By guest authors Irina Patterson and Candice Arnold
Ken: I wish you could interview all of our ribbon partners. We have work going on in Cadillac, Michigan, in Claire, Michigan, in Mt. Pleasant, Michigan, in Marlette, Michigan. Some of these are pretty small towns. We’ve got groups supporting small businesses, bringing them what we believe are cutting-edge technologies and access to capital.
Irina: Is your geographical focus the entire state of Michigan?
Ken: Yes. It’s starting to get there. I was going to say the upper peninsula . . . we usually, say we cut off at the bridge, which is the tip of the lower peninsula in Michigan. Now, we’ve been asked to do some work [in other parts of Michigan].
[For example], Michigan Tech is a great research university. They have a phenomenal engineering program. Their challenge is that as they try to commercialize, they’re in a small town. They don’t have connections to capital, to marketing and service support groups. If you’d have asked me a month ago, I would have said the lower peninsula. Today, I guess it’s fair to say that Michigan is our target area.
Irina: How do you find your entrepreneurs?
Ken: They come directly to us through the website at mmic.us. For our outreach, we use the BOOST program, where they showcase their capabilities. The BOOST events have been really important.
We’ve had well over 100 companies go through this process of having an elevator pitch reviewed and judged by the economic support organizations, the university faculties, the entrepreneurship institutes at these schools, and the SBDC (small business development center). We use those groups to vet these companies.
Often, part of that vetting is telling those companies that affiliation with the innovation center could help them in key ways.
What we try to provide in that membership are educational programs on raising capital, valuations, receivables, managing receivables, and bank relations.
We’re putting together banking forums today with CRA officers. The Community Reinvestment Act has officers in almost all banks, which are looking at how to support local economic development and local reinvestment.
In Michigan, they’re telling us they’ve got money to lend without adequate applicants. Here, we’ve got investments that are capital ready if we can get our companies ready.
I think that’s what I’ve heard from most venture funds. They’re not afraid to invest here if they see the deals, if they see the opportunities. We hope that we’re pushing companies through this pipeline.
We recruit companies through the BOOST and our outreach programs and through the ribbon network. I would say 90% of our companies have been referrals.
Irina: How do you process the applications?
Ken: The applications, because we don’t see ourselves as a welfare program or a highly subsidized program. Fee for service is an indicator.
We do not take an equity position in early-stage companies. The angel investment groups might provide some of that capital. Our screening has been not that rigorous.
We’ve tried to move to at-market rates – or, excuse me, actually above market rates. So, it’s market plus fee for service. We expect our customers to pay for our services. That makes it a little hard for the startups. In our earliest-stage companies, hotel [office space rent] is more likely than, say, labs [to be] the more expensive space.
Irina: What is your membership fee?
Ken: We start at $100 a month. That allows hotel and access to all of our training, educational workshops, forums, online content.
We’re working on expanding the mentor match-up for the entry levels. That is going to be an automated service, not the one-on-one coaching.
What we have found is that we’ve got a great support of retired professionals to provide mentor services. Most companies in the innovation and growth stages don’t need a single mentor. They actually need coaching on various topics or tasks.
Say, I’m looking at intellectual property, and I want to go to China. What are the best ways to protect myself?
Or, I’m trying to raise capital, and my books have always been on a cash basis, and I need accrual accounting to put together historical financials to give to investors.
Those are the types of tasks we are trying to service now through a large portfolio of student labor. We have a highly talented pool of MBA and graduate students from three area universities who are available for on-demand labor services.