Velocity Founders Story | December 10, 2019
When startup founders meet with the Velocity Director or Business Advisors in a boardroom, they are usually quizzed on how far away they are from previously established targets. Sales goals. Fundraising goals. While not all moments are tense (some startups do exceed their targets often!), they do produce uncomfortable moments, as founders are inevitably being pushed outside of their comfort zone.
Last Friday afternoon was different. When Emagin co-founders Thouheed Abdul Gaffoor and Mohamad Vedut sat down with Velocity’s Director of Startups Jay Shah in a boardroom, it was elation all around. “Are you happy with the deal?” Shah quizzed. Gaffoor and Vedut smiled and responded together, “we are happy.” Their smiles communicated a sense of self-assurance, as one would expect of founders who successfully scaled and sold their startup within 3 years.
Rejection as the end of the beginning
Emagin began as a project when Gaffoor was working on his master’s thesis as a civil engineering student at the University of Waterloo. He also credited his past co-op work experience to the creation of Emagin as it helped him to understand how utilities were grappling with water challenges and preparing for climate change. However, what set the pace and tone for Emagin was actually a rejection in the very beginning.
“A lot of people didn’t know this, but we were first rejected by Velocity,” recalled Vedut. “We were just your stereotypical engineers. We assumed people would immediately understand the value of what we’re working on.”
Velocity eventually accepted the Emagin team in 2016, and both Gaffoor and Vedut knew that they had to be relentless in order to transform themselves from “stereotypical engineers” to successful founders. To them, the most important first step was crafting a compelling value proposition. When the work was complete, Emagin had transformed from a project to an artificial intelligence startup that provides water utilities with an operational platform to help them better optimize, understand, and look at predictions of how their system will behave in the future.
Emagin’s winning streak
All told, 2017 was a pivotal year for Emagin. Armed with clarity of how the startup can add value to its customers (i.e., water utilities), the founders began seeking pathways to accelerate. They hit two major milestones in early 2017. First, Emagin was selected as one of the 12 companies from 180 applicants worldwide to participate in San Francisco-based Imagine H2O’s 8th Annual Accelerator program. The program provided Emagin with significant advantages in terms of industry exposure and connections to potential customers worldwide. Second, Emagin competed in the Winter 2017 edition of Velocity Fund Finals and won.
The early wins generated significant momentum for Emagin. The startup was able to quickly enhance their marketing and secured pilot projects with municipalities and industrial facilities across North America.
They never forgot about the sweat equity and all-nighters they invested into the company to ensure its success. By mid-2017, Emagin had secured almost $1 million in private equity seed funding from one of the largest global venture capital firms.
Emagin’s customer obsession & first customer
While Emagin built its AI platform, HARVI, in an iterative fashion much like many successful modern SaaS companies, it was all based on feedback from water utilities. Business development, in particular, also required a customer-centric approach. “It’s about domain expertise. In all sectors, but especially in specialized ones like water, it’s very difficult to sell a product to businesses in that area if you don’t have the knowledge and expertise in that area yourself,” remarked Vedut. “Of course, we did not just sell to our customers. We consistently demonstrated how well we understood them. They were very ‘wowed’.”
Velocity taught us how to scale a SaaS product and be customer focused. Even though sometimes we thought we knew better, we stuck to it, because we realized that there was a process we needed to go through.Thouheed Abdul Gaffoor, Emagin Co-founder & CEO
“Some people wonder how we scaled so quickly,” added Gaffoor. “But it really boiled down to the fundamentals. Velocity taught us how to scale a SaaS product and be customer focused. Even though sometimes we thought we knew better, we stuck to it, because we realized that there was a process we needed to go through.”
In October 2018, Emagin achieved another significant milestone. The startup announced that it has secured an eight-year framework agreement to deploy its AI technology to UK water utility giant United Utilities (UU). This agreement came at the heels of Emagin’s participation of UU’s Innovation Lab, where a pilot project demonstrated energy savings of over 22% across one metering zone. “Our customer served over 7 million UK residents. It was the largest deployment of its kind,” recalled Gaffoor. “You bet we were pretty damn proud.”
With a staff of ~30 employees, the startup launched from Velocity by the end of 2018. “I think it was the first time a startup grew to that size in such a short period of time while operating out of Velocity,” Shah said.
From recognition to acquisition
Emagin continued to accumulate accolades and blazed a path forward while operating out of Communitech’s co-working space. In early 2019, The startup picked up Startup Canada’s innovation award for the Ontario region.
Meanwhile, Emagin had been evaluating strategic partnerships to help the company scale its brand globally. One such partner was Innovyze, a leading provider in water data analytics. Emagin and Innovyze quickly recognized the strong mutual alignment in terms of mission and culture, and both teams began exploring how they can strengthen the alignment beyond a strategic partnership.
In December 2019, Emagin officially announced that it has been acquired by Innovyze, where the Emagin team would lead the development of all AI products for the global leader in water infrastructure data analytics.
“We have always wanted to scale and solve some of the biggest water challenges,’ Gaffoor said. “Mohamad and I both agreed that the best way forward for Emagin was to join the Innovyze team. We have grown really fast over the past 3 years. We want to grow even faster. This deal also means we can continue doing it in Canada.”
Thoughts on doing a startup
No one startup journey is alike. When asked what advice the co-founders would give to others who want to do a startup, they thought many might be overlooking opportunities in traditional industries. Many traditional industries are still lagging behind when it comes to innovation, which means they are either ripe for disruption or in need of better support from tech startups. They also stressed that since these opportunities are B2B in nature, they could be good options for engineering students as technology counts a lot more (vs. a B2C setting).
Gaffoor and Vedut also returned to the theme of customer focus and customer development process. “People don’t hand out awards for customer obsession, but it’s hard for you to be recognized as innovative if you don’t focus on your customers and their problems,” the co-founders stressed. They believed that all founders need to recognize that they need to go through the customer development process before building their startup. “If we need to do a startup, we’ll definitely go through Velocity again,” laughed the pair.