Editor's note: This article was published in the Record-Eagle's Momentum '19 special publication. For more stories from northern Michigan's economic engine click here to read Momentum in its entirety online.
TRAVERSE CITY — By most any measure, the launch of the 20Fathoms technology and entrepreneurship incubator in Downtown Traverse City is a tremendous success.
With 50 members participating and hosting almost two dozen start-up operations since opening last July, 20Fathoms Executive Director Andy Cole said the incubator has vastly exceeded its early forecasts and in less than a year is more than 95 percent self-sufficient.
“We’re two to three times ahead of where we thought we’d be projection-wise,” Cole said. “It’s starting to expand in our minds what is possible.”
Two local companies — Atlas Space Operations and SampleServe — have already “graduated” from the 20Fathoms space into their own locations, and both have raised more than $1 million in investment funding, Cole said. He estimates that close to $4 million in salaries has been generated so far by the businesses operating in 20Fathoms — about half of that total being paid locally.
Cole said the “secret sauce” to the incubator’s early success is the involvement of a handful of corporate members who are able to provide valuable business services to the start-up companies including accounting, legal and e-commerce advice, along with general business mentoring. Members also share information and expertise among themselves and have access to state-of-art conference facilities to help them connect to information resources across the globe.
“Ninety-nine percent of our stuff is free for everybody” who joins 20Fathoms, Cole said.
While Cole is pleased with the incubation phase of the incubator, he’s even more optimistic about its future. 20Fathoms recently completed a grant application to the U.S. Economic Development Administration that would generate another $1.5 million in federal grant and matching funds to accelerate its growth and programming.
If the effort is successful, Cole said 20Fathoms’ focus will be expanded in four key areas:
— Talent attraction
“We have to help our members get really good talent,” Cole said. Most skilled tech employees already have budding careers or no shortage of job opportunities, he said, so it will take a concentrated effort to lure desirable employees to northwest Lower Michigan. But the Grand Traverse area has advantages over other parts of the country that make it attractive to potential employees.
“The reason that we’re doing so well entrepreneur-wise is that Traverse City wins on lifestyle,” Cole said. “These are people that prioritize lifestyle.”
— Access to capital
Cole said a vast majority of the country’s investment capital is going to the major metropolitan areas of New York, Chicago and San Francisco, and that start-ups and budding tech companies typically locate where that investment is centered.
“If we want to keep our talent, we need to improve our access to capital,” Cole said.
To build those resources locally, Cole wants to develop investor recruiting programs, expand financing and investing workshops, and conduct more social meet-ups to create more connections between potential local investors and viable start-up operations.
— Developing a health technology cluster to improve the general health and well-being of Northwest Michigan.
— Expanded education opportunities with partners like Northwestern Michigan College, Michigan Technological University and Michigan State University, along with other education resources, including the local SCORE chapter and the Michigan Small Business Development Center. Cole also wants to grow the web-based educational opportunities available at 20Fathoms.
“There’s a wealth of knowledge we have access to our in our community,” Cole said. “We need to be able to take advantage of that.”
As one of just nine participants selected for the 2019 Rural Innovation Initiative involving tech hubs and smaller communities across the country, Cole said 20Fathoms is well positioned to accelerate the success of its early operations.
“Maybe we have a template that communities across the nation can use,” he said.