Three Roots Valued Partner: Bill Malkes

Bill Malkes is a serial entrepreneur, current Chief Executive Officer of NellOne Therapeutics, who has a long history with Grady Vanderhoofven, CEO of Three Roots Capital. With decades of experience launching and leading companies, Malkes is committed to improving the community around him wherever he goes.

Prior to joining NellOne Therapeutics in April 2020, Malkes was the co-founder and former CEO of GRIDSMART Technologies Inc., a global intelligent transportation solutions business based in Knoxville, which was sold to Cubic Corporation for $87 million in January 2019. Under Malkes’ leadership, GRIDSMART became the second largest solution provider in its industry, selling products in 22 countries around the globe. Before GRIDSMART, Malkes held senior leadership and advisory roles at Health Care Solutions, ASIC International, Tradewind Technologies, and Learning Technology Systems.  Three of those companies were based in the Knoxville area.

Malkes initially met Vanderhoofven through the Southern Appalachian Fund, a New Markets Venture Capital Company Vanderhoofven helped launch in 2003. Meritus Ventures, which began investing in 2006 with Vanderhoofven as one of two fund managers, made its first investment in GRIDSMART in 2007, solidifying a lasting relationship between the two men. Meritus’ early investment in GRIDSMART supported the company’s development of its flagship product, and subsequent investments by Meritus helped to fuel to company’s rise to prominence in its industry.

“You need a trusted investor,” said Malkes. “I have walked away from funding sources before because I felt uncomfortable with the integrity of the firm. You know if Grady puts someone in front of you, they’re going to have integrity.”

At GRIDSMART, employees were encouraged to engage in service projects and give back to their community. This service-oriented company culture was, in part, driven by Malkes’ Christian faith. While most investors might be wary of working with an executive who was deeply committed to public service, Malkes said this never was the case with Vanderhoofven, who understood the importance of Malkes’ desire to make a positive impact in the community and in his employees’ lives.

“It takes a special kind of investor,” said Malkes. “It’s not just having my back and trusting me, but it’s his ability to support something like that and have a strong moral compass. Those are the things that give entrepreneurs the courage to do things like that. The courage to do the right thing.”

Serial entrepreneurs are what take communities from “A to B,” said Malkes. He is proud of his work at GRIDSMART and other companies because of the “cumulative effect” his approach has on the Knoxville region.

“We were always very liberal with our healthcare. We have very employee-friendly policies. We believe in paying everyone well with a living wage,” said Malkes. “So, when that next iteration of entrepreneurs goes out there, they start with those values, and then they improve on them. They see things that we don’t. I think that’s why your city gets better, bigger, more diverse. It has more meaning.”

Since coming to Knoxville two decades ago, Malkes has witnessed an “incredible metamorphosis” of the region, with improved access to capital and support systems for potential entrepreneurs. Looking ahead, Malkes said “it takes companies like Three Roots sitting in the center” of the entrepreneurial ecosystem to make the future better for all.

“It’s a scary thing to launch into entrepreneurism,” said Malkes. “You can have all the coaching you want, but you need someone who has been there before and who can not only provide financial resources but guide you to financial resources. But the even bigger thing is you get those relationships and that knowledge.”

“It has been an honor to work with Bill over the years,” said Vanderhoofven. “We have a shared sense of purpose and a similar view of the value of successful companies in their communities. Since I have known him, Bill has created and run a variety of companies, while I have managed numerous investment funds. One of the ‘constants’ over time has been our friendship. We have not always agreed on every decision, but a sense of mutual trust and respect has always endured. Investors invest in people first, companies second. The necessity of working with the right people is the ‘constant’ in a complex equation around company creation and financing. Everything else is a variable.”

Pioneering Advances in Regenerative Medicine: NellOne Therapeutics

Three Roots Capital is committed to working with forward-thinking organizations to help fuel their growth for future discoveries and developments. One of these companies, NellOne Therapeutics (NellOne), located in Knox County’s Fairview Technology Center, is an early-stage biopharmaceutical company pioneering advances in regenerative medicine.

In 2008, NellOne was co-founded by Dr. Cymbeline (Bem) Culiat, a research scientist at Oak Ridge National Laboratory, and Tracy Warren, an investor, executive, and entrepreneur. Serial entrepreneur and valued Three Roots partner, Bill Malkes, joined NellOne as its Chief Executive Officer in April 2020.

Dr. Culiat, who serves as NellOne’s Chief Science Officer, spent a decade as a senior scientist at Oak Ridge National Laboratory. At ORNL, she discovered NELL1, a naturally occurring secreted human protein, which triggers multiple processes for tissue growth and maturation. NELL1’s basic biology and regenerative effects on tissue injury (physical, chemical, inflammation, low oxygen conditions, etc.) have been studied for more than a decade, with Dr. Culiat arguably being at the pioneering forefront in understanding NELL1. This formidable collective of attributes empowers the use of NELL1 as a prospective therapeutic for a plethora of severe injuries and disorders, including virally induced lung damage caused by COVID-19.

Malkes refers to NELL1 as a “very talented protein” that has immense potential. Malkes and Dr. Culiat feel they “have been given stewardship of this protein for a greater good and have an obligation to make it available.”

“I felt very called to be here. It’s a phenomenally important product in so many ways that needs to be on the market,” said Malkes. “Not only do we want to make a difference in the world, but we want to make this product accessible to everybody.”

In August 2020, NellOne secured a utility patent to protect its breakthrough work on creating a shorter version (NV1) of the naturally occurring NELL1 protein. This patent allows the startup to fast-forward its effort to create multiple clinical applications for the NV1 novel variant and pursue large-scale production.

Earlier in the year, NellOne filed a provisional patent application to use the NELL1 signaling protein in the treatment of respiratory viral infections, particularly COVID-19. The patent application, Methods and Compositions for Treating Tissue Damage Resulting from Viral Infections, is an extension of the startup’s current research. In November 2020, NellOne partnered with ORNL on a COVID-19 drug delivery system that is designed to transport therapeutics directly to cells infected by SARS-CoV-2, the virus that causes COVID-19.

“We were headed down a particular path when COVID broke out, but what we understood pretty quickly was that while NELL1 can’t prevent COVID, it’s a prospective therapeutic with the potential to reverse tissue damage and regulate the inflammatory response linked with COVID and other virally induced lung disease,” said Malkes.

In October 2020, Three Roots made an investment in NellOne. Three Roots wanted to put “fuel in the tank” to fund the company’s progress and wanted to create an opportunity to contribute to the company’s success by providing technical and operational assistance in areas where Three Roots can add value. This approach to investing is illustrated by the three roots of Three Roots Capital: Access to (1) capital, (2) coaching, and (3) connections.

“Three Roots is enthusiastic about supporting NellOne,” said Grady Vanderhoofven, President and CEO. “NellOne is a team of brilliant and dedicated people who truly want to make a difference in the world around them. We’ve had an awareness of the company for quite some time. We believe the addition of Bill Malkes to the team, coupled with the company’s recent advances and recent market dynamics, creates a scenario where Three Roots can help the company accomplishes its goals.”

Looking ahead, NellOne is seeking U.S.-based partners to complement their current overseas partners to help produce the NELL1 protein. They will also continue to validate their studies regarding the efficacy of the protein and conduct Food and Drug Administration safety and toxicity studies.

“I also cannot say enough of how proud I am to be a part of NellOne,” said Malkes. “It’s a company founded by two women, one of whom is a minority, and that’s where I get to work. This is not what Knoxville looked like in 2000, but it’s happening today, and it’s real. I truly believe these are the things that take a community to the next level. That’s what people should know: There’s momentum, come join us.”