BusinessRx: CirrusWorks looks for help with investment rainmaking

October 23, 2011
The Entrepreneurs

David Giannini, Michael Lovett and Ryan Day know a thing or two about the Internet service in your hotel room. They helped create the industry with Giannini’s previous startup 12 years ago. The company was acquired by a larger European IT service provider. But now Giannini, Lovett and Day are hoping to revolutionize the industry with their latest venture, CirrusWorks, based in the District. As their name suggests, they are taking it to “the cloud.”

The Pitch

Lovett

“CirrusWorks developed a networking platform that makes it cheaper and easier to manage technology in commercial buildings — everything from Internet access, to power supply systems, to security surveillance systems. The CirrusWorks solution can replace several cumbersome, antiquated technology systems in one building, streamlining them to a few small pieces of equipment that can be monitored by logging into a secure CirrusWorks’ platform. A building operator can actually control and manage the systems remotely over the Internet while leaving the bulk of the technology requirement to our servers in the cloud.

“Our first product tackles the hospitality industry, but CirrusWorks can really apply to any of the millions of commercial buildings. With hundreds of thousands of hotels worldwide, that Internet access marketplace alone is huge. We’ve already launched our product in Asia, with pilots in Hong Kong and Macau. We’ll be expanding in those areas and Singapore first, and hope to launch in the U.S. shortly thereafter.

“So far, our launch has been very well received. Our Internet access service has had a near 0 percent failure rate — unheard of the industry, which usually sees unacceptable failure rates between 2 percent to 5 percent with the current technology used by most hotels today. Internet service in hotels has become so important to guests that they rank it higher than food, so the fact that our technology can eliminate service failures is incredibly important.

“CirrusWorks also saves customers money. Hotels no longer need to worry about upgrading equipment, hiring support staff, or paying a call center to field guest login inquiries.”

Giannini

“Now that we’ve installed our product and vetted it commercially, CirrusWorks is ready to take off. We’re currently seeking financing to really explode our sales and marketing. Our strategy is to work with channel partners — network installers who can resell our product when they acquire new projects.

“Up to this point, we’ve been bootstrapping the company. We’re really looking to take advantage of our great location in Washington, with access to some of the best networking minds and technical resources in Northern Virginia, and this arguably being the new hospitality capital of the world. Also, the investment and professional services networks are a very close-knit group so we’re hoping to become one of the great local success stories.

“Once we penetrate the hotel market, our next phase will be to expand our product to other data, security and power requirements in buildings.”

The Feedback

Elana Fine, director of venture investments, Dingman Center for Entrepreneurship

“Your strategy to launch in Asia provides you the opportunity to test and refine your product and sales process in a large hospitality market. You can stumble with little notice here. However, this approach may limit your access to local funding sources. Although investors generally see Asia as a large market opportunity, they might view your international go-to-market strategy as an additional risk factor. To increase your funding chances, spend your time speaking with investors who have experience in China and view your approach as a differentiation rather than added risk.

“You should also be open-minded about launching the technology locally sooner than you planned. Investors look for opportunities to add capital and increase value through network and connections. While they may get excited about the CirrusWorks technology, they may decide to invest in other companies where they can better leverage their U.S.-based contacts. You could develop a hybrid approach by continued investment in hospitality in China while validating the monitoring and building surveillance verticals with U.S.-based customer wins.

The Reaction

Lovett

“We are looking for investors and partners who are knowledgeable in Asia and real estate. That said, we do not view CirrusWorks as an Asia-only opportunity, just an Asia-first one. We have been developing Asia initially because the hospitality IT market there is fractured and immature, allowing for fast penetration into a rapidly expanding commercial market. Legitimate penetration in Asia affords us the ability to more effectively attack the U.S./European Union markets — and attack we will, as soon as our noncompete agreements expire in March.”

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