A Kansas City startup’s smartphone-enabled alternative to ankle monitors taps into a huge courts and corrections market — with the potential for tremendous cost savings and societal impact, said Darcy Howe.
And that docket of benefits presents a unique opportunity for KCRise Fund, which this week announced its lead investment in Lee’s Summit-based eHawk, added Howe, founder and managing director of the venture capital fund.
“Leading eHawk, we have two seasoned guys in the space [co-founders Bart Cooper and Ted Green] who saw and faced the problems firsthand, with relationships at the county, municipal and state level, with a technology platform where everyone wins,” she said, referencing the former bail bondsman and trial attorney at the startup’s helm.
eHawk’s RePath platform — managing large pre-trial, probation, and parole populations — boasts a broad spectrum of features to encourage compliance and benefit the participant, including facial recognition, notification of court dates, remote enrollment, customized reporting, location monitoring, customized geofencing, chat, video communication and compliance scoring.
Click here to learn more about eHawk and RePath.
The undisclosed eHawk deal is a rare move for KCRise, which is a co-investment fund that typically needs another institutional investor in the round. While Chicago-based Sandalphon Capital, Denver-based Service Provider Capital and Kansas City-area angel investors were involved in the raise, it’s the first time KCRise has led a round, Howe said.
KCRise announced the close of its $41 million Fund II in February with plans to invest in 20 high-growth technology companies benefitting Greater Kansas City.
A minor percentage of KCRise Fund II is allowed flexibility related to a portfolio company’s headquarters location (though all companies must still support Kansas City in some way, she said), and in this case, wiggle room on who leads the round.
“We have been at this for five years now and our board is confident in our team’s ability to lead rounds, though we do not plan to lead very many,” Howe said, noting KCRise Fund’s work within eHawk will run deeper than with most other portfolio companies.
“eHawk is a company whose revenue is ahead of the build-out of the team,” she explained. “So we saw the opportunity to help with talent and go-to-market strategy and to give other VCs an easier path to saying ‘yes’ on a company we believed in deeply. We have partnered with Sandolphan in prior companies and their ‘roll up the sleeves and make customer intros’ matches the KCRise Fund ethos.”
Howe is joining the board of eHawk, and Caroline VanDeusen, a principal at KCRise Fund, is serving as the startup’s interim sales director. VanDeusen, who joined KCRise earlier this year, is a 10-year veteran of govtech business development — most recently at PayIt where she served as managing director.
Following a successful pilot program across several Missouri counties that substantially decreased incarceration and taxpayer costs, eHawk’s RePath smartphone monitoring program is now available to every county in Missouri for unlimited use, the company said. The tech company has also signed a contract with the province of Alberta, Canada, where RePath has already seen rapid adoption.
RePath’s results so far in Missouri have been transformative, eHawk reports. In St. Louis County alone, the State of Missouri is saving an estimated $3.9 million annually in pre-trial reimbursement expenses, a 67 percent reduction rate in pre-trial jail days. This represents an average of over 400 fewer individuals in the county jail on a daily basis and more than 150,000 jail days saved in one year from a single county.
“ … RePath costs about 1/100th of jail and 1/10th of an ankle monitor,” said Bart Cooper, CEO of eHawk. “But the better question really is how much does it save? The short answer is that it saves millions and we expect that RePath will always save more than it costs.”
eHawk is KCRise Fund’s third new Kansas City portfolio company in 2021 — behind investments in Kenzen and Dynamhex, as well as follow-on deals with existing portfolio members Bardavon, Daupler, TripleBlind, and Spear Power Systems, VanDeusen said. The fund also invested in Bentonville, Arkansas-based Ox, an e-commerce order fulfillment startup and KCRise’s fourth deal alongside Steve Case’s Rise of the Rest (others include BacklotCars, Cariloop, and Daupler).
Click here to see KCRise Fund’s full portfolio.
“This is the first time KCRise has helped a portfolio company in sales to this degree,” she acknowledged, while pointing to new portfolio-wide steps to boost startup sales. “We hosted a Business Development Forum in June for all portfolio company sales leaders to share ideas, connect them to our corporate network for prospecting, and generally help address the unique challenges of selling brand new tech into an established market.”
Such techniques are critical when software alone can’t close the deal, said Ted Green, COO of eHawk.
“No matter how good we make RePath, you can’t just dropship a software solution into these complex systems and expect magic to happen,” he said, noting ways eHawk already works to set itself apart from competitors. “Our team works directly with our clients to assess every aspect of their pre-trial system. We attend bail hearings, tour the jail, perform on-site enrollments, provide monitoring services from our own center, and meet with the many individuals and departments involved in the process. This dedication to service along with our best in class software is what drives our results.”