CEO Deepinder Singh at the Minnesota Cup
Mankato-based maker of smart HVAC control systems finds competing for awards to be a valuable process, regardless of outcome
The success story of Deepinder Singh, the entrepreneur behind Mankato-based 75F, begins with a false start.
A native of India and a graduate of that nation’s Thapar Institute of Engineering and Technology, Singh moved to Mankato in 2006 with his wife, a cardiologist who took a position at Mankato Clinic. Their new home suffered from uneven temperatures, a problem Singh thought he could solve given his computer science, engineering, and consulting background. That year, he founded Suntulit (which means “balance” in Sanskrit), a company specializing in residential temperature control.
The system he devised would allow the homeowner to modulate temperatures in multiple zones while also saving up to 40 percent on energy costs. In 2011, Suntulit won a GE Ecomagination Award for Innovation and received $100,000 to continue developing its technology.
The residential market for such systems was tough, however, and the commercial market began to look more attractive. In 2012, Singh founded 75F and turned his focus to a smart HVAC (heating, ventilating, and air conditioning) system for businesses. He used the lean startup approach, under which “what you need is the product that fits your customers, not creating a product then trying to sell it to customers,” he says. The idea is to create only a minimum viable product that can be introduced to customers for feedback.
After two years of development, he had created a commercial system that relies on wireless zone controllers, dampers, and cloudpowered smart algorithms. It’s geared toward owner-occupied buildings with rooftop HVAC units where each tenant has unique heating and cooling needs, such as doctors’ offices or law firms.
Singh leveraged the industry connections he made with Suntulit to acquire his first 75F customers and began installing systems in March 2014. One early customer was Mondale & Associates, a firm that provides representation for independent manufacturers in the heating and air conditioning industry. An ideal candidate for a 75F system, the firm operates out of a leased one-level building with 1,600 square feet of office space and 3,400 square feet of warehouse space.
“It was horribly uncomfortable,” says co-owner Curtis Mondale of his building. “We’d get airflow in the wrong places. We had some offices that were way too hot, some offices were way too cold.” Mondale wanted to keep the entryway cooler than the rest of the rooms and resolve issues like his corner office, which was chilly in the winter, and a warehouse room that would reach 80 degrees or more with the door shut.
Singh, Mondale, and two former contractors installed the system in late April. The project took one day and involved installing nine zones and 15 dampers in six rooms and an entryway. “It’s definitely a contractor installation, [but] we have plenty of hands-on field experience in our company and guys who know their way around the systems quite well. We wanted to experience it ourselves,” Mondale says.
The typical 75F install is 2,000 square feet with eight to 10 rooms. For each installation, Singh trains HVAC contractors who then become the main contact should the system need maintenance. 75F provides a warranty and data backup.
To modulate the temperature, the smart system collects and crunches data, such as information about (and settings for) each zone. If the system fails, the cloud backup ensures that users need only replace the hardware, not start over from scratch. (75F has its components manufactured by contractors in Chicago and does the assembly in Mankato.)
The price for a 75F system, installed, averages $2.50 to $3.00 per square foot. An annual subscription fee of $300 covers the cloud data storage. According to the company, the system pays for itself in about three years, thanks to increased energy efficiency and lower heating and cooling costs.
Because last summer was unusually cool, Mondale can’t say for sure whether his cooling costs were lower in 2014 with the 75F system as compared to previous years without it. But, he says, “it’s helped a lot. It’s made a tremendous improvement in the comfort and the consistency of temperatures across our various offices.”
To boost his company’s profile and increase capital, Singh turned to business competitions. Among the multiple awards 75F took home in 2014 were top honors at the Minnesota Cup.
“Our goal is to support early-stage entrepreneurs, and what we’re looking for is that next great success story in Minnesota business that’s going to create revenue and jobs and change the world,” says Scott Litman, managing partner of Magnet 360 and co-founder of the Minnesota Cup. “Ideally, what we want to see in the top people is a great entrepreneur we can believe in, a great plan that we believe they can execute, a product or idea where we can say, ‘Whoa. They’re onto something. This is amazing,’ and 75F had all of that.”
Litman cites 75F’s plan, credentials, and early examples of product installation as the reasons for awarding the company $105,000 in prize money. “It blew us away,” he says of Singh’s presentation.
Litman wasn’t the only one impressed with 75F’s potential. Last October, AOL founder Steve Case invested $100,000 in the company as part of his Rise of the Rest Road Tour, which highlighted innovative startups based in the Midwest.
Singh appreciates the prize money but believes competing for awards is worthwhile regardless of the outcome. “It’s not just the end result but the process itself that is very valuable,” he says. “The icing on the cake is winning and the prize money, but competitions really hone your skills in terms of what things need to be addressed to get an investor excited. Competitions ask that you understand your business model really well.”
75F continued its winning streak in November 2014 at the Cleantech Open, which Singh describes as “the Academy Awards of clean tech.” There, the company took home the Energy Efficiency Division National Winner and the People’s Choice Award. In total, 75F was the winner or a finalist in business competitions 11 times last year.
Litman agrees that early-stage entrepreneurs looking for exposure and an introduction to the broader business community will find entry points in competitions. “Over the 10 years of the Minnesota Cup, the winners and finalists have raised $175 million in capital,” Litman says. “I can’t say it’s all the Minnesota Cup — it’s good entrepreneurs, good business plans — but there are a significant number of those entrepreneurs that have met people, made connections, or had their profile risen so it made it easier for them to interest investors.”
The downside of focusing on competitions is that business owners can lose sight of their long-term goals. “There’s got to be a balance,” Litman says. “If somebody is just going out and entering these competitions, there isn’t enough time to run the business and do a great job at that, too.”
Singh admits he was not able to invest as much time in 75F’s growth as he would have liked in 2014. “We’ve been really focused on the competition aspect rather than the field, but what we do have is people reaching out in terms of potential leads,” he says.
In addition to business competitions, Singh recommends entrepreneurs assemble an informal board of advisers — ideally people in a Fortune 50 or Fortune 500 company — who have created a similar product. Other startup owners can also provide valuable advice. “Everyone might have a slightly different version of success, but it’s very helpful to hear others’ experiences.”
The biggest challenge for 75F thus far has been credibility. “When you’re in an industry which has many entrenched ideas, it’s hard to move the needle,” Singh says. “It’s very easy to stay with the status quo because it’s safer. That’s one of the things the publicity from the competitions has done: shown that we are a credible candidate for development.”
75F will “absolutely” remain headquartered in Mankato. “We’re established there,” Singh says of his and his wife’s careers and personal lives. 75F currently employs 14 in both Mankato and India, from a variety of backgrounds including business, engineering, and electronic design automation.
“We talked to a lot of people in the industry,” Singh says of his company’s evolution. “Our process has been shaped by their feedback. We used off-the-shelf components to get started and learned what features would benefit the customers. Everything we’ve done with the product has been driven by the customers and working with them to see what they truly need.”