UM spinoff puts $8 million funding round to use
Canton Township-based Fusion Coolant Systems Inc., a spinoff from the University of Michigan that uses supercooled carbon dioxide to lubricate cutting tools used in manufacturing, has wasted no time putting a funding round of $8 million it raised last October to good use.
Fusion Coolant uses the liquid CO2 to replace the traditional mix of water and oil used to cool industrial cutting tools, hitting the surface of the tool at between minus-20 and minus-60 degrees Celsius.
The CO2 speeds up machining time, increases tool longevity, sharply reduces the cost of cleaning up waste created by the oil and water and the associated health and environmental risks and can be used in a wider range of manufacturing, including implantable medical devices where oil is a contaminant.
In March, the company hired Brian Ahlborn as its full-time president and CEO. Ahlborn has more than 30 years in the automotive sector and was recruited from Linamar Corp., a company based in Guelph, Ontario, that had $7.6 billion in revenue last year. Positions he held there included president of its European Group and of the U.S./Canada Group. Previously he served as CEO of Los Angeles-based Transonic Combustion Inc., and as president of Livonia-based McLaren Performance Technologies.
Fusion Coolant doubled its square footage in Canton in December from 4,200 square feet to 8,400 square feet and will soon open a new customer center there to demonstrate its technology. The center will triple the company's machining capacity.
The company will open an office in Europe in the second quarter.
The company has grown from four to 12 employees and expects to be at 20 by year's end.
The company has recruited Christine Gibbons as chief administrative officer. Previously she had been president and CEO at Ann Arbor-based HistoSonics Inc., a medical-device company that earlier in April closed on a funding round of $54 million, the second largest in state history for a medical-device company. She continues to serve as a consultant for HistoSonics.
As is often the case, this funding round was as notable for the validation that came from the reputation of those investing as it was for the money itself.
This round included two new lead investors, Material Impact, a recently launched $110 million fund in Boston co-founded by Adam Sharkawy, who has a track record of building medical-device companies and serves on Duke University's Biomedical Engineering Advisory Board and Texas A&M's Bioengineering Advisory Board; and Bloomfield Hills-based Michigan Capital Advisors, a private equity firm focused on tier-two and -three suppliers to the automotive industry whose managing partner is Chip McClure, the former chairman and CEO of Meritor Inc.
Previous investors who joined the recent round included the Ann Arbor-based Amherst Fund LLC; a University of Michigan fund called MINTS, for Michigan Investment in New Technology Startups; and Detroit-based Invest Michigan.
"I know Stephen Polk, one of Chip's limited partners," said Ahlborn, referring to the former owner of Southfield-based R.L. Polk & Co. who sold the company for $1.4 billion in 2013. "They said they were closing on funding for a company and asked to come in and look at it. This is the third time I've done a start-up. Personally, I like the small-company environment.
"The first thing I liked about the company is I come out of the auto world, where you're trying to eke out efficiencies of maybe 1.7 percent and if you do, you celebrate. With Fusion Coolant, you're looking at 2X, 3X improvements over existing technologies. If someone says you can improve the life of your tools by three times, it's eye-opening.
"And then you throw in the fact that the company already has blue-chip customers in auto, aerospace and medical," said Ahlborn, who said nondisclosure agreements prohibit him from naming who those customers are.
Charlie Moret, the president and CEO of Detroit-based Invest Michigan, said it was an easy decision to invest again in the recent funding round. He invested $425,000 this round and has invested a total of $750,000 over three rounds of funding, which is the most money he has invested in any portfolio company.
"Their technology is seeing very high demand in the medical, aerospace and automotive sectors, and sales are now growing at an exceptionally rapid pace," Moret said.
Fusion Coolant was founded in 2010 by Steven Skerlos, UM's Arthur F. Thurnau Professor of mechanical engineering and civil and environmental engineering. In his role as chairman of the company, he had been acting as a part-time de facto CEO. He remains with the company as chief technology officer.
In 2004, Skerlos co-founded Accuri Cytometers Inc., which became one of the state's entrepreneurial success stories. Accuri, which makes bench-top devices to help researchers automate cell analysis, was sold for $205 million in 2011 to New Jersey-based Becton, Dickinson and Co.
In 2011, Fusion Coolant won $150,000 as the runner-up at the second annual Accelerate Michigan Innovation event.
Subsequently, it got funding of $550,000 in 2012, led by Ann Arbor Spark; $600,000 from the Frankel Fund at UM in 2013; and $1.3 million in 2016, led by MINTS.
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