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CAPCO Programs: Success Stories

Alabama Success Story: Digium

While still a student of Computer Engineering at Auburn University, Mark Spencer founded Linux Support Services in 1999. When faced with the high cost of buying a private branch exchange (PBX), a telephone switching system which reduces the necessary number of telephone lines, Spencer created his own. Thus, Asterisk – the industry’s first open source telephony platform – was born. Now, Digium’s staff is pioneering a revolution in how businesses acquire and operate their software systems through the application of open source software.

In addition to Asterisk, Digium also offers a full range of professional services, including consulting, technical support and custom software development. Used in combination with Digium's telephony interface cards, Asterisk offers a strategic, highly cost-effective approach to voice and data transport over IP, TDM, switched and Ethernet architectures. Digium's offerings include VoIP, conferencing, legacy PBX, IVR, auto attendant, media servers and gateways, and application servers and gateways.

Through the Alabama Certified Capital Company (CAPCO) program, a local CAPCO invested $2.4 million in 2006 which subsequently attracted $18.2 million in additional follow-on capital. The money allowed the company to expand its hardware and software products and to double the size of its staff.

Located in Huntsville, Alabama, Digium’s success has reinforced and supported the community’s technology-driven economy and today the company employs 105 people. The company also helps foster a culture of innovation in the Tennessee River Valley by recognizing industry leaders with their Digium Innovation Award. The award distinguishes developers, customers and partners for outstanding achievements that are improving business processes, overcoming technology challenges and enhancing the bottom-line.

CAPCO funding has allowed Digium’s commitment to a world based on communications to become a reality, bolstering job opportunities and a culture of innovation in the process. 

Missouri Success Story: Stereotaxis

Stereotaxis of St. Louis, Missouri, produces an advanced cardiology instrument control system to enhance the treatment of coronary artery disease and arrhythmias. The company’s proprietary technology uses superconducting magnets and digital computer imaging to guide surgical instruments through the blood vessels and chambers of the heart to precise targets for treatment. This technology enables practitioners to exercise digital control of imaging, device movement and positioning using minimally invasive medical techniques.

CAPCO firms first invested in Stereotaxis in 1998 through Missouri’s Certified Capital Company (CAPCO) program. The investment was part of an $18 million private placement that came at a critical time for the company, when it had only a dozen employees and no revenue. That funding enabled Stereotaxis to begin to expand the clinical application of its technology from neurological to cardiovascular uses.

The company was incubated at the Center for Emerging Technologies (CET), which has since been named one of the top 10 incubators in the country by the National Business Incubation Association. Stereotaxis was the largest tenant at CET until 2005 when the company moved to the CORTEX building, constructed by a partnership including St. Louis University, Washington University and other local institutions.

The company’s presence has brought secondary benefits to the community, in addition to jobs created for those directly employed at Stereotaxis. As one city official noted, Stereotaxis has created daytime street traffic and has contributed to a resurgence in the adjacent residential area. Lofts, coffee shops and new restaurants have sprung up around Stereotaxis’ offices, enhancing the growing Midtown area.

Stereotaxis raised $47.7 million through an initial public offering in August 2004. The company currently employs 222 people. Stereotaxis has contributed in critical ways to St. Louis’ nationally recognized efforts to establish the region as the biobelt center for plant and life sciences. The company has created high-paid professional jobs; developed much needed medical technologies; and generated economic development in the City of St. Louis.

New York Success Story: Medidata Solutions

Medidata Solutions, located in New York City, is committed to assisting companies in bringing life-enhancing treatments to market more quickly. Medidata is a leading provider of Web-based data management solutions for clinical trials. The company’s suite of applications streamlines the process of collecting, verifying and consolidating clinical research data. The company's solution has been successfully deployed by world-class life sciences and research organizations, helping them to accelerate the process of bringing life-enhancing treatments to market. Medidata's solutions are designed for front-line clinical investigators, giving sponsors, investigators, monitors and data managers the earliest possible visibility into data.

A New York CAPCO invested $2.5 million in Medidata in 2002 through New York’s Certified Capital Company (CAPCO) program.  This initial investment helped the company attract an additional $20 million in follow-on capital in 2004 from a group of investors.  CAPCO financing allowed Medidata to better reach their goals:  effective decision-making, improved resource allocation and better science.

Today, Medidata provides good jobs for more than 150 people, a substantial jump from their pre-CAPCO investment staff of nine.

Texas Success Story: T&K Machine

T&K Machine is a manufacturer of highly engineered precision-machined airframe components and light assemblies for the commercial and military aerospace markets. The company produces a wide range of structural and airframe components, such as door latches and parts for wing boxes and cargo boxes. T&K serves some of the leading original equipment manager and Tier 1 aerospace suppliers including Boeing.

T&K is located in Paris, Texas, the seat of Lamar County, a “Strategic Investment Area” county in northeastern Texas, close to the Oklahoma border. Additionally, the region is a federally qualified “Distressed Area” and “Hot Zone.”

The company fosters job opportunities for low-income and unemployed persons through collaborative relationships with the Texas Workforce Centers. The one-month long program targets both high school graduates and out-of-work hourly laborers for high-speed, precision machining.  Participants spend two weeks of half-day classroom oriented curriculum (developed by T&K) and a half-day in the T&K manufacturing setting for live demonstrations; at the conclusion of the two weeks, participants then spend two weeks of full-day apprenticeship on the T&K manufacturing floor.  To date, 45% of those starting the program have graduated, with 14 securing full-time employment with T&K.

Through the Texas Certified Capital Company (CAPCO) program, two CAPCO firms invested almost $3 million in T&K, enabling follow-on funding of $2.5 million. This funding allowed T&K Machine to purchase new manufacturing equipment, restructure debt, and create and/or retain more than 70 well-paying jobs with full benefits, with an average salary of more than $35,000. Financing also enabled management team members to purchase ownership in the company.

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