California firm relocates to Ann Arbor

April 6, 2001

Author : Duane Ramsey
Source : Insider Business Journal

NovoDynamics, Inc., a data impacting company based in the Silicon Valley, has transferred its operations along with five employees and several advisors to Ann Arbor following a merger with Ann Arbor-based Nonlinear Dynamics, Inc.

The merger with Nonlinear Dynamics was planned and completed once NovoDynamics, Inc. was established as a separate company by previous officers and employees of Catalytica NovoTech, the former subsidiary of Catalytica Energy Systems, Inc., of Mountain View, Calif. The firm will operate independently from Catalytica.

The company decided to locate in Ann Arbor because it is less expensive and also because the city is located closer to its customers, which are in the areas of pharmaceuticals, chemicals and e-business, said Bruce Scott, vice president of business development and marketing for NovoDynamics.

"We liked the environment here and what's happening in life sciences at (the University of Michigan), which is a great source of talent," he said.

Local business development groups are pleased that NovoDynamics will be in Washtenaw County and that a trend may be developing. Last year, Acuson Corp. expanded its existing operations in Ann Arbor rather, than in California, where it is headquartered.

"We're always really happy when a Silicon Valley company decides to locate in Ann Arbor," said Sue Lackey, president of the Washtenaw Development Council. "We think that they've finally seen the light."

Don Garaventi, CEO of NovoDynamics, said the company has known the capabilities of Nonlinear Dynamics for some time.

"The respective skills of each company are highly complementary," he said. "We will leverage those skills to deliver a flexible, customer-focused service that will be directed to the client's specific value targets."

The explosion of data impacting companies is creating an increased awareness of the significant value lost in databases because of their overwhelming size and complexity. The company's data mining technologies provide the means to deal with those complex databases, Garaventi said.

The merger will strengthen NovoDynamics' ability to provide customized services that can extract the hidden values residing in databases. The company applies its proprietary technologies in advanced data mining techniques to create solutions for clients, he said.

"We believe that it will greatly improve our ability to serve our present customers better and to rapidly expand the business with both existing and new customers," said Bob Saltsman, former CEO of Nonlinear Dynamics.

Saltsman came out of retirement to manage Nonlinear Dynamics, as well as to plan and implement the merger with NovoDynamics. Nonlinear Dynamics was founded in 1997 as an outgrowth of the International Center for Advanced Science and Technology at the U of M.

For the past four years, it demonstrated its ability to apply leading-edge pattern recognition and data-mining technologies to enhance product and process discovery for the chemical and pharmaceutical industries. Nonlinear's capabilities also can improve the performance of e-business tools such as CRM and supply chain management, Saltsman said.

With Nonlinear's 26-person staff, it represents a combined total of about 30 employees for NovoDynamics, which now occupies Nonlinear's existing space on Ashley Street. The new company also plans to relocate a research laboratory from California to Ann Arbor as soon as it can find the appropriate space here, Scott said.

"We believe that business supports the area where it's located," said Scott, who cited the company's banking relationship with the Bank of Ann Arbor as an example. "We looked for a community that likes to support itself and invest in itself. We've already had some interest from firms and individuals who would like to invest, so we hope to get local support."

NovoDynamics plans to launch a round of angel investments, private equity funding to raise $2 million, beginning in April and lasting for 90 days. Beyond that, it expects to conduct a venture capital funding round to raise $10 to $20 million in the next six to nine months, Scott said.

Catalytica Energy Systems sold substantially all of the assets used by its former non-energy related subsidiary to the newly formed company. Catalytica obtained a 31 percent-ownership in NovoDynamics through the sale of those assets that included lab equipment, software and certain non-energy related intellectual property.

An additional series of investments totaling $2 million allowed NovoDynamics to complete the merger with Nonlinear Dynamics, said Craig Kitchen, president and CEO of Catalytica Energy Systems.

NovoDynamics will continue to have a financial relationship with Catalytica, Scott said, but not an operational one. Ricardo Levy, chairman of Catalytica, will sit on NovoDynamics' board of directors with Saltsman and Roger Dickinson of the former Nonlinear Dynamics, and Garaventi.