News

Each year for twelve years, Michigan entrepreneurs have vied for the opportunity to be recognized as one of Michigan’s 50 Companies to Watch. This dynamic program opens up new worlds for Michigan’s successful entrepreneurs, by introducing them to each other and customers, suppliers, legislators, expert resources, and relationships around the state. The program kicks off September 1 with companies from around the state in every industry being nominated for the innovation and growth that makes them “worth watching.”

Entrepreneurs are welcome to nominate their own companies. Business bankers, CPAs, attorneys, and other professionals are encouraged to nominate their exceptional clients. Consider your customers and suppliers – among them is a company that would be exciting “to watch.” 

Your nomination can put a deserving second-stage growth company in the spotlight. Each year 50 second-stage Michigan companies are selected for the impact they make in their markets, in their communities and in the state. We’re looking for companies that are notable for their marketplace performance, innovation, philanthropy and empowered employees.

The 2016 awards will be presented at the 13th annual Michigan Celebrates Small Business (MCSB) event on Thursday, May 5, in Lansing. This prestigious event attracts an audience of 1,000 and has played a key role in supporting and recognizing the achievements of Michigan’s new economy businesses from all parts of the state.

Among the recipients of the 2015 Michigan 50 Companies to Watch awards, are Algal Scientific, BEET Analytics, Histosonics, and Varsity News Network – all companies that have gone through the NEF Coaching Team process or were coached by NEF for Michigan Growth Capital Symposium or Accelerate Michigan Innovation Competition. A complete list of award winners can be found on the event website at http://www.michigancelebrates.biz/the-event/2015-award-winners/

 Nominations will be accepted beginning September 1 at www.michigancelebrates.biz. For more information contact Diane Durance at ddurance@miquest.org.

 

As the culmination of the DTX Launch Detroit program, an intensive 10 week student (undergrad, graduate and 2 years post-graduation) technology-focused accelerator program, TechTown Detroit hosted the Showcase event on Thu, 30 July. Approximately 200 people attended, with visitors coming from as far away as Kalamazoo.

Following is a list of the team that presented, a very short summary of their product/service, and the name and email address of the team lead. Those who can help these teams further develop their ideas are encouraged to contact them.

Assistive Robotics: A stability enhancing lift device that aids a person in standing with their own power from a seated position in the therapist’s office. James Jones, jonesje3@udmercy.edu

CAREPRN: A trusted digital marketplace providing easy, immediate access to certified in-home care professionals in moments of crisis. Jason Wolfe-Greer, Jason.wolfegreer@gmail.com

COSA: an online collective of student artists’ portfolios to advance their art careers. Connor Borrego,  conrbor@umich.edu

DineRoll: A community-focused marketing platform for driving new business to local restaurants through food events. Jasmine Rostkowski, jasmine@dineroll.com

MySwimPro: A mobile application that delivers individualized swim training and tracking for masters swimmers and triathletes who are focused on improving their performance and health. Fares Ksebati, fksebati@gmail.com

Optis Creative: A video game crowdfunding service that protects donors, also known as backers, by overseeing development and financing of funded projects. Aigbe Idahosa, aigbe15@gmail.com

RealTime: A platform for college students to create and find local pop up events. Shreya Arora, ashreya@umich.edu

SteerPeer: A mobile platform that matches college students with peer tutors. James Biller, Jamesbiller7@gmail.com 

Student Connect: An app that allows international students to get their non-academic questions answered faster than contacting an advisor. Kevin Mendez, kpmendez.a@gmail.com 

Syntheslide: An inexpensive digital pathology solution that allows pathology staff to scan and share microscope slides with their smartphone to help remotely diagnose patients. Nakul Shankar, Nakshank@gmail.com 

The Broke App: A mobile, personal finance tool that allows banks to reach and teach college students how to build wealth for the future based on their current spending habits. Kristen Sheppard, shepp@umich.edu

The Mission of the New Enterprise Forum (NEF) is to Coach (Help Entrepreneurs develop effective communications to reach potential investors), Perfect (Develop investor-ready presentations and Executive Summaries), and Connect (Provide help to reach the investment community).

One of the most difficult things for any new business are the issues facing an entrepreneur in the arduous journey funding.

This slide show has great information about the process. NEF has some different approaches to the presentation process, but the points made are critical for every entrepreneur seeking funding.

http://www.slideshare.net/InspirationalMoments/pre-funding-essentials2pdf-to-upload?from_m_app=ios

SCORE recently ran an article (Ann Arbor News, June 14, 2015) discussing how inventory control is part of a sound management strategy.  Without good controls companies can run into financial difficulty.  Good inventory management is a difficult, but necessary, balancing act.  While excessive inventory can tie up significant amounts of cash, a shortage of inventory will drive your customers to other vendors. 

In addition to the cost of acquiring inventory, there are hidden expenses for its storage and handling including insurance, damage to product, and even obsolescence.  Time (and money) spent both taking a physical inventory and just searching for needed products can add up quickly when the inventory is not well managed.

One other important inventory issue not discussed in the article is configuration.  Most companies go through a number of revisions during the design phase of their product and startups are no exception.  Many of these design cycle changes never see the light of day or only as a mock up or prototype.  However, once product is released for sale, engineering changes continue to happen.  This means different customers are actually buying different products.  This can be true with software as well as hardware items.

It is important to know how to identify what revision product a customer has purchased.  This becomes a critical issue if there are product complaints from your customers, technical questions, or even the worst case scenario of a safety recall.

A good rule of thumb is that whenever a change is made to the form, fit or function of the device, the change must be recognized and a new internal part number assigned to the item.   Other types of changes such as drawing corrections or clarifications are usually managed by a change to the item’s revision level.  Your marketing name can stay the same, but your product label and sales records must reflect the correct configuration.  This will provide better customer service down the road and assist in controlling product liability issues.

Many of us do not think of restaurants as heavy users of technology but as with all businesses that realm is changing. Recent surveys and articles outlined in Nation’s Restaurant News point out that consumer and demographic trends are changing the way that restaurants, particularly in the pizza, fast casual (think Panera) and quick service areas (McDonald’s Wendy’s, etc) are doing business or will be doing business in the future. “Technology-friendly service in restaurants has become important to consumers broadly, and to Millennials and Generation Z customers, it’s essential,” said Colleen Rothman, manager of consumer insights for Technomic, the firm which conducted the survey.

 Ann Arbor based Domino’s is the recognized leader in digital ordering and attributes its 14.5% sales growth in the last year to a variety of apps and digital ordering innovations, including just introduced text ordering, that allow it to compete against less tech savvy competitors.   These competitors include many smaller chains and independents that do not have the breadth of technical expertise that Domino’s can muster.  Perhaps that underserved segment represents an opportunity for the right service provider or app. 

Interestingly, Hungry Howey’s, also Michigan based, was ranked second in the survey conducted by Technomic for offering the most digital options for customers to interact with the company.  These included ordering but also offering of reward and loyalty points.  Surprisingly, the high end full service Capital Grill received high marks from  the survey respondents for its I-Pad based wine list and related wireless ordering program.  Among others listed in the top ten companies as the offering the best digital options were Starbucks and Chic-Fil-A. 

Industry growth and demographic trends are also contributing to the use of additional technology in restaurants. Jim Sullivan, an industry consultant and speaker, notes that growth in the industry is projected to require an additional 1.7 million jobs in the next few years.  Currently there are not enough good workers to fill those jobs and immigration probably won’t fill the void as no solution is likely in an election cycle nor will many members of Generation Z, as they do not appear to be clamoring to work in the industry.  Thus, Sullivan feels that tablet menus and ordering from them in full service establishments and the growth of menu kiosks in fast food locations will offset the need for around 680,000 servers and cashiers by 2020.  Additionally, he sees that the growth in electronic payment methodology will ultimately disrupt the need for cash registers and point of sale systems resulting in the need for fewer bookkeepers. 

On the unit manager side, he sees the acceptance of wearable technology like the Apple Watch and android watches and apps that work on them providing “managers real-time updates on how to control food costs, utility usage and labor efficiency, with specific suggestions on who to cut early and how to schedule the next shift based on weather, history and promotions. New customer-to-regular ratios and diners’ frequency numbers will also be relayed live, improving table visits and repeat business.” These tools when coupled with camera systems will lead to the ability for the manager to monitor activities in the dining area, the bar and the back of the house on a real time basis.  He believes that this will lead to improved operating performance and training in the restaurant.    

What does all this mean?  It means there are opportunities in all types of business to develop technologies that can disrupt the current means of doing business and to offer value to operators in that business segment.  Look at the current environment to determine where the problems are and where they will be and consider how those problems can be solved.

TechTown Detroit, in partnership with Bizdom, Invest Detroit, the Detroit Creative Corridor Center, the Henry Ford Innovation Institute, NextEnergy, and Techstars Mobility - driven by Detroit, is currently running the 2015 DTX Launch Detroit program, a 10-week summer accelerator for college students and recent graduates aspiring to launch a technology startup. This year’s cohort comprises 11 teams, with 26 participants from 10 Michigan universities.

Launch Detroit’s curriculum is based on The Startup Owner’s Manual, a step-by-step business development guide written by famed serial entrepreneurs Steve Blank and Bob Dorf. The key focus of the program is for the teams to speak with potentials customers for their products to discover if there is a real market need, as opposed to be a cool idea about which those outside the team do not care. This is a proven process, one used by the National Science Foundation (NSF) iCorps program as it has been shown to dramatically increase the likelihood that the business will become successful.

NEF’s involvement with the program is significant. Viktor Brandtneris and Gerry Roston, NEF board members, are respectively the lead and assistant facilitators. Betsy Creedon, another NEF board member, is the program manager. Helen Ewing and Ian Charles, current NEF board members, and Sheu-Jane Gallagher, a former NEF board member, are team coaches. In addition, a half dozen NEF board members and program committee members have agreed to coach the teams prior to their presentation at the final showcase.

Those interested in seeing the results of the teams’ efforts are invited to the showcase event, to be held on Thu, 30 July, from 4:00-7:00 pm, at TechTown; see http://www.eventbrite.com/e/dtx-launch-detroit-showcase-2015-tickets-17505583672 for more details.

NEF coached Advanced Cooling Therapy has received de novo clearance from the Food & Drug Administration for their first product, an esophageal cooling device. This follows on the heels of their CE mark clearance in Europe in 2014. Please visit the following link to read the full statement: http://www.businesswire.com/news/home/20150624005300/en/Medical-Device-F...

Herb Gibson of GAPro System, a past NEF coaching graduate, won $40,000 at PowerMoves@Detroit sponsored by Morgan Stanley.  PowerMoves@Detroit is part of a national effort to provide crucial support for early stage, high growth businesses.

Herb Gibson, CEO & Founder of GAPro System, gave a 7-minute pitch and came out on top over 4 other entrepreneurs.

Herb’s advice to other start-ups: “Believe in yourself and your vision.  You must be committed to your vision and possess a burning desire to succeed.”

Additional details can be found at:  http://www.morganstanley.com/ideas/power-moves-detroit/

 

The Internet of Things (IOT)

Panelists: Johnathan Murray, Managing Director of Draper Triangle Ventures (Moderator)

 

Kevin DiDio, Counsel for Varnum

Brad Erickson, Research Analyst, Mobility & IoT for Pacific Crest Securities

Denis Foo Kune, Co-Funder & CEO of Virta Laboratories

John (Ivo) Stivoric, VP of R&D for Jawbone

Matt Van Haaren, CEO of Pixel Velocity

Johnathan transported our imaginations back to what Rip Van Winkle might see in IT technology if he were to wake up today. Now, IT is all about sustainable value where hardware is great but you have to drive utility so it is a blend of software, service and hardware if you want to stay cutting edge. Turning to the panel, Johnathan asked each one to report in on their opinions of where IT is at in their sectors.

 

Brad: Smart From the industrial perspective, phones have been saturated in profit margins three years go. Components have been driven down in cost. Software needs to catch up. He sees the following opportunities: waste reduction in things like food and industrial equipment downtime; inventory management; delays of all kinds. He feels that the industrial side has more IT opportunities than does the consumer side.

 

John: From the consumer side, he feels people want to be understood and helped to understand their environment. Medical applications and how to use things are a hot spot for IT advances. Consumers are inundated with messaging and drown in the volume of interactions. Why not use IT to sort through interactions to limit them and create higher value. As an example, why look at all emails and texts in a clueless manner trying to understand who they are from or what they want and if they are important?

 

Matt: From the energy perspective, data collection from sensors is great but more value comes from making sense of the data to make correlations that; improve rapid decisions, allow for proactive responses, mitigate shut downs, and cut costs. The energy market has a lot to catch up in I devices and software as well as cloud-based systems.

 

Denis: From the security point of view, there are bottle necks in user trust around privacy, security, and data accuracy. Hackers exploit system weaknesses to gain passwords as entry to steel credit card information or links to getting credit card information. In the medical field alone, there are 12 million routers that are vulnerable today. The challenge of IT today is to design in security into new systems verses plugging holes in old systems.

 

Kevin: From the legal side, smart products will evolve into smart cities. Soon every company will be an IOT company. There are vulnerabilities in devices used to make our lives easier, such as, home monitoring devices. Manufacturers must keep up to date in not only thinking about how their device could be misused by the end user, but also in how the device could be used as a link to other devices for further crime. The FTC has three privacy challenges for IOT companies: 1) data collection, 2) potential for unexpected uses of consumer data, and 3) heightened security risks. Manufacturers should keep connectivity first in mind instead of just remediating after events occur. Your CIO and General Counsel need to be working together.

 

Observations: Sharing infrastructure has to be shared amongst companies in order to provide connectivity with multiple devices and platforms. Doing so introduces risk of non-compliant players introducing system vulnerabilities. Accreditation may be one way to mitigate this phenomenon.

 

People are voluntarily joining the internet collective to get value but what are they sacrificing? Privacy? Security? They still want the benefits without the risk or being harmed.

 

Companies do not want to air their dirty laundry (weaknesses) even to service providers who could prevent issues.

 

So what would Rip Van Winkle see if he were to wake up 10 years from now? Ideas: a car that nearly drives itself; automatic dispatching of repair teams in response to gas pipeline leaks; technology that allows the consumer to control their own privacy; a football deflating app on a watch; human interaction devices on touch screens or wrist devices providing emotionally important interactions; and a smart T-shirt to tell the wearer not only the calories of what they ate but how much exercise they will have to do to work it off. 

 

Main Street businesses have a growing number of non-bank sources for funding their growth.  Capital is flowing into the space.  Last fall, UK Based Funding Circle, LTD, raised a $37 million C round investment from a number of VC firms and partnered with San Francisco based Endurance Lending Network to form Funding Circle USA.  Like the UK operation, Funding Circle USA is a peer to peer lending network that makes a marketplace for small business loans. 

Broadly, the idea works like this.  Potential borrowers apply on line and are screened for approval.  Funding circle only will consider loans to businesses that have been in operation for a couple of years. Rates are reasonable starting out around 6%.  Loans are approved using a scoring model and funded rapidly with funding possible in less than a week.  Loans range in size from $25,000 to $500,000.  Approved and accredited investors that are part of the Company’s network of investors can choose to invest in the loan.  Funding Circle makes its money from modest fees charged to borrowers and investors.

Franchisees of approved concepts can receive loans from Apple Pie Capital, another investor funded platform.  Apple Pie, also San Francisco based, recently raised $6.7 million in an A round and has raised an additional pool of committed investor funds totaling $28 million to lend to franchisees of approved brands.  Like Funding Circle, investors select the loans they want to fund.   Unlike SBA loans from banks, approval is fast and personal collateral is not required.  Funding is available for start-up franchisees meeting approval requirements.

There are other platforms providing funding across the country.  Michigan, like other states, has authorized the creation of funding platforms that offer both debt and equity forms of funding to Michigan based businesses that are startups. This effort in Michigan is in its infancy.   Come to our June meeting to learn more from our panel about the current status platforms operating under the Michigan law known as the MILE Act and the Federal JOBS Act and their impact on new businesses.

Pages