Out of the Garages and Attics and Into the Ecosystem

FEATURE-October 2013
By Phillip Conkling
Photographs by Greta Rybus

Entrepreneurship in Maine is Alive and Well

Don Gooding, who heads the Maine Center for Entrepreneurial Development (MCED), is a man on a mission. At MCED, a private nonprofit, Gooding has helped create an intricate “ecosystem” of investors, mentors, funders, and entrepreneurs which is trying to transform Maine’s natural-resource economy into an economy of innovation. Given Maine’s dispersed population and vast geography, connecting those with promising new business ideas to those with access to capital and market savvy is a big challenge. But Gooding believes that Maine can accelerate business development, precisely because our small population and legendary work ethic makes us more nimble—and more driven to succeed.

Watching Gooding connect people and ideas is like watching a bee pollinate an orchard—so many flowers, so much fruit to grow! Gooding is not your average business development expert; his eclectic background includes telecommunications, marketing and web-development skills before coming to Maine with his wife, a third generation summer person, to start an online accapella music business and investing in other start-up companies. His experience and his very large virtual rolodex provide entrepreneurs in Maine with access to overlapping networks of individuals and organizations that help new businesses not just succeed, but to become—to borrow a term of one of MCED’s signature programs—“Top Guns.”

One of the most significant organizations in Maine’s innovation ecosystem is the Maine Technology Institute (MTI), created by the Maine legislature and signed into law by then-governor Angus King in 1999. MTI is a publicly-financed, industry-led seed fund providing grants and loans to support promising business ideas.

I wanted to find out what happened to some of MTI’s first investment decisions and called Joe Migliaccio, MTI’s director of business ventures. I learned that since its founding, MTI has awarded over $127 million to more than 800 businesses. As Migliaccio began ticking off one successful business after another that had used a bit of start-up capital from MTI to attract private funding, he mentioned a marine science company. I recalled voting to recommend that it receive a $50,000 seed grant when I was on MTI’s marine sciences advisory board in its early years.

The grant helped a new company, Fluid Imaging Technologies (FIT), develop a sophisticated tool that could rapidly analyze different species of microscopic algae. The tool, which had been developed and patented at the Bigelow Laboratory for Ocean Science in Boothbay Harbor, was called the FlowCAM. The technology looked promising enough that its chief architect, Dr. Chris Sieracki, proposed licensing the technology from Bigelow and going into business. None of us recommending approval really understood the potential of combining cell-counting digital imaging and microscopes, but it was just the kind of innovative proposal we had been empowered to fund.

So 13 years later, I called up FIT and got their president and CEO, Kent Peterson, who held off my entreaties for a visit because, he explained, they were in the midst of their fourth move, while they tripled the size of their facilities each time. Could I call him back in a week after they had two days to settle in?

Kent Peterson, a tall, trim man with an erect bearing and a quiet voice, welcomed me to their 18,000-square-foot office and laboratory in an industrial park that still had the name of the previous tenant of the building. Peterson described the heady arc of the company since starting, in his words, “not in a garage, but an attic of a garage,” where he and Sieracki went into business. Peterson recalled that when he and Sieracki first met, Peterson immediately saw “an abundance of applications worldwide” for the FlowCAM.

Peterson and Sieracki did not lack for ambition. They decided at the outset not to focus on a single geography—the U.S. market for example—or to concentrate on a single industry segment—marine research, or pharmaceuticals. Instead they set out to become “the Xerox of imaging particle analysis.” Although Peterson has the zeal of a convert, it is not the hand-waving kind, but the confident one-step-after-another-will-get-you-there kind. “There is a whole new world of dynamic digital imaging,” Peterson says, because for businesses that depend on precision manufacturing or processing analysis, “time is a special resource.” Their applications currently, in Peterson’s words, analyze particles in “lunar dust to alfredo sauce.”

Lew Brown, director of marketing and employee number three at FIT says, “You might not know anything about particles, but you use them every day.” One of their customers is a major home and house care product manufacturer that makes shampoo, he explains. “They put silicon droplets in their shampoo that disperse the water when rinsing and give sheen to your hair.” There is a very precise concentration of these tiny particles of silicon that will do the job optimally.

Ever since the first MTI grant, Peterson quietly explains,  the company, currently with 40 employees, has been “growing at double digits every year for 13 consecutive years.” They are developing their next-generation FlowCAM in part with a development loan from MTI and have just closed a $4 million capital fundraising effort that has allowed them to double their research staff. “If IDEXX can do it in Maine, so can FIT,” concludes Peterson.

Another group in Maine’s entrepreneurial ecosystem is called the Maine Angels. The Maine Angels has no formal organizational structure, as such, but is a volunteer-run group of investors with an appetite for risk. Because I had contacted a new Maine-based wind turbine company called Pika Energy, I got a follow-up call from one of Pika’s board members, Paul Farrow, who is also a member of the Maine Angels.

Farrow tells me that unlike venture capitalists, who create a fund that its managers invest, angel investors operate strictly as individuals, generally at the very early stages of a company’s development. He invites me to the Maine Angels monthly meeting. At the meeting, 30 or so Maine Angels listen to three pitches from companies which have been previously vetted, and then discuss whether there is enough interest for the next round, where investment terms are finalized and individual Angels decide whether they are willing to invest.

When it comes time to report on current members’ investments, Paul Farrow holds up Pika Energy’s first wind turbine blade, a sleek biomorphic form made from a new injection molding process. For homeowners, a turbine blade is the key to energy production. Blades typically cost several hundred to a thousand dollars a piece. But Pika’s new process has reduced the cost to $30 per blade, which is a key part of their strategy to reduce the costs of the machines by half of the going price. Another key to their technology is  a patent-pending microgrid that allows customers the option of plugging in solar panels and tracking system performance.

I had visited Pika’s new facilities at a Westbrook industrial park several weeks earlier and met its president, Ben Polito, and his partner, Joshua Kaufman, director of research. The pair met while they were students at Massachusetts Institute of Technology. The six employees at Pika were still unpacking after moving out of Polito’s and Kaufman’s basement, where they have been working for the past three years. Kaufman, who greeted me while intently fiddling with a little box filled with microcircuitry, said that because 96 percent of wind customers want the ability to add solar, Pika’s sophisticated electronic micro-grid technology is at the heart of their marketing strategy.

Polito tells me that they have recently closed their latest round of angel financing, which allowed them to invest in manufacturing tools and to double their workforce, including hiring an experienced plant manager, formerly of Tom’s of Maine. But this is also a personal quest for Polito, who grew up at the remote end of Georgetown Island, beyond the reach of Central Maine Power’s utility poles for the first seven years of his life. He remembers “electricity was this cool thing that I saw in kindergarten and the neighbors had,” and he got interested in how electricity makes things work. At Morse High School in Bath, Polito built small turbines for science projects.  He says, “You don’t really know how to design stuff until you know how to build stuff.”

Polito, who has benefitted from MCED’s “Top Gun” program, is a big believer in locating business in Maine, where everything is much more affordable and there is an ample supply of talent due to the quality of life. “Maine was a backwater when my parents came here,” recalls Polito, “but the Internet has democratized where you can do innovation.”

BOOMERANGS

Another source of funding for entrepreneurs in Maine is the Small Enterprise Growth Fund (SEGF), a public-private venture capital investment group headed up by John Burns. SEGF’s Entrepreneur in Residence is Des Fitzgerald, who comes by the title honestly. He has started a number of businesses himself over the years, some of which succeeded handsomely, others of which did not. Fitzgerald has thought a lot about the qualities it takes to be an entrepreneur: someone who wants to own something and is willing to take a risk. An entrepreneur is a “big idea” person, he says, who is also “passionate inquisitive, energetic, confident and competitive,” and suggests I call Shannon Kinney, founder and general manger of Dream Local Digital.

I find Shannon Kinney on the first floor of the old Thorndike Hotel in downtown Rockland in offices spread out in a series of rooms along the hallway at the back of the building. Various earnest 20- and 30-somethings, several with tattoos, are hunched over large computer screens that glow and hum quietly. Kinney finds us a meeting space in an adjacent room as  her staff bustle in and out.

Like Polito, Kinney is a “boomerang” entrepreneur, who grew up in Maine, went to work elsewhere, and then brought her business ideas back to where she wanted to live. In Kinney’s case, after graduating from the University of Maine in Orono and beginning her Internet marketing career in Maine, she found she needed to leave in order to develop professionally. After five years in Silicon Valley, working with large media companies that were investing in Internet-based social media marketing, she looked up one day at the wall in her office decorated with images from Maine and asked herself, “Why am I here?” which led her back to her hometown in Thomaston.

To her surprise, Kinney found a difference in Maine between when she left and when she returned. “It’s all interconnected here—there’s a culture here that didn’t exist before.” She was determined to prove that she could market her services to national and international clients from Maine. So she started Dream Local in 2009, and focused on offering services to media companies, to connect advertisers with customers through such platforms as Facebook, Twitter, LinkedIn and other mobile platforms or through email or search engines—wherever those customers happen to hang out in the digital universe.

A year ago, there were three Dream Local employees, including Kinney. Today there are 25 employees, mostly from Maine, including other boomerangers. Now her wall art is a quote from racecar driver Mario Andretti: “If you are under control, you are not going fast enough.” With offices also in Portland and Silicon Valley, Kinney aims to double her staff (and speed) in the next year.

Kinney credits part of her success to the “vibrant community of entrepreneurs in Maine.” Kinney, who gives lectures at MCED’s “Top Gun” seminars for up-and-coming entrepreneurs, says, “We are all incredibly motivated to helping other entrepreneurs in Maine and we are all committed to enhancing prosperity here.” And, “This is a great part of our story,” adds Kinney, who is a great example of the story herself.

Indeed, from the Maine Center of Entrepreneurial Development, the Maine Technology Institute, the Maine Angels, the Small Enterprise Growth Fund, Maine’s universities, economic development corporations and banks all networked with each other through overlapping boards, there is an impressive and sophisticated support system for business startups.

In a way, this entrepreneurial network is like the original tradition of entrepreneurship in Maine, when small groups of investors would buy a share of a ship under construction and invest its cargo for an uncertain voyage across an ocean. All involved—the owners, the captain, and the crew—shared the risks and the outsized rewards of a successful delivery.

Another group of entrepreneurs is now helping to build a new economy in Maine. And whether the players come out of Maine’s research institutions, or from people with an indelible summer connection, or those who have boomeranged back after gaining experience elsewhere, the reality is that there is a vibrant ecosystem of mentors, investors and supporters for those daring to launch their vessels.

This article was originally published by maine. magazine. Maine Media Collective © 2016