Economic Development, Food Service & Agriculture, and Small Business & Startups

Ag-tech incubator invests in startups

Organization offers consultation, assistance to entrepreneurs.

September 9, 2016
| By Pat Evans |
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The agriculture industry is changing, and the Great Lakes Ag-Tech Business Incubator wants to ensure entrepreneurs in the Midwest are ahead of the curve.

The incubator began as an idea by the Ottawa County Board of Commissioners in the midst of the Great Recession as a way to become more involved in economic development and was spun off from the county to become an independent nonprofit in 2014.

“It was really about, ‘Let’s think of the opportunities to create jobs and businesses without duplicating what other agencies are doing,’” said Paul Sachs, the executive director of Great Lakes Ag-Tech Business Incubator.

The organization provides agricultural entrepreneurs with support and consultation throughout a business’s development, all for a 2 percent cut of revenue once the business begins to generate money.

Ottawa County pitched an idea of an agricultural technology incubator to the U.S. Department of Agricultural and received a grant for a feasibility and market needs assessment, which came back “overwhelmingly positive for business support for ag-tech development,” Sachs said.

Sachs said agriculture is one of the most important industries in Michigan but is often forgotten, as consumers can go to a supermarket and pick up fruits, vegetables and meats without thinking about where it comes from.

While some consumers might take the state’s production for granted, the industry still must care for its resources, which includes maximizing space and efficiently producing better products, Sachs said.

“We live in one of the most diverse regions for crops and what we produce,” Sachs said. “Farmers are highly innovative, and we have expanding industries circling the farms from technology to processing, and we found a natural niche that we saw for developing this incubator.

“It’s pivotal that we create this support system to support agriculture and move it to the future on being able to provide sustenance for a growing population.”

Through a two-year pilot program starting in 2012, the Great Lakes Ag-Tech Business Incubator gained the attention from the state, which granted the program $500,000 to support the incubator’s first three years of official operation and help take it from a statewide incubator to a regional incubator.

Sachs took the helm as executive director in May and said the organization has gained momentum, as the organization’s leadership sets their sights on the future.

In June, GreenStone Farm Credit Services announced a $25,000 contribution to the Great Lakes Ag-Tech Business Incubator, along with financial consultation, lending services and business training to incubator clients. GreenStone is one of eight partners that offer services at deferred, discounted or pro-bono rates for Great Lakes Ag-Tech Business Incubator clients.

“For the last century, GreenStone has supported organizations, programs and initiatives dedicated to advancing agriculture,” GreenStone President and CEO Dave Armstrong said. “This partnership with the Great Lakes Ag-Tech Business Incubator fits with our commitment to help Michigan ag-technology-based businesses get started and become successful.”

The other partners are Ottawa County Farm Bureau, West Michigan Community Bank, Warner Norcross & Judd, Rehmann, Consumers Energy, Watson Intellectual Property Group and Bizstream.

Support provided by the Great Lakes Ag-Tech Business Incubator includes securing patents; developing prototypes; setting up manufacturing consultants, business plans, projects and client negotiation help; and marketing.

“It’s a whole range of needs,” Sachs said. “We’re looking at whatever our clients may need and help them or set them up with someone who will help them.”

Working with two current clients, Sachs said there also were three preliminary agreements that didn’t pan out through the vetting process.

“When starting a new business, there are hurdles, and not every idea will make it,” he said. “We try to make sure they have the tools they need and hands-on assistance to get them over those hurdles to get up and running.”

Sachs said there are a lot of entrepreneurs looking at the agricultural industry, many of whom grew up on farms, and see opportunities in technology and other industries that can be applied to help advance family farms.

Farmers also are “natural problem solvers” who fix an issue on their own property and look to create products to sell to other farmers who often have the same issues, Sachs said.

When the Great Lakes Ag-Tech Business Incubator was started, Sachs said few, if any, other incubators existed. Now as the importance of agriculture grows, the incubators and accelerators are popping up across the country.

An incubator in Iowa is supported by DuPont and John Deere, which takes six clients through a program, gives them financial assistance and sends them on their way, Sachs said.

“We don’t operate that way; every client has different needs” he said. “We’ll work a minimum of three years with a client, so we make sure to push them to success.”

Working with two clients currently, Sachs said he wants to add another two to three clients by early 2017 and have up to 10 clients by the end of 2017.

“We only work with companies we’ve vetted and that we know will have market opportunities,” Sachs said. “If we have eight clients, it means we are fairly certain we have eight clients that will make an impact and create successful companies here in West Michigan.”

Sachs said potential clients “have never flinched” when told about the 2 percent gross sales fee the incubator will collect once the company starts generating sales.

The three-year grant from the state is supported by the sponsor organizations until the organization will generate enough from the service fees to be fully independent, Sachs said.

“It will take a while for us to be wholly sustainable,” Sachs said. “We become partners in the companies and do legwork and help them move forward. If we do not help them, they don’t pay anything. We’re invested in making them successful.”

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