Building a Capital-Efficient, Highly Scalable Smart City IoT Venture: LYT CEO Timothy Menard (Part 3)

Sramana Mitra: Santa Clara was the first that adopted your technology?

Timothy Menard: San Jose was first.

Sramana Mitra: Let’s go into the mechanics of how you built the company from a financial engineering point of view. The first grant was $250,000. You got a second grant because of the discussions with Santa Clara and San Jose.

Timothy Menard: Yes, that was for $750,000.

Sramana Mitra: There is no other financing?

Timothy Menard: We had two friends and family rounds. The company was started with only $747,500 of friends and family. The SBIR grant is great, but it’s all for doing the R&D. Then to get the second round of $750,000, we raised another $60,000. After three years, we raised $110,000. We had gotten a million dollars in grants.

Sramana Mitra: Fantastic. What year does that bring us up to?

Timothy Menard: 2018 was when we received the second grant. We worked from 2018 to 2019 with San Jose. The system went live in the summer of 2019. It was piloted until the end of 2019. It was left enabled and has been running ever since.

Sramana Mitra: What were the commercials with San Jose? Now they are a customer.

Timothy Menard: SaaS model. It’s based on the intelligence needed. For our business model, we’re built to scale because we want every traffic light and every vehicle. We want to break up the old way of doing things of looking at the problem spots. We built our pricing to be extremely market-competitive so we can fit into the old way they bought things but also get anywhere between 10 and 15 times more in the deployed outcome.

Sramana Mitra: To understand your business, what is an average deal size?

Timothy Menard: Average starting deal is in the low six-figures. At full scale, it can go into the mid-seven figures. That’d be a 10-year contract agreement.

Sramana Mitra: You got to full scale with San Jose?

Timothy Menard: We are now in a scale-up. In the public sector, you have to go through a Request for Procurement (RFP). We won our first RFP with another public transit agency called Trimed. They are the transit provider for the city of Portland. Because of our work in San Jose, we were able to win that bid. That is for full metropolitan use.

We’ve been working on that since last year. They have a two-year rollout plan to put that on all the roads and transition off the old way of doing things. That’s 700 traffic lights. It’s going to grow to include light rail down the road. We’re in the process of onboarding several other metropolitans on the West Coast as well.

Sramana Mitra: What about financing? Have you raised institutional capital outside of your friends and family round?

Timothy Menard: We raised capital at the end of 2020.

Sramana Mitra: At this point, you had San Jose?

Timothy Menard: We had San Jose and we were bringing on two other cities. We had a couple of different functional cities at that point. We did two parts seed. We did part one which was about 20% of the overall seed money we would take. Then we did the remaining 80% the following year.

Sramana Mitra: How much total was that round?

Timothy Menard: We raised $5 million.

This segment is part 3 in the series : Building a Capital-Efficient, Highly Scalable Smart City IoT Venture: LYT CEO Timothy Menard
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