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Business Rx: CloudSolar is ready to heat up its business

By Special to Capital Business
Monday, November 15, 2010; 30

THE ENTREPRENEURS

The mid-November chill has hit Washington, but Michael Armani and Ramik Chopra say you could still be enjoying your outdoor swimming pool with their innovation that aims to increase the efficiency of a pool's solar water heater.

The swimming pool market was not even on Armani's radar as the PhD candidate in bioengineering set out to improve solar heating in general.

"It's the payback period for solar technologies that is the real limiting factor," Armani said. "I started developing technologies -- literally in my back yard -- to see what I could do to improve the efficiency."

He studied the way panels are currently made and developed his own more efficient formula for the black liquid that courses through solar panels to retain and circulate heat from the sun. He teamed up with Chopra, then an MBA student at the University of Maryland, to start CloudSolar Inc. in Olney and bring his patent-pending innovation to the market. They built prototypes and tested them all summer.

THE PITCH

Armani

"CloudSolar has developed a patent-pending and environmentally benign fluid that improves the efficiency of solar thermal heat collectors and reduces their costs. This would be useful for the swimming pool industry and solar residential water heating worldwide.

"In addition, we are developing new fluids to improve the properties of heat transfer, heat capacity and viscosity for heat-exchange processes, which can be used in many different markets.

"At this stage, we're trying to develop the nine commercial applications we've identified for our innovation. It could take some time to try each one out and determine our licensing strategy."

Chopra

"We've talked to a few people in the industry, but finding licensing partners is one of the biggest challenges. We need to narrow down who we could partner with, and at the same time continue to develop new prototypes with the technologies."

Armani

"We're not exactly sure how much we should develop the technology before pitching it to potential partners. Because we have so many different technologies that could be developed, is it better to offer all of these to potential partners in their raw form, or focus on one or two technologies and fully develop them?"

THE FEEDBACK

Asher Epstein, managing director, the Dingman Center for Entrepreneurship

"Licensing is a challenging game because there are two things you need to be able to demonstrate with a licensing strategy: First, that the technology is well-protected -- that there's actually something valuable worth licensing; and second, that the technology works as advertised.

"You need to really quickly analyze and prioritize your nine technologies. You can't do all nine -- that's clear. It's better to focus on one technology and with limited resources, you need to start with the most promising.

"Remember, markets don't like technology -- they like solutions. Your technology -- the recipe for the liquid -- could be very valuable, but the solution is what people need. That requires end-to-end thinking on how you'll not just produce and use the liquid, but also how you'll service it, replace it, dispose of it, etc. The other thing to remember is that you're competing in an established marketplace, so you have to be competitive on your end-to-end solution compared to the other options out there.

"I don't think you need to take this to a full, ready-to-buy product to forge a licensing agreement with a partner, but I do think you need to develop it to the point where you reduce some of the risks so that partners can quantify how much more money it will take them to get it to the market.

"And because you potentially have multiple technologies and markets, you've got to make sure each license is carefully restricted because you don't want to create competition for yourselves when pursuing additional markets."

ENTREPRENEURS' REACTION

Armani

"What Asher's saying is it's either going to fly or it's going to die at some point, so we need to move forward quickly.

"We'll work on prioritizing and focus. Because we've already developed the swimming pool heating technology, we'll try to launch that and license it just to bring some money into the company, then focus on the additional technologies and their applications to potentially larger markets."

Looking for some advice on a new business, or need help fixing an existing one? Capital Business and the experts at the University of Maryland's Dingman Center for Entrepreneurship at the Robert H. Smith School of Business are ready to assist. Contact us at capbiznews@washpost.com.

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