SPOKANE, Wash.—The trend to “go paperless” imagines that there is a distinction between paper communication and digital communication, but intelliPaper, imagines something different. intelliPaper, started by Eastern Washington entrepreneur Andrew DePaula in 2009, is a technology company that embeds digital information in paper, putting it well on the way to revolutionizing a medium that has been largely unchanged for more than 2,000 years.
“People have been predicting the demise of paper for quite a while, but I just don’t buy it,” DePaula said. “What will change is the way we use paper, and I intend to be part of the change.”
From his Eureka moment seven years ago in a conference center hotel room, DePaula has been carefully creating the foundation for a company that can deliver reams of information, including images, photos, voices, music–whatever you can imagine–on a strip of paper as small as your thumb.
The company’s first product was a paper USB thumb drive, but DePaula has adapted the technology to greeting cards, business cards, trade show handouts, recruitment materials and more. Now DePaula’s company is poised to take a quantum leap forward.
In April he received a $770,000 loan from Craft3, a nonprofit community development financial institution that provides loans to entrepreneurs who have been unable to get capital from traditional lenders. The Craft3 funding will allow DePaula to automate the intelliPaper assembly process to meet the growing market demand for the company’s smart paper products, currently produced in a light manufacturing facility near his home in Edwall, an unincorporated area west of Spokane.
DePaula, an electrical engineer with a background in information technology, credits his successful loan application, in part, to assistance he received from Alan Stanford, a certified business advisor with the Washington Small Business Development Center (SBDC).
Getting a traditional business loan for a technology-based start-up, particularly one with new technology, is next to impossible. Most technology startups are funded by venture capitalists or angel investors, Stanford said, and typically those investors have some say in how the company is run, which is what DePaula wanted to avoid.
“It’s very difficult to get something this big off the ground without selling the farm,” DePaula said, but the Craft3 loan allows him to retain control of how the business grows. For several years DePaula intentionally kept quiet about his business, wanting to keep a low profile until he was able to protect his intellectual property.
When Margie Hall, executive director of the Lincoln County Economic Development Council, met DePaula in September 2012, the company had four employees, a solid business plan and had just started online sales of its products. DePaula credits Hall with being an incredible advocate for helping him find the resources or information he needs to do business in Edwall. When Hall learned that DePaula was having trouble finding capital for his expansion, she suggested he meet with Stanford, who had a 37-year career in finance and banking before joining the SBDC in 2010. “Alan began by reviewing Andrew’s business plan and recommending how to strengthen the plan and the financial forecasts for funding requests,” Hall said. “Alan has been his business advisor ever since.” DePaula said he had originally contacted the SBDC several years earlier with questions about setting up his business, but meeting with Stanford for help pulling together his loan application was the right person at the right time.
Without a financial background, DePaula knew the Craft3 loan application was going to be a huge drain on his time and energy, but when he called Stanford, the response was, “Sure, no problem. I can help you with that.” Over the next two months, DePaula said, Stanford had helped him pull together all the financial information Craft3 had requested, including detailed financial forecasts, and create a thorough and compelling loan application.
Stanford’s help was “a godsend,” DePaula said. “Most literally, a real answer to a real prayer.” As with many inventors, DePaula enjoys working through technological puzzles, but financial puzzles, not so much. “Honestly, I should have an MBA to do what I am doing” he said. “I’m an engineer. That’s my first love. I deal with numbers because I have to, not because I want to.”
At the 2008 Consumer Electronics Show (CES) in Las Vegas, he visited every booth he could find that had anything to do with thumb drives, but no luck. The cheapest thumb drive he could find were around $3 each at the time. Previous experience told him he needed to get the wholesale cost down below $1.00. Sitting in his hotel room at the end of the week, he took off his conference participant badge and realized it had a computer chip embedded in it. If a computer chip could be embedded in a nametag, where else could you embed a tiny silicon chip? And that was his Eureka moment. Perhaps he could store digital information in paper.
DePaula’s first challenge was to create a USB drive out of paper, which he has accomplished. Retail price right now on large orders is generally less than $2, but within two years DePaula expects the price on select products to be down to 50 cents each. In any case, he said, USB drives are only the beginning. “intelliPaper isn’t just a USB drive,” DePaula said. “It really is intelligent paper. That’s the long-term vision that we have for it.”