CVTC business incubator 100 percent occupied

March 17, 2014

From leadertelegram.com: “Once scrambling to attract tenants, center aimed at helping fledgeling start-ups filled” — by Andrew Dowd – After struggling to fill a third of its space with cutting-edge entrepreneurs a few years ago, Chippewa Valley Technical College’s business incubation venture now is full.

Sweeping changes made a couple of years ago — changing the facility’s name from NanoRite to the Applied Technology Center, widening its target industries and focusing on a smaller geographic area — helped it reach a mark sought since CVTC began the venture in summer 2007.

“It’s virtually 100 percent now,” said Tom Huffcutt, CVTC’s vice president of operations.

With the exception of an office housing a CVTC employee and some hours available in a shared lab space, the center is full of businesses working on a range of projects.

“We seem to have a solid portfolio with tenants,” Huffcutt said, noting many have multi-year leases.

Super Vitamin D has spent the past two years in the center developing a transdermal patch, which will help people with chronic illnesses get the bone-strengthening vitamin by absorbing it through their skin as opposed to digesting it.

Though testing and the delicate chemistry needed to put Vitamin D into a patch took longer than they’d originally thought, the company’s D3ForMe product soon will be on shelves.

“Product is just going to be reaching market by early summer,” said Carla Leuck, marketing manager for the company.

The patches are being manufactured in Miami and packaged in Minnesota, but shipping and storage operations will be based out of Eau Claire.

Super Vitamin D currently has four employees at the Applied Technology Center, but that could increase after the product launches, Leuck said.

The company had moved into the center as it was undergoing its renaissance in early 2012.

Changing scales

When the center opened in July 2007 as NanoRite, it was marketed as a microtechnology and nanotechnology incubator for high-tech entrepreneurs.

While the NanoRite image was high-tech, forward-looking and enhanced the college’s image, CVTC President Bruce Barker said last week that working on that miniature scale was mostly the territory of big businesses and universities.

“Nano is not the area for start-up businesses,” Barker said.

The economy also was a factor as entrepreneurs were having a hard time getting money from lenders that had been tight-fisted from the Great Recession.

The center’s low occupancy point — 35 percent — was in 2010, Huffcutt said. At that time, OEM Fabricators had pulled out its micromachining division and another major tenant, Resonant MicroSystems, gave notice it would be vacating.

“Our costs were exceeding our revenues,” Huffcutt said.

Built to be self-sustaining and boost the economy, NanoRite instead had needed subsidizing from CVTC’s other enterprise programs — but never took a financial toll on the college’s general fund used for teaching students.

Something had to be done — either shutting down the center that had been running a deficit or finding a way to make it work.

“We knew we had to make a change,” Barker stated.

In Fall 2011, administrators presented the CVTC Board with recommendations to change the center’s image and increase its use.

Two years ago the center widened its scope while narrowing the area it was recruiting entrepreneurs.

The center’s name emphasized nanotechnology, though the center has other capabilities, and it was changed to the Applied Technology Center to attract a broader range of start-ups.

“NanoRite was actually turning some potential customers away if they were not operating at this level,” Barker said.

NanoRite recruiting trips used to include Chicago, California and East Coast cities, but they’ve since been scaled back to grow start-ups closer to home.

“We’ve really changed our focus to west central Wisconsin,” Barker said.

“Focusing more regionally, we had more success,” Huffcutt said.

Both the center’s broader scope and smaller reach have been positive, Barker said, noting that the three newest tenants are regional businesses.

In a vacant area in the building, CVTC built a computer data center that serves the college’s needs — saving it $80,000 annually that it used to spend to rent data storage space elsewhere — and other clients. The data center serves as CVTC’s main information storage site and houses equipment for WiscNet, UW-Eau Claire, Cooperative Educational Service Agency 10 and is courting other public institutions.

In addition, there is space for other private and public entities to easily install their own equipment in the secured, climate-controlled, well-connected data center that has its own backup power generator.

The Applied Technology Center also created programs catering to entrepreneurs working on a tight budget.

Fledgling businesses that can’t yet afford machinery now can rent time on CVTC’s equipment, a program that’s already been used by a half-dozen entrepreneurs experimenting with products.

The center also expanded its options to include short-term rental agreements to help fledgling start-ups, as opposed to starting out with office leases.

Pulling through

The changes and improving economy brought the center into “good health” about two years ago, Huffcutt said.

Though the budget year is not yet over or all the costs tabulated, he said this appears to be the first time the center is running in the black.

“Now costs and revenues are in line,” he said.

The newest tenant, Heartland Business Systems with headquarters in Little Chute, signed a contract earlier this year for space in the Applied Technology Center.

Heartland had done contractor work for CVTC’s computer network and helped build the CINC network used by local institutions. Between the data center, CINC network and proximity to numerous public sector customers, Mark Koxlien, general manager for the company’s business in western Wisconsin and Minnesota, said opening an office in the Applied Technology Center was very attractive.

Eighteen Heartland employees report to the Eau Claire office, Koxlien said, though most are field engineers who usually are visiting clients.

As part of its lease agreement, Heartland Business Systems provided videoconferencing equipment to the center for its use and that of other tenants.

Other tenants also allow CVTC students to use their equipment, including precision devices used by quality control consultants Advanced Inspection Services.

“It probably saved us a quarter of million dollars in capital expense to not buy the equipment they have,” Barker said.

Having the center full of entrepreneurs also helps the college keep its instruction relevant to the job market.

“That interaction between business and our faculty has been great,” Barker said.

The boom in tenancy shows that high-tech entrepreneurship is “alive and well” in the Chippewa Valley, Barker said, in the economic recovery that followed the Great Recession.

In the coming months, CVTC plans to report the center’s job creation statistics to the Eau Claire City Council and Eau Claire County Board, both of which contributed financially to start NanoRite.

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