much of its early engineering R&D at the Southwest Research Institute in San Antonio. Fallbrook spun out its CVT technology for use in power-generating wind turbines to a startup in Austin, TX, and signed a development partnership with Austin-based Hodyon to incorporate Fallbrook’s CVT in air conditioner compressors for medium and heavy-duty vehicles. Fallbrook acquired Hodyon in 2011, and Klehm says its sales of auxiliary power units (APUs) for use in automotive air conditioners and other accessory drives has gone from 200 units per year (at $6,000 a unit) to 200 units a month.
“I think of Austin as the Palo Alto of the Southwest,” Klehm says. “Every single day, you’re seeing new startups pop up. Everybody here has a startup mentality.”
Klehm also described the Texas tax code as “just completely organized to optimize and incentivize innovation and job growth. In California, the tax codes are organized to dis-incentivize job growth.”
The only thing holding Fallbrook back now, at least the way Klehm talks, is access to capital. In fact, Klehm recently urged a House Committee on Small Business to prod U.S. securities regulators to accelerate their promulgation of new rules intended under the JOBS Act of 2012 to make it easier for small companies like Fallbrook to raise capital from investors. His testimony was arranged by Connect, the San Diego nonprofit group that supports technology innovation and entrepreneurship.
“Our ability to access capital is the most significant challenge we face as a business,” Klehm said in his testimony on April 11 before Arizona Republican David Schweikert, chairman of the Subcommittee on Investigations, Oversight, and Regulations. “I personally spend over 50 percent of my time on it. With additional capital, we would expand our manufacturing base in Texas, and build out our engineering development team, which would create new high-tech jobs, and accelerate our product development and partnership opportunities.”
