A year after his last company filed for bankruptcy, a serial entrepreneur in St. Paul got a boost for his newest venture when the state on Thursday promised a grant worth $740,000 if the firm meets job and investment goals.
The new firm, HexFuel, was started 18 months ago by David Ault just as he was shutting down an alternative-energy financing firm that had been stung by problems with a Chinese turbine manufacturer. Ault said the bankruptcy of that firm should have no impact on HexFuel, which has its office in Maplewood.
HexFuel is built around technology developed in Utah about six years ago. Its $15,000, breadbox-sized machines attach to large diesel engines to boost gas mileage and cut emissions.
The new venture excited Minnesota officials because, after Ault and four partners leased the "BoostBox" technology from its Utah inventors, they decided to invest $10 million to convert a Hastings lumber building into a manufacturing plant. They aim to have 150 to 300 workers within five years and make 20,000 to 60,000 HexFuel units a year, Ault said. His team has been conducting research, testing and selling a few hundred units to large-fleet trucking firms.
The Minnesota Department of Employment and Economic Development (DEED) said it will give HexFuel $740,000 from the new Minnesota Job Creation Fund, provided the company first meets its performance goals.
"Business expansions like this one at the HexFuel manufacturing facility in Hastings have made all the difference," Gov. Mark Dayton said in a statement. "I congratulate HexFuel on this important development and for the many new jobs their business will create and support in the years ahead."
Ault, who is 41, in 1991 started Audio Video Planners, a firm that designed home electronic systems. He sold its assets last year to help start HexFuel, which is his eighth entrepreneurial venture. Currently, Ault is also the CEO and founder of REF LLC, a consulting and project financing firm. "Out of eight businesses, I had only one that had to seek debt protection," Ault said.
Last April, his St. Paul-based Private Energy Systems, which had helped finance 64 wind, solar and biomass projects, filed for Chapter 7 bankruptcy. Private Energy had $3.86 million in liabilities and $502,200 in assets at the time. Ault said it was hurt when a Chinese maker of wind turbines didn't honor warranty obligations.
No grant until jobs created
DEED Commissioner Katie Clark Sieben said in a phone interview Thursday that she was not aware that one of Ault's prior companies had filed for bankruptcy. She emphasized that no state funds will be issued to HexFuel until it fulfills its target of creating 150 jobs over three years.
Prospective jobs are expected to include manufacturing workers, research, accounting and administrative positions.
"No money is paid to the company until those jobs are created and its private investment is made. So the state is not at risk in any way, shape or form," Clark Sieben said.
The HexFuel grant is the sixth announced by the state under the new $24 million job creation fund. The state requires recipients to invest at least $500,000 in a structure and to hire more than 10 workers before any state grants are issued.
"We're going to spend $10 million before we ever see that $740,000," Ault said. Asked if he was surprised that the state approved his grant request so soon after his bankruptcy filing, Ault said, "I really don't think that a business that didn't work out should reflect on a completely different business that is moving forward."
HexFuel's "hydrogen assist" technology is designed to boost fuel efficiency by 10 to 30 percent, while cutting emissions 20 to 50 percent. It is also expected to boost torque and reduce the maintenance needs of diesel-powered vehicles. The technology's timing appears to be spot-on due to a flurry of pending federal regulations that will soon require dramatically reduced emissions for vehicle, lawn mower and recreational diesel engines.
DEED became aware of HexFuel in January after it received a grant application from the company. The higher wages, specialty jobs and technology promised by the firm were "a great example" of the "competitive projects" the state is trying to attract, Clark Sieben said. "This is new technology and we think it's an exciting product," she said.