa Bay area startups in Case’s Rise of the Rest pitch competition. The tech legend — who now runs a Washington, D.C.-based investment firm called Revolution that counts Vinik as an investor — tours a different part of the country each year to award venture capital to startups but also to send a message to angel investors that innovation happens everywhere, not just Silicon Valley, New York and Boston.

'[Tampa] is a rising city, and now is the time to double down because the momentum is good, and there’s an excitement that now exists.' Steve Case, Rise of the Rest

Immertec won the contest — and the $100,000. 

Now Maltais and his business partner and co-founder, Chief Technology Officer Jonathan Clagg, have to deliver on the promise of Immertec. It's a company Silicon Valley investors, led by Intel, threw money at in 2017 when it debuted its technology to great fanfare at the headquarters of Facebook. But Maltais turned down the $1 million investment. 

Why? A big reason was the West Coast’s cutthroat culture.

“At that early stage, receiving $1 million in Silicon Valley so we could hire a bunch of people who would build their own projects on the side would not really build a culture of success for us,” Maltais says. “We said, ‘Let’s go back [to Tampa Bay] and leverage this traction and raise money locally.’”

The strategy worked. Partially on the strength of the buzz generated by its launch, Immertec raised $1.2 million from Tampa Bay angel investors and is about to close another, “much more significant” round of funding, Maltais says. It plans to hire at least 12 new employees this year. “Now we can scale the business and bring in talented people," Maltais adds.

Rising star

Immertec’s “Bloom where you’re planted” approach and willingness to snub Silicon Valley likely warmed the heart of Case, long a fan of the Tampa Bay area. In the mid-2000s he invested in Revolution Money, a Tampa fintech company eventually acquired by American Express. He's also seen how the proliferation of business accelerators, such as Tampa Bay Wave and TEC Garage, have helped create a sense of camaraderie and community among the region’s up-and-coming tech entrepreneurs.

“Particularly in the past decade, the [Tampa Bay] startup community has grown nicely,” Case says. “The level of collaboration across different constituencies has been strong, and there’s a greater sense of possibility. Clearly, it’s a rising city, and now is the time to double down, because the momentum is good and there’s an excitement that now exists.”

Case says the growing excitement about startups like Immertec will help attract some of the talent and capital that gets sucked up by the east and west coast tech hubs. “You’re going to have more breakout successes that could turn into the iconic Fortune 500 companies of tomorrow,” he says.

Case’s blessing and investment is the latest in a long string of wins for Maltais, 35, a five-year U.S. Marine Corps veteran who saw combat action in the Iraq War. He says that high-stress experience, in addition to the high rates of depression and suicide among veterans, prompted him to launch Immertec, behind technology that lets doctors and other medical professionals view surgical procedures being done anywhere in the world without leaving the comfort of their office.

“Physician burnout is a serious problem in America,” Maltais says. “They have such demand on them to learn new devices and new procedures. Every day a physician commits suicide because of being overwhelmed.”

AOL founder Steve Case, center, brought his Rise of the Rest pitch competition to Tampa and St. Petersburg. Courtesy photo.

Although it sounds like something akin to the Holodeck on the Starship Enterprise, it’s all science, no fiction, Maltais says. Using Immertec’s MedOptic platform, a doctor in Uganda, for example, could “scrub in” remotely and witness all aspects of an advanced surgical procedure at, say, Tampa’s Moffitt Cancer Center thanks to cameras set up in the operating theater that utilize the company’s proprietary, live-streaming 3D virtual reality software. The company's business model is to sell directly to hospitals and university medical schools. 

“We’re going to solve the problem of centralized specialization,” Maltais says. “What I mean by that is that you have amazing institutions like the Cleveland Clinic, Johns Hopkins, Harvard, where there are so many talented people on the cutting edge of one specific procedure, and yet they’re sharing [that knowledge] with a small amount of people who have access to those locations.”

The MedOptic platform, Maltais says, could be a godsend for busy doctors, particularly specialists, in terms of eliminating travel that cuts into earnings, patient care and family time. “He or she could schedule, through our app, a surgery or training at their convenience.”

It could also create a sort of “gig economy” for doctors. “A physician that has excess time could now make $500 an hour, maybe, by remoting into a hospital in, say, rural Minnesota to help save someone's life,” Maltais says. “That, to me is the future, and that's what Immertec is going to be a part of.”

Linda Olson, founder and president of Tampa Bay Wave, which in 2018 welcomed Immertec into its post-accelerator program for later-stage startups that seek to scale, calls the company “a true rising star.”

Maltais, she adds, “is the kind of entrepreneur who is both visionary and extremely resourceful, taking full advantage of all resources made available to him, including Tampa Bay Wave’s extensive mentor network and coaching teams.”

Virtual reality, real dollars

Maltais, declining to provide specific sales figures, says revenue has grown 200% year-over-year since the firm formally launched in 2017. It's also partnering with Johnson & Johnson, a $327 billion company.  

“We are in clinical use, I can tell you that,” Maltais says. “For a startup to already be in clinical use, that is significant traction. Some companies go to Series C and don’t have clinical use yet.”

Maltais and Clagg founded the company using their own money. In Clagg’s case, he used savings from a six-figure corporate job he left in order to dedicate himself to developing the software that powers Immertec’s MedOptic platform. That was in 2012 while Maltais was running an e-commerce business, BBQ-Aid, he'd founded. Maltais grew BBQ-Aid’s revenue to seven figures in less than three years before selling it.

And that wasn’t even Maltais’ first shot at entrepreneurship. At age 14, he says, he started an ice cream truck business in his hometown of Manchester, N.H., that would sometimes pull in $5,000 per day.

Maltais and Clagg, meanwhile, face the same challenge as nearly everyone in high-tech, rapid-growth sectors like virtual reality: talent acquisition.

“If there are any full-stack developers in this region, we’d love for them to reach out to us because we’d prefer not to hire from San Francisco, New York, but if we have to, that’s what we’re going to do,” Maltais says. “We’re growing fast. We’re hiring people all the time.”

For a recent new hire, Immertec had to look far beyond Florida, to Vietnam, and sponsor the employee for U.S. residency through the H1B visa program. The company is so pressed for help that it’s getting by with the assistance of 10 unpaid interns, most of whom will be offered full-time employment when the company becomes profitable.

“They’re coming in every day," Maltais says, "because they believe in the team and what we’re doing.”

(This story has been updated to correct the spelling of Immertec co-founder Jonathan Clagg's name.)

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