Media Coverage


Waterside Capital invests in laser-tag

By Michael Schwartz, Inside Business - Hampton Roads, April 28, 2008
michael.schwartz@insidebiz.com

When Waterside Capital Corp. invested in a local role-playing game card company last year, Lin Earley admitted that he had never tried his hand at the firm's products.

With Waterside's latest investment, $900,000 in a Northern Virginia-based laser tag company, Earley, Waterside's CEO, proudly said he has a more personal frame of reference.

While he is not the target demographic for LaserNation, a Dulles-based company that operates laser tag arenas and designs and manufacturers its own laser tag equipment, Earley has played the game in which players use handheld lasers and try to shoot or tag opponents' laser-sensing targets in a sort of mock-battle environment.

LaserNation caught Earley's and Waterside's eye for a couple of reasons.

Its CEO Bill Edwards was involved in a company that Waterside, a Norfolk-based small business investment company, invested in and successfully cashed out of in 1998. The company was Election Products Inc. and was bought out by Election Systems & Software.

Although that deal was before Earley's time with Waterside, Earley said the successful transaction was enough to give him "a good bill of faith in Edwards' management ability."

LaserNation and Waterside believe the company has growth potential, not just from birthday party revenue at its two laser tag arenas, but also because of plans for a franchising system and its line of laser tag equipment.

The company was started in 2000 by Edwards and his partner Gary Reece. LaserNation currently operates two laser tag arenas, one in Sterling, Va., the other in Baltimore. Edwards said the arenas generate revenue of between $600,000 and $700,000 a year apiece.

In 2005, the company began to put together plans to franchise the laser tag arenas. Those plans were put on hold in order to develop its own line of laser tag equipment including the guns, the sensors and a patent-pending power supply to replace money and time-consuming batteries.

LaserNation is collaborating with companies all over the country to develop its new products. The new power supply will be "torture tested" later this month, Edwards said.

Edwards said he is confident in working once again with Waterside. There is a certain stigma attached to a venture capital-type company such as Waterside. That stereotype envisions the VC will strong-arm the CEO of the investment company into handing over ownership.

"I feel comfortable with Waterside," Edwards said. "I believe they want us to stay in it and run it."

Since taking the reins at Waterside, Earley has done away with the SBIC's previous policy of taking seats on investment companies' boards of directors and participating in decision-making processes.

"We no longer take seats on the board as a general operating process," Earley said.

Instead, Waterside insists on being allowed access to the type of financial reports the board gets to see. Waterside also insists that each company has an independent board, made up of at least a couple of members who are independent from the company.

The investment is Waterside's latest since the publicly traded SBIC put $450,000 into Norfolk-based game card company Decipher Inc.

Earley hopes the industry in which LaserNation operates, the "entertainment industry," might be somewhat less sensitive to an economic recession compared with other industries.

"I don't know if anything is totally recession-proof," he said.

Asked if Waterside's investment in the gaming business is going to be a recurring theme, Earley said the company has several possible investment opportunities in the pipeline that are "not in gaming."

As of press time Thursday, Waterside stock was trading at $1.50 per share, unchanged from its previous closing.