Vairex Air Systems raises new funding to keep up with accelerated growth

BOULDER — Vairex Air Systems, which makes high-pressure blowers for fuel-cell manufacturers around the world, has raised $100,000 from existing investors to use as working capital through the end of the year as the company’s revenue starts to make a hockey-stick turn upward.

Cofounder and CEO Ski Milburn said Friday that the company is planning to raise a larger round of $500,000 to $1 million at the end of this year or early next year. But the rapid growth Vairex has experienced lately was going to make cash flow tight in the meantime.

Boulder-based Vairex — a participant in Fort Collins-based Innosphere’s Actuator program — is projected to record $1.1 million to $1.2 million in sales this year, Milburn said, nearly double last year’s mark. And feedback from customers has the company projecting somewhere in the range of $2.6 million next year.

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“We’re growing like gangbusters right now,” Milburn said.

Vairex’s blowers are used in fuel cells for a wide variety of applications, from forklifts to backup power systems for electric vehicles.

If the name Vairex sounds familiar, it’s because the current 6-year-old iteration of the company is a reboot of Vairex Corp., an engineering firm that Milburn founded in 1987. The original Vairex was acquired in 2008 by a venture-backed British holding company that went bankrupt in 2009. Milburn and his current partners bought the Vairex assets out of bankruptcy and launched Vairex Air Systems in 2010.

The company has raised about $1 million since 2010, as well as a $150,000 Advanced Industries Accelerator Program grant from the state of Colorado last year. Milburn said one of the reasons the company was competitive for the grant is that all of its customers are out of state or overseas. That means new dollars flowing into the state and staying here.

Vairex, 3048 Valmont Road, has a one-person sales office in Japan. The company employs five people in Boulder, meanwhile, who count manufacturing among their duties as well as their corporate and design roles.

“By next year, we’ll have enough volume that that won’t work,” Milburn said, saying he expects to add a handful of production workers next year.

Milburn said the company is “almost” profitable and definitely will be next year. The company is also eyeing another acquisition in coming years as revenue keeps growing.

Innosphere’s Actuator program is aimed at helping companies looking for an exit find a buyer more quickly. The program, Milburn said, has provided Vairex with consulting, negotiation and publicity help, as well as a treasure trove of financial data that helps startups discover and vet potential suitors.

“It’s almost like having a consulting investment banker sitting at the table with you every day,” Milburn said.

Milburn said he expects Vairex to be acquired in the next two or three years or so, particularly as demand rises for fuel-cell technology.

“Nobody’s said, ‘We want to buy you,’ but they’re showing interest,” he said.