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New Enterprise Forum Begins
25th Year Of Helping Start-Ups
At a recent NEF Meeting (left to right) David Parsigian, Managing Partner, Honigman Miller Schwartz and Cohn LLP; Mahendra Ramsinghani, Managing Partner, First Step Fund; Andrew McColm, Managing Partner, Early Stage Partners; and Ted Dacko, founder, Arbor Dakota, as moderator. (Photo by Mike Gould.)
By David Baker and Margaret Baker
Start-up businesses are critical for U.S. economic growth. The Kaufman Foundation estimates that start-ups create an average of 3 million new jobs annually. And while each year more than 600 thousand businesses are started, according to the SBA Office of Advocacy estimates, well over 500 thousand are also closed.
Starting a business is difficult, risky, and nerve-wracking, so entrepreneurs willing to take the leap need resources to help ensure success. The New Enterprise Forum (NEF), located right here in Ann Arbor, is a shining example of such a resource. NEF's mission is "to link entrepreneurs with management expertise, joint venture partners, business services, capital,and other critical resources."
Jan Gensheimer, President of NEF talked to us about the role NEF has played in helping to spawn new companies. "NEF was formed in 1986, by the local entrepreneurial community," Gensheimer explains. "This entrepreneurial community is made up of VCs, bankers, lawyers, accountants, consultants, etc. who want to create an environment where entrepreneurs can come together and get their pitches ready to go in front of investors."
Gensheimer elaborates, "These are two things that are really hard for the scientist or a technician who has come up with an idea. The first is finding a way to articulate the idea. The second is showing that the market is ready for and willing to spend a lot of money to provide a good return for investors. That's often really hard for the founder and is something the NEF coaching teams and the NEF network is really good at recognizing."
NEF creates exactly the environment entrepreneurs need to test their ideas. Each month—on the third Thursday—they host what they call one "Showcase Presenter," where a CEO is invited to pitch to their idea and business plan to the forum. "We don't take everyone that comes to New Enterprise Forum," Gensheimer explains. "We only select companies that have high growth potential and are what we view as fundable deals. The Showcase presentation is primarily for angel investors and early VCs. NEF gets the company leaders coached and ready, and then we put them up in front of our forum to practice their pitch and get used to the community."
The coaches that NEF provides to the Showcase Presenter are a key aspect of NEF's value to these entrepreneurs. "One of the big things New Enterprise Forum does is put a team of volunteer coaches around an early-stage company that's got a business plan and is trying to get its pitch ready to go in front of investors. Those volunteer coaching teams take a start-up idea and drive that story forward so that they can go in front of funders or business partners; people who want to invest in the business and help it grow."
"We've never had a [paid] employee," Gensheimer states emphatically. "Never have, never will. We have a board of directors made up of successful business leaders who volunteer their time for NEF. And we have close to 50 volunteer coaches that form the coaching teams to help the companies prepare their pitches. And we have 20-30 stakeholder companies in the community that each throw a little bit of cash down to underwrite the cost of the organization. That's what makes the organization work: the stakeholders, the coaching teams, and the board of directors, all contributing their networks, their contacts, and their time to help the companies that come in front of us to move forward. "
Diane Durance agrees. Durance has been on the board of directors for NEF for 7 years and is currently the VP of Programs for NEF. Durance has the unique experience of presenting twice as an NEF Showcase Presenter: once in 1990 for Lexicom Publishing Group, after which she received an investment offer but decided to decline, and another time in 2000 for Home Run Services.
"NEF is an amazing organization," Durance exclaims, "and it's completely a volunteer organization. NEF has engaged such talented people throughout the years. The people on the board and on the program committee have tremendous insights to share with budding entrepreneurs. They just want to see entrepreneurs be successful. And even though there are a lot more people than ever before in Michigan engaged in supporting entrepreneurial activity, the community of NEF was there before it became cool; before everybody else in the state 'got it' that supporting entrepreneurial activity is important."
In addition to the Showcase Presenter Forum, NEF also provides an Open Forum for anyone attending the event. Here entrepreneurs have a 30-second opportunity to describe their companies and the resources they need. And unlike the Showcase Presentation, there is no restriction on who can participate.
Gensheimer comments, "The Open Forum allows everyone in the room to say why they're there. We see a series of people who come to our meetings who are or become part of a coaching team. We see repeat, long-time established members of the entrepreneurial community that are either giving back to the community or they simply make it their business to support this community.
We see service providers who support this community, such as accountants, lawyers, or consultants who are proud to have their clients featured as a Showcase Presenter or who are out looking for clients. We see a group of people who are in between jobs or in transition, or students looking for jobs or ideas. And we see entrepreneurs who are simply there with their idea; they may not be ready to do a Showcase Presentation yet but they just want to introduce their idea for the first time. An NEF meeting is an ideal place to test and float an idea then network with others who might be able to help them drive their business forward. "
TRENDS IN ENTREPRENEURIALISM
Currently, Gensheimer notes, there are two clear trends in entrepreneurialism. "First, we see a lot more innovators who, in previous years, would never have had the courage to go out on their own. Today, however, they are either being pushed by the sagging economy or being incented to work at achieving alternative incomes that caused them to take this idea that they've been noodling around with and try to turn it into a business."
"The other trend we see is that the science is moving so fast and there are so many opportunities that are happening so quickly. New technology is developing so rapidly that entrepreneurs are trying to get an idea out there quickly and see if they can get traction with it and make a company." Certainly, there is no shortage of companies that have been successful in this business climate. And NEF has been there for many of them.
"In general, there are three things that make every company successful. First, you have to have an idea; a notion, a product, a service – the thing. Second, you have to have a way to make money on it – a market that's willing to buy it. And third, you need a leader who can execute it. Three legs of the stool: the product, the market, and the leader. And we hope that when we work with these companies at the earliest stage we are able to coach the leaders to better validate their product and identify their market."
Below are just some of the companies that have been Showcase Presenters at NEF and have continued on to become successful ventures. NEF does not claim to be solely responsible for their success, but NEF does consider the Showcase Presenter process to be a helpful part of the company's development.
"These companies were supported by many other places in their early stages," Gensheimer qualifies. "We are the first ones to tell you that the people who come to us for coaching don't come just to NEF. They work in the whole eco-structure. But we are proud to say that all of these companies, except for the new presenters in 2010, have gone through NEF and have developed, grown up, been sold, or have been acquired at some time."
SoloHill Engineering (www.solohill.com)
(1986 NEF Presenter, NEF's founding year) SoloHill is a biomaterials research and manufacturing company in Ann Arbor. Since their initial presentation to NEF in 1986, SoloHill has continued to receive funding, such as a 2005 NIH grant of $387K to develop less costly flu vaccines using its microcarrier beads. SoloHill continues to grow, securing a patent in May 2009 and experiencing 2009 revenue growth of 100% over 2008.
(1988 NEF Presenter) ArborText, now PTC, makes an XML-based document processor that enables companies to manage and deliver product information on demand. Jim Sterken and his team took an initial $40k investment and built a $40 million company that was then sold to Massachusetts-based PTC, a global firm that provides product lifecycle management solutions. PTC continues to retain ArborText operations in Ann Arbor.
Aastrom Biosciences (www.aastrom.com)
(1993 NEF Presenter) is provides enhanced autologous cellular therapies (cell-processing technology) for use in the treatment of severe, chronic cardiovascular diseases. On February 6, 1997, Aastrom went public, selling 3 million shares that generated $21 million, and is traded on the NASDAQ (ASTM).
Assay Designs (www.enzo.com) (1994 NEF Presenter) Ann Arbor-based Assay Designs began in 1992 and is now part of Enzo Life Sciences, a division of Enzo Biochem. Assay Designs provides kits and reagents for the detection and quantification of small molecules and proteins. In 2005, Assay Designs received $5 million in funding from private equity firm Ampersand Ventures. In 2009, Assay Designs was acquired by Enzo Biochem for approximately $12.2 million in cash.
1996 – BlueGill (www.fiserv.com)
(1996 NEF Presenter) In 1996 Hal Davis founded BlueGill Technologies, a company that pioneered internet billing and statements. In 1999, CheckFree Holdings, announced plans to acquire BlueGill for shares 3.2 million shares of CheckFree Common Stock for all outstanding BlueGill Capital Stock, based on a valuation of $250 million. CheckFree was later acquired in 2007 by Fiserv, Inc., a provider of financial services technology, and trades on the NASDAQ (FISV).
T/J Technologies (www.a123systems.com)
(1997 NEF Presenter) T/J Technologies, now A123 Systems, develops lithium-ion batteries. In 2006, T/J Technologies was acquired by Boston-area A123 Systems and, despite initial plans of leaving Ann Arbor, retained 300 of the 1,000 employees in Ann Arbor.
(2002 NEF Presenter) Founded in 2002, Ann Arbor's HandyLab, now BD, developed a $100,000 platform called Jaguar™, a fully integrated molecular diagnostic system for molecular diagnostic assays and automation. Early investors in HandyLab were EDF Management and EDF Ventures. In 2009, HandyLab these investors were able to exit the company when the firm was sold for $275 million to NJ-based BD (Becton, Dickinson and Company), a global medical technology company.
Adaptive Materials, Inc. (www.adaptivematerials.com)
(2002 NEF Presenter) Adaptive Materials in based in Ann Arbor and provides portable power solutions with its solid oxide fuel cells. Adaptive Materials recently ranked #3118 on Inc. Magazine's "Inc. 5000" list and ranked #69 in the Inc. ranking of energy companies. Adaptive Materials was recently awarded a $3M contract for a 60-watt fuel cell system to the US Air Force. The contract is designed to determine the feasibility of power communications, surveillance, and other technologies for soldiers in the field.
Mobius Microsystems (www.idt.com)
(2002 NEF Presenter) Detroit-based Mobius Integrated Systems Corporation, now IDT, is a leader in precision all-silicon oscillator technology and delivers "system-on-a-chip solutions." Earlier this year in January, Mobius Microsystems was acquired by IDT in an all-cash agreement for outstanding Mobius shares.
Accuri Cytometers Inc. (www.accuricytometers.com)
(2005 NEF Presenter) Accuri provides life science researchers with easy-to-use, cost-effective flow cytometers (a technique for counting and examining microscopic particles). Since its inception in 2005, Ann Arbor-based Accuri has grown and developed its product base and is now entering the clinical in vitro diagnostics (IVD) market. In August 2010, Accuri announced a $6 million Series E preferred stock financing funded by many current investors, such as Arboretum Ventures, Baird Venture Partners, Fidelity Biosciences, Flagship Ventures and the InvestMichigan! Accuri plans to use the proceeds from the Series E financing to support expansion of the Accuri C6 Flow Cytometer® System into the clinical in vitro diagnostics (IVD) market
2010 - Family Mint (www.familymint.com)
(2010 NEF Presenter) FamilyMint is an online subscription service that gives parents the opportunity to help children become skilled at managing money. Jeff Eusebio is CEO.
2010 - RetroSense Therapeutics (www.retro-sense.com)
(2010 NEF Presenter) RetroSense Therapeutics is a start-up that has a solution to restore sight for people who have dry macular degeneration. Sean Ainsworth is CEO.
2010 - Bandals (www.bandals.com)
(2010 NEF Presenter) Bandals designs and sells stylish fashion sandals and flip flops that are adjustable and interchangeable. They recently received $250,000 from Hennessey Capital for new product development and marketing. Tom Sesti is CEO.