By Hope Belli Tinney, WSU SBDC
intelliPaper, started by eastern Washington entrepreneur Andrew DePaula in 2009, is a technology company that embeds digital information in paper, putting the business well on the way to revolutionizing a medium that has been largely unchanged for more than 2,000 years.
“People have been predicting the demise of paper for quite a while, but I just don’t buy it,” DePaula said. “What will change is the way we use paper, and I intend to be part of the change.”
Loan to automate process
Since his “Eureka!” moment seven years ago in a conference center hotel room, DePaula has been carefully creating the foundation for a company that can deliver reams of information, including images, photos, voices, music – whatever you can imagine – on a strip of paper as small as your thumb. The company’s first product was a paper USB thumb drive, but DePaula has adapted the technology to greeting cards, business cards, trade show handouts, recruitment materials and more.
Now the company is poised to take a quantum leap forward.
In April DePaula received a $770,000 loan from Craft3, a nonprofit community development financial institution that provides loans to entrepreneurs who have been unable to get capital from traditional lenders. The funding will allow DePaula to automate the intelliPaper assembly process to meet the growing market demand for the company’s smart paper products, which currently are produced in a light manufacturing facility near his home in Edwall, an unincorporated area 35 miles west of Spokane, Wash.
Advisor aids loan application
DePaula, an electrical engineer with a background in information technology, credits his successful loan application, in part, to assistance he received from Alan Stanford, a certified business advisor with the Washington Small Business Development Center (SBDC).
The Washington SBDC is a network of more than two dozen small business advisors who provide confidential, one-to-one advising at no charge for small business owners who want to start, grow or transition their business. The Washington SBDC receives support from Washington State University, the U.S. Small Business Administration and other institutions of economic development and higher education.
Getting a traditional business loan for a technology-based startup, particularly one with new technology, is next to impossible. Most technology startups are funded by venture capitalists or angel investors, Stanford said, and typically those investors have some say in how the company is run, which is what DePaula wanted to avoid.
“It’s very difficult to get something this big off the ground without selling the farm,” DePaula said, but the Craft3 loan allows him to retain control of how the business grows.
Strengthening the financial plan
Not that he doesn’t have help. Early on DePaula relied on a small group of close friends and family members who provided financial support and advice for how to move the company forward. That gradually expanded to the official advisory board that now helps guide the company.
For several years DePaula intentionally kept quiet about his business, wanting to keep a low profile until he was able to protect his intellectual property. When Margie Hall, executive director of the Lincoln County Economic Development Council, met DePaula in September 2012, the company had four employees, a solid business plan and had just started online sales of its products.
DePaula credits Hall as an incredible advocate who helps him find the resources and information he needs to do business in Edwall. When Hall learned that DePaula was having trouble finding capital for expansion, she suggested he meet with Stanford, who had a 37-year career in finance and banking before joining the SBDC in 2010.
“Alan began by reviewing Andrew’s business plan and recommending how to strengthen the plan and the financial forecasts for funding requests,” Hall said. “Alan has been his business advisor ever since.”
Right person at the right time
DePaula said he had originally contacted the SBDC several years earlier with questions about setting up his business, but meeting with Stanford for help pulling together his loan application was the right person at the right time.
Without a financial background, DePaula knew the Craft3 loan application was going to be a huge drain on his time and energy, but when he called Stanford, the response was, “Sure, no problem. I can help you with that.”
Over the next two months, DePaula said, Stanford helped him pull together all the financial information Craft3 requested, including detailed financial forecasts, and create a thorough and compelling loan application.
Stanford’s help was “a godsend,” DePaula said. “Most literally, a real answer to a real prayer.”
Cheaper USB drive
As with many inventors, DePaula enjoys working through technological puzzles; but financial puzzles? Not so much.
“Honestly, I should have an MBA to do what I am doing,” he said. “I’m an engineer. That’s my first love. I deal with numbers because I have to, not because I want to.”
What he wanted to do when he first dreamed up intelliPaper was to simply find a low-cost USB drive.
In 2008 he was working for a religious website (Bibleinfo.com) trying to find an inexpensive way to deliver large amounts of information to people by means of a tangible data storage device like the small, square, business-card-sized CD-ROM products available in the late 1990s and early 2000s. USB thumb drives seemed to be the answer.
At the 2008 Consumer Electronics Show (CES) in Las Vegas, he visited every booth he could find that had anything to do with thumb drives, but no luck. The cheapest he could find were around $3 each. Previous experience told him he needed to get the wholesale cost down below $1.
Sitting in his hotel room at the end of the week, he took off his conference participant badge and realized it had a computer chip embedded in it. If a computer chip could be embedded in a nametag, where else could you embed a tiny silicon chip?
And that was his “Eureka!” moment. Perhaps he could store digital information in paper.
DePaula’s first challenge was to create a USB drive out of paper, which he has accomplished. Retail price on large orders is generally less than $2, but within two years he expects the price on select products to be down to 50 cents each.
In any case, he said, USB drives are only the beginning.
“intelliPaper isn’t just a USB drive,” he said. “It really is intelligent paper. That’s the long-term vision that we have for it. “
He said he worked out the conceptual framework for where he wanted to take this new technology pretty quickly; much of it was mapped out that night in his hotel room. But building the business to support it has taken much longer.
For more information about intelliPaper, go to https://www.intellipaper.info/.
For more information about the Washington SBDC, go to http://www.wsbdc.org.