Thursday, February 10, 2011

Jobs search: EDC uses a number of approaches

By Joy Campbell, Messenger-Inquirer
Published: Sunday, February 6, 2011 12:02 AM CST

We need good-paying jobs.

That has been a common statement at forums in Owensboro.

And economic development officials at local, regional and state levels across the country are incorporating a number of approaches to find those jobs.

One of the models is relatively new to Kentucky.

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The Emerging Ventures Center for Innovation and its bricks-and-mortar companion, the Centre for Business and Research at 1010 Allen St., now hold a relatively new place within the Greater Owensboro Economic Development Corp.'s long-term strategy.

Emerging Ventures, which is also called an innovation center or IC, is integrated in the state's innovation-driven economic development strategies.

This focus on innovation, however, is in addition to the traditional model of competing to win industries through tax breaks or other incentives such as cheap land or loans.

The EDC's website shows that agency's three main goals are to grow and diversify the regional economy, innovate and educate, and develop the community to attract people.

"It's a three-legged stool," said Madison Silvert, the EDC's executive vice president and Emerging Ventures' executive director. "If all you do is compete for plants, you can't sustain your economy."

What is an innovation center?

In 2000, the state passed the Kentucky Innovation Act. Soon after that, a Department of Commercialization and Innovation was created within the Cabinet for Economic Development. The DCI focuses on high-tech companies -- creating them, recruiting them and retaining them.

The DCI's goal is to create products, new companies and jobs for Kentuckians.

The state has six regional Innovation and Commercialization Centers (ICCs) and seven local Innovation Centers (ICs).

Emerging Ventures is Owensboro's IC.

Until last year, Owensboro's center was called a Kentucky ICC satellite, not a full-fledged IC. The main difference was the level of funding.

"We had to show that we had the stuff here," Silvert said. "The EDC raised the funds, and with the help of OMHS, U.S. Bank and the Messenger-Inquirer, we started our center."

Most people don't realize that companies such as MPD Inc. hold numerous patents, and Kentucky Bioprocessing has significant intellectual property, he said.

The push for Owensboro's innovation infrastructure came after Kentucky Bioprocessing ran out of space to lease to other high-tech companies in its area of plant-based therapeutics and pharmaceuticals.

"Even if the demand for this wasn't already here, it needed to be, and we needed the infrastructure to support it," Silvert said. "For three years, we demonstrated to the state that the demand was here and that a number of innovators were here and could use the help."

In 2010, the Owensboro IC became an equal with the other six state-sanctioned centers, and its funding increased to about $70,000.

Open for three years now, the center's resources are available in the Commerce Center at 200 E. Third St. It is a one-stop shop for people who want to start or are on their way to start a business, Silvert said.

The resources include access to the Senior Corps of Retired Executives (SCORE), which offers coaching and mentoring, and the Murray State University Small Business Development Center, which has been in Owensboro for about 30 years and can assist with business plan development and more.

"If you have an idea for a business, this is a great place for you," Silvert said. "We have a wide range of services for start-ups."

Another even more recent piece of the region's innovation efforts is the Entrepreneurship and Business Academy, one of five academies within the new Community Campus plan that will be offered through four regional school systems.

"We hope to create the next generation of entrepreneurs," Silvert said. "Big companies here, like WaxWorks and Titan, were started by local entrepreneurs. We want them to know that we support them and have a place where they can grow. And education is a big part of that."

Successful local companies will have a point at which they ask whether Owensboro is the place where they want to grow, Silvert said.

"We want to make sure we have the work force ready so that we can say, if you want to grow, you should do it here," he said.

Business accelerator poised to take off

The EDC leases about 37,000 square feet of space for the Centre for Business and Research from developer Malcolm Bryant, who owns the former tobacco warehouse. The center, also called a small business accelerator, is modeled after WKU's much larger facility.

Silvert said Batavia, N.Y., is recognized as having the first business incubator in the U.S.

"There is a fine line difference between a small business incubator and accelerator," he said.

The difference apparently is found in the support services the centers provide and other contract relationships with clients.

Western established its small business accelerator about nine years ago and now has 17 clients that employ a total of about 400 people.

The Bowling Green center is in a renovated former mall with more than 300,000 square feet of space.

The largest employer is a call center providing 300 jobs. Some of the companies are one-person operations.

Doug Rohrer is the new director of Western's Center for Research and Development and has been on the job a little more than a month.

"I would say the small business accelerator is robust, very successful," he said. "We're about full and will need to renovate more of our space soon."

Companies that start or move into the Bowling Green center receive finished out space with access to multiple conference rooms and high-speed Internet at attractive rates, Rohrer said.

"They also get advice and support. We connect them to the appropriate university staff to get expert counsel," he said.

Western's business school, for example, can help them create business plans. "The goal is to grow companies and create jobs for Kentuckians," Rohrer said.

The traditional economic development model didn't give weight to finding high-tech companies, he said.

"The Innovation Act provides the framework for this," he said. "Everybody would like to have a new Google or Facebook. These companies come up fast and grow fast. The whole innovation system is about finding those kinds of companies."

Hitcents.com still growing

One of those fast-developing high-tech companies in the Bowling Green business accelerator is Hitcents.com.

Hitcents, the center's first tenant, now employs 33 people.

Ed Mills and his twin sons, Clinton Mills and Chris Mills, started the company in 1999 when the younger owners were 16 years old.

"They were working at Steak 'n Shake and said we've got an idea," said Ed Mills, who is the company's chief financial officer. "I said great, let's run with it. And they never looked back."

The company, which started in web design and programming, now has five divisions and is still working by its motto, "dare to dream it real," Ed Mills said.

Hitcents still offers web design, but it also creates software and can provide software packages that can manage multiple business functions.

The company recently received approval for up to $150,000 from the Kentucky Economic Development Finance Authority to help in buying information technology infrastructure equipment.

That investment helped Hitcents launch a new enterprise resource planning product, Omniprise, on Feb. 1 which was five years in development. This is expected to create about 10 new jobs.

As expected, its website has all the details.

Ed Mills said when the time came for his sons to go to college, Hitcents already had national corporations as clients.

"WKU President Gary Ransdell said, 'We want to give you entrepreneurial scholarships and try to entice you to go the center and be our first tenant,' " Ed Mills said. "That was the best decision we made."

The CFO said Bowling Green's business accelerator gives the company access to Western's professors for collaboration and provides an extensive support system.

"With that, we feel like we have a long arm that can reach out at any given opportunity," Ed Mills said.

Hitcents was number 191 on the Inc. 500 list of fastest-growing companies in 2007. Clinton Mills was one of only four CEOs on the list under age 30.

Owensboro's center also growing

Owensboro definitely is in the game, Rohrer said.

Western now has two full-time assistant professors in food processing and biology opening research offices in the Owensboro center. The university has a food manufacturing degree that was developed for the Owensboro campus.

This model recognizes that ideas flowing from the students and professors could turn into start-up companies.

Hollison Technologies, a start-up biotech company, was the first tenant in the business and research center. The company describes its business as providing unique products and services for food protection and the detection of contaminants in the food supply chain.

The company earned a $50,000 investment from the Emerging Ventures Seed Fund and a $200,000 investment from the Kentucky Science and Technology Corp.

Kevin Humphrey started the company along with partners Doug Wood of Island, Eric Dodd of Evansville and Tony Bashall of Massachusetts.

The company has an office in Boston.

Silvert expects to have five clients in the center by the end of this year. Two of those are Alisha Hardison, owner of Dalisha's Desserts, and Joshua Vandgrift, owner of Owensboro Consulting and Business Services.

Hardison wants to open a dine-in business as well as to fill custom orders for individuals and businesses, sell products online and operate as a wholesaler to local restaurants.

Vandgrift's consulting firm provides direct consulting services such as web design as well as connects start-up companies with what he calls top-notch freelancers to help them maximize profits.

At the state level, the Kentucky Science and Technology Corp. has a contract to manage the whole innovation network. The company provides training for Silvert and other innovation center directors, financial modeling and other support.

Kentucky Science and Technology Corp. also has analysts that look at deals submitted by state start-ups to determine if they are good investments.

Other pieces of the innovation model include potential funding sources including the Kentucky New Energy Ventures Fund; Rural Investment Fund (for companies not based in Lexington or Louisville) and the Kentucky Enterprise Fund.

Owensboro's innovation center is part of the Central Region Innovation and Commercialization Center, and Rohrer also serves as the executive director of that network managed through Kentucky Science and Technology Corp.

Western's Center for Research and Development includes seven research labs in which different university departments conduct applied research.

The center will be hosting a grand opening in March for a scanning electron microscope that has the largest chamber of any similar technology in the U.S., Rhorer said.

"In the world of electron microscopes, this is huge," he said. "We will be selling space and time on it and expect a lot of interest in it."

Private and public universities and colleges are affiliated with Owensboro's center.

The University of Louisville, for example, will collaborate with the center through Nucleus, the Life Science Innovation Center on its campus.

Nucleus will provide resources for start-up high-tech companies in business planning and information technology. New companies also can use U of L's buying power of to help control expenses in health insurance and other areas.

"All of these programs are working together to foster innovation and support entrepreneurs to increase their chances of success," Rohrer said.