Seed Capital From Angel Investors: Michael Gruber, Founder and Managing Director, Cornerstone Angels (Part 8)

By guest authors Irina Patterson and Candice Arnold

Irina: What do you usually allocate for interns to do?

Michael: It depends on the timing of the work. A lot of it is helping out with the screening of companies. Some of the stuff is helping with logistics at our meetings. Also, some of it is helping out with market research when we’re conducting due diligence.

Irina: What is your investment sector preference?

Michael: Most areas, except no life sciences, no biopharma. Areas that we do like for Cornerstone are Internet/software, we like the clean tech energy space, we like manufacturing. We’d look at some business services, we’d also look at some consumer food and beverage deals. For Independence Equity, as I mentioned, we’re very much focused on clean tech energy and sustainability, so a lot of things relating to advanced materials, alternative energy, things related to waste, waste recycling, things relating to water.

Irina: Have you invested in any clean tech companies?

Michael: We have. At Cornerstone, we have one member who just invested in one. We have two other folks looking at that. We have a few companies within our portfolio that are clean or have this industrial theme. That’s been a big practice of my partner, Larry, and me in our Venture Lab activities, working with a lot of companies that have unique technologies related to clean tech, whether it’s related to water, solar, or some of these advanced materials that are very energy efficient.

We have a number of companies [in our portfolio], 10X Technology and this other company, Advanced Diamond Technologies, and another company called In-Pipe Technology. Each of those is clean tech related. One of the companies we just got deeply involved in is a services company to the wind turbine market. We have one person who indicated that he’s going to invest in that, and we have a number of folks who are interested in it. I think it’s a pretty interesting company.

Irina: What does Advanced Diamond Technologies do?

Michael: They have the ability to manipulate and create synthetic diamonds from natural gas. They take methane from natural gas, and they grown diamonds from the crystals up. It’s not gemstone diamond and it’s not being used for cutting tools. What it’s being used for is advanced coating. There are a bunch of different applications for it, but one application is industrial pumps and seals.

Anything that pumps, whether it be oil, water, sewage, or even pharmaceuticals, there’re all sorts of pumps and there’re spaces that bump against each other and grind. The idea is that a lot of those things wear down very quickly.

With this Advanced Diamond coating, it’s incredibly smooth. It has the co-efficient friction of Teflon. Because of that, it’s able to operate smoother and longer, and because it’s also hard, it doesn’t wear down. So, it’s able to last a lot longer and it’s able to have several magnitudes longer running even under dry circumstances. It’s used by a lot of the major seal companies.

It’s also being used for biomedical applications. Right now, they have a partnership with Jarvik Heart, which is the maker of the artificial heart. The coating can also be used for knee replacement or hip replacement. You need to have something that’s hard and you need to have something that’s smooth, for when you’re wearing it against the bone. It could be used for orthopedic situations.

The other big application is the coating could be used for dissipating heat. Just think about semiconductors and chips, especially today for LEDs (light-emitting diodes). Everyone’s trying to look for thermal management, and the diamond is an important way or a good way to be able to dissipate heat, so that’s a big new market.

The last huge market for them is, again, water. You’re able to create electric diodes using the diamond coatings for water purification. It’s being done to be able to use those for purifying the water as it would go through certain types of systems, which is a multi-billion dollar opportunity.

Irina: What does In-Pipe Technology do?

Michael: They have a biologic approach of where they release proprietary biologics into the sewer system, which decreases and breaks down the sludge prior to [the water’s] ever going to a treatment facility. All the water that we consume or use in a variety of circumstances needs to be treated at a facility. And that’s typically where all the sludges are broken down.  The idea is that if the sludge has been broken down prior to [the water’s] going to the treatment center, you’re able to save 30% of energy at the treatment plant because you don’t have to break it down as much.

This segment is part 8 in the series : Seed Capital From Angel Investors: Michael Gruber, Founder and Managing Director, Cornerstone Angels
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