The Forum - 05/05/2007
Tech Hub Aids Valley
By Melinda Rogers, The Forum
The last time Barry Batcheller launched a new company, his office was perched above a Chinese restaurant.
“We had a little office building before we went into a larger broom closet,” said Batcheller, who has started several North Dakota businesses and is now chief executive officer of Appareo Systems in Fargo.
“You’d bring people in there and they’d say ‘um, that’s nice,’ ” he said, laughing.
Batcheller no longer needs to worry about his clients’ take on the appearance of his offices.
Appareo has a new home – along with four other emerging technology businesses – at North Dakota State University’s Center for Technology Enterprise.
The striking $6 million, 52,663-square-foot building near the intersection of 19th Avenue North and 18th Street in Fargo is designed as a hub for technology startup companies and intended as an economic development tool to foster growth of high-tech businesses in North Dakota and northwestern Minnesota.
Five technology businesses have recently moved or are in the process of moving into the facility.
Appareo, which makes electronics for the aviation industry, joins Pedigree Technologies, Precision Partners, Feed Management Systems and anchor tenant Bobcat Co. in the incubator’s inaugural class.
Each falls into a field that aligns with the incubator’s focus on enhancing entrepreneurship in the material sciences, bio and life sciences, information technology, nanotechnology, advanced manufacturing and sensors/micro-electronics industries.
Those industries were cited in reports by the Greater Fargo-Moorhead Economic Development Corp. as areas the Red River Valley needs to build on in order to stay globally competitive.
“Right now, our goal is to get it up and going and fill it up with companies so we take the risk out of the equation for some of these small businesses,” said Terri Zimmerman, a business development specialist for the incubator.
She said the goal is the businesses will thrive after two to three years in the incubator, move out and create new revenue for the region.
The incubator will also house a program called Bison Ventures, which pairs students from the NDSU College of Engineering and Architecture with business students in hopes of building on ideas between students and faculty to create spin-off companies. NDSU Professor Dan Ewert is leading those efforts.
A goal in the making
The venture builds on NDSU’s research progress when it established the Research and Technology Park in 2002, said Tony Grindberg, a state senator and the park’s executive director.
Grindberg was charged with establishing a business incubator at NDSU and building an entrepreneurship portfolio shortly after becoming the park’s first employee in 2002.
A consultant’s report by California-based Claggett Wolfe Associates completed in 2003 showed the idea would be feasible if tenants paid rent and if the university raised money for the project through a capital campaign.
The 2003 North Dakota Legislature approved
$1.25 million for the incubator as part of Gov. John Hoeven’s Centers of Excellence initiative. Another $2.4 million came from private and public sources. The city of Fargo awarded the project a $200,000 grant.
Remaining cash flow was raised, propelling the capital campaign to meet its $6 million goal last year, Grindberg said.
As construction wraps up and tenants move in, Grindberg said it’s rewarding to see the concept move to reality.
“What we’re providing is an opportunity to further accentuate growing our own economy by creating more technology companies,” Grindberg said.
“New ideas germinate and become successful organizations and provide new jobs for the community,” he said. “There are entrepreneurs that will migrate to Fargo-Moorhead and want to be a part of what we have to offer.”
NDSU President Joseph Chapman said the incubator puts North Dakota on the forefront of economic development initiatives across the country.
The university’s research park quickly expanded, much to the surprise of some who have had trouble building similar parks across the U.S., Chapman said.
Companies like Phoenix International and Alien Technology decided to locate in the park.
Not including the incubators’ companies, return on the growth of NDSU’s research enterprise has generated $8 for every new dollar from the state, Chapman said. That means nearly half of the school’s appropriations generate new taxes, he said.
Chapman said the incubator offers a chance to build on that success.
“I think this is a model that’s going to make big dividends for North Dakota,” he said. “We really are attracting people back here. We really are attracting established businesses.
“Some of these big companies are recognizing us as a player in a much bigger scene.”
Fostering success
The business incubator’s mission encompasses several things, Zimmerman said.
Supporting technology venture formation and growth, encouraging research and intellectual property development, providing an outlet for student and faculty education, and creating a financial return for the state are among top goals, she said.
Businesses that want a spot in the park contact Zimmerman and submit an executive summary of their business. Candidates undergo a formal application process consisting of a business plan review and panel interview.
This year’s crop of incubator businesses was recruited by Chapman and Zimmerman, or transferred from space at the university’s Research I and Research II buildings. Precision Partners went through the application process in December and was chosen for a spot.
Zimmerman, whose credentials include stints at Dakota Technologies, Wamnet and Great Plains Software, said she continually works with businesses that are potential candidates to move into the incubator. There are 10 she’s got an eye on.
Once they secure a spot, businesses can receive services such as client networking, links to university researchers or financing.
Zimmerman established a $1.6 million F-M Angel Investment Fund. The venture fund gives incubator businesses access to equity and financing, local banks and potential corporate partners.
A spot in the incubator also gives businesses a chance to bounce ideas off other emerging companies, said Jeff Nesbitt, founder of Precision Partners, which develops technology to help farmers boost profits.
“The things we’ve been thinking about, I don’t know how to get off the board and get to the ground rolling,” said Nesbitt, who started his business 10 years ago in Fergus Falls, Minn.
“(The incubator) is going to be a lot better situation than what we’ve done in the past, which has been whatever we knew how to do, that’s what we did. Whatever we didn’t know how to do, that’s where it stopped.”
Research connections the business can make as part of the NDSU incubator can change that trend, Nesbitt said.
Batcheller, who co-founded Phoenix International in Fargo in 1987, is also optimistic about what the incubator will do for Appareo’s success.
The company has already secured contracts with the U.S. Air Force and its products will undergo a 90-day air wing deployment test with the U.S. Navy in Florida this month. Favorable outcomes could mean big future business.
Batcheller said the incubator complements the growth of technology businesses across the Red River Valley.
“I think this whole growth scenario is part of the momentum,” he said.
“I look at the incubator building and I’m really pleased.”
Readers can reach Forum reporter Melinda Rogers at (701) 241-5524
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