Thursday, Jan. 3, 2008

IT company V-Empower is rising fast

Bowie firm combines social responsibility with profits

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Shukoor Ahmed knows what it’s like to struggle with a business on the brink of dissolution. He also knows what it’s like to then turn it into a multimillion-dollar success.

The entrepreneur’s information technology and consulting company, V-Empower Inc., ranked No. 1 among Deloitte’s 50 fastest-growing technology companies in Maryland in 2007, and No. 19 among the 500 fastest-growing tech companies in the United States.

The Bowie company, with more than 40 employees in five countries, posted revenues of $5.3 million in 2006.

But Ahmed projects sales of only $3.4 million this year. He explained the slide, saying V-Empower had a ‘‘hiccup” when it unsuccessfully tried to transition into an employee-owned company last year.

Ahmed’s political ambition sparked the idea for his business venture. When he first ran for the House of Delegates in District 23 in 1998, he saw an opportunity to design a Web-based tool that would connect people to elected officials.

With financial help from family and friends, Ahmed — a native of India who moved to the United States in 1988 — founded V-Empower in 2001. Ahmed’s initial plan was to focus on the newly developed Statedemocracy.com site, but when it did not prove profitable, he eventually converted it into a nonprofit project.

Within three years, the company suffered ‘‘huge losses,” and Ahmed had accumulated personal debt of close to $300,000, he said.

The last two months of 2003 were tough, he said. ‘‘We thought about cutting our losses and moving on,” he said.

Plans to sell 70 percent of the company to investors fell through after they reviewed the company’s financial information and backed off, Ahmed said.

But his phoenix rose from the ashes in the new year when the company became a Microsoft vendor in January 2004. Community service and involvement is an integral part of Ahmed’s life, and it paid off for his business in a serendipitous way.

While helping families move to the United States from Bosnia, he developed a friendship with a fellow volunteer who worked at Microsoft. The computer giant was pouring resources into information security, and that is how V-Empower got on board.

‘‘From that point on we started to do extremely well,” he said. ‘‘Teaming up with Microsoft was crucial to the growth of the company.

Other clients include Computer Associates, Washington Mutual Bank and eBay.

Ahmed said he prefers working with corporate clients because of the payment structure, although he has done some small work for government agencies.

When a small company is growing slowly and is strapped for cash, waiting months to secure a government contract, and then another few months for payment, can be problematic, Ahmed said. The result can be bankruptcy.

When dealing with the private sector, getting paid within 10 to 30 days can help keep the company stable, particularly when there is no backup support from a financial institution, he said. ‘‘It wasn’t until late 2004 when a bank would look at us,” Ahmed said.

His goal is to eventually restructure the business into two separate entities — an information security company that is employee-owned, and a software and Web application development company that would serve nonprofit clients and elected officials.

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V-Empower contributed more than $500,000 — mainly through in-kind donations — to local and national nonprofits in 2006. It’s easier for the company to donate services than cash, especially because many small nonprofits lack technological expertise, he said.

Corporate social responsibility is ‘‘a very hot subject these days,” said Asher Epstein, managing director at the Dingman Center for Entrepreneurship at the University of Maryland. Ahmed graduated from the center’s TiE-Smith Fellows in Entrepreneurship Program.

‘‘It’s increasingly popular for early-stage companies to develop a socially responsible component to their business objective,” Epstein said.

But it can also be challenging.

The outside causes may not be consistent with what employees, investors or customers think should be a priority, Epstein said. Internal conflict may arise with corporate giving that doesn’t jibe with the company’s stakeholders, he said.

Most investors would rather see a company with access to cash flow pay the investors, and then let investors decide how to allocate those funds, Epstein said. Sole proprietors can call their own shots, he said.

There are marketing benefits to certain programs, but they should be evaluated against other marketing strategies regarding use of time and other resources, he said. Social responsibility programs tied closely with the corporate mission and identity are usually more successful, he said.

Rajan Natarajan, a board member at the Maryland India Business Roundtable in Largo, said few business owners have a charitable mindset such as Ahmed’s. Not only does he operate a successful company that is growing and receiving recognition, but he is a ‘‘nice man” who helps his community, Natarajan said.

Ahmed is also a member of the Roundtable, and has donated money and services to the group.