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Annapolis-based Link Labs raises $5.7 million to grow 'the Internet of things'

Investors are backing Annapolis startup Link Labs with a $5.7 million round of venture capital to help it compete in a young but growing market for attaching wireless sensors to everything from fuel tanks to air conditioners to soil beds, an industry known as "the Internet of things."

Link Labs is targeting business customers who it says are looking for ways to wirelessly monitor things like fuel levels, energy usage and environmental conditions and to automate responses. The number of Internet-connected devices is expected to continue to grow rapidly in the coming years.

"Fortune 500 companies have been looking for this and have been ready for this," said Christopher College, managing partner at TCP Capital Ventures, one of Links Labs' new investors. "They just have never had the technology to be able to do it."

Link Labs is one of the few entrepreneurial ventures to sprout from the Johns Hopkins Applied Physics Laboratory in Laurel, better known for its government contracting work.

Its technology would serve the continuing push to use wireless technology to improve efficiency, cut labor costs and, in some cases, to help other companies sell more products. It places wireless sensors on a variety of devices or even just passive surfaces and allows for two-way communication, not just monitoring.

For example, the technology could provide a notification when a field needs watering and turn on sprinklers. Or it could more passively track the location of a valuable asset.

Link Labs CEO Brian Ray declined to disclose sales figures but said monthly revenue has doubled in the past six months.

The company's products already have been designed into five products by U.S. companies that are hitting the market next year and, as a result, it expects to be shipping 100,000 radio modules a month by the end of next year, Ray said in an email. While he declined to disclose customers, he said its sensors are being evaluated by more than 100 customers in 19 countries

The company said its technology provides wireless signal footprints much larger than traditional Wi-Fi hot spots while using less power than wireless devices that tap cellular signals.

"It's really not cost-effective to use cellular technology to just know if something is on or off or where it is," said Bob Proctor, principal at Blue Venture Investors, one of Link Labs' earliest investors.

About 10 billion objects were among "the Internet of things" in 2013, and that number was expected to grow by as much as 20 percent each year through 2020, according to consultant McKinsey & Co.

The company plans to devote the latest investment to research, development and manufacturing of new sensor devices and to boost marketing efforts, Ray said. The company doesn't expect to grow its staff rapidly, adding another two or three people over the next year and a half, Ray said.

Columbia-based TCP led the recent investment round, joined by the Maryland Venture Fund, a state government investment arm; Blu Venture, a Northern Virginia-based firm that focuses on the Mid-Atlantic; Inflection Point Partners, a Toronto-based investor; and some angel investors.

Link Labs is just the second company to gain the support of TCP's 2-year-old fund dedicated to companies run by military veterans. Though College said TCP has met with about 300 veteran-run startups, Link Labs joins Baltimore information security software firm RedOwl Analytics as the Veterans' Opportunity Fund's only portfolio companies.

College said he was attracted to the company's technology and market opportunity, as well as its leadership team. Five of Link Labs' 15 employees are veterans, including CEO Ray and the core of its management team. Ray is a U.S. Naval Academy alumnus and served as a submarine officer in the Navy before leading a team at the Hopkins lab and serving a stint as an executive at Canton network security company Lookingglass Cyber Solutions.

"The fund has an investment thesis that veteran managers are able to manage better than the general population, and because of that we're going to get higher returns," College said.

Ray and other executives' ties to the Hopkins lab also give the technology a pedigree. The company is not officially a lab spinoff because the technology isn't derived directly from the communications and geolocation projects Ray and others worked on there.

When it comes to technology transfer, most of the lab's focus is on licensing technology that government customers paid it to develop. In the federal fiscal year that ended last September, 77 such licensing agreements were executed, while six companies were created based on technology developed in the lab, according to Hopkins data.

But lab officials nonetheless support Link Labs and similar entrepreneurial efforts.

"We're quite pleased when some of them get an entrepreneurial bug and want to go off and do something to contribute to the economy," said Tim Galpin, the Hopkins lab's chief strategy officer. "We're not a natural path to do that."

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