A plan to make Ann Arbor Michigan's startup city

Mark Smith has some big ideas. Physically big ideas. On a cold day in early March, the Ann Arbor resident looked out at a sprawling, largely vacant commercial campus and detailed his vision for it. When (not if) he pulls it off, it promises to be a pretty big deal for a community that is already being noticed for its ability to produce startups.

Smith plans to turn a light industrial area on the outskirts of Ann Arbor into an incubator for new economy tech companies. It will feature tens of thousands of square feet of dry labs, wet labs, clean-room manufacturing, co-working space, and all of the extras that make those startups thrive - high-speed Internet, in-house business services, and room to expand.

The targeted startups for this incubator include a broad range of industries, such as life sciences, alternative energy, biomedical device, and electronics. Think of any company that needs some sort of lab space to develop the next big thing in tech. Smith wants them all to mix, match and innovate in his space.

He is convinced his grand plans will succeed because he has been running a smaller, more impromptu incubator for tech startups in Ann Arbor for more than a decade. This next project is a natural evolution of that vision. And in the process he'll be transforming one of Tree Town's forlorn industrial sites (he can't identify the address publicly until he closes on the deal because of a non-disclosure agreement) into a hive where dozens of scientists, entrepreneurs, investors, and other assorted new economy innovators happily buzz about their work all day long.

"We want this to be a place that solves problems and creates companies that put down roots," Smith says. "We want new solutions and high-paying jobs."

New economy farmer

A lot of random twists and turns of life led Smith to this place today. He originally went to college as a bio-chemistry major and planned to attend medical school. That changed when a death in his family and a few other major life events turned him, quite unexpectedly, into a farmer.

Smith and his wife spent years growing crops. Asparagus, raspberries, strawberries, sweet corn, hay, you name a popular southeast Michigan crop and they probably grew it in the 1980s.

"Labor intensive things," Smith says. "You would literally work from sun up to sun down. It just wears down on the body."

The family of Smith's wife had been farming in the region for the better part of a century. They had other jobs, such as practicing law or managing real-estate but farming was what brought them all together.

Everything changed in the 1990s when agriculture in America became less about the family farm and more about big business. The tools and materials needed to run a farm soon called for millions of dollars in investment, and swings in commodity prices could bring a lot of financial pain very quickly.

"It was killing us," Smith says. "We either needed to get very big or very specialized, and neither appealed to us."

So Smith returned to one of his first loves, tinkering. He and some friends who pursued careers in the sciences played around with inventions and product development. They created gas sampling technology and developed a platform that monitored how ventilation impacted the heart rate of a group.

"I don't call it research and development," Smith says. "We just came up with stupid ideas and tried them."

Those discoveries led to a career as an inventor and entrepreneur in the mid 1990s. Smith and his colleagues were on the cutting edge of technology, trying out new products and enjoying a few notable successes.

They also had some valleys with their peaks. An investment in a bio-medical startup went belly up in the early 2000s. That left Smith and his partners with an empty building built for bio-medical research at 333 Parkland Plaza.

Necessity became the mother of invention, forcing Smith and his partners to re-conceive that space as an incubator for tech startups, offering mentoring and in-house business services. It filled up fast. Today, seven companies occupy the 7,500-square-foot building and its highly desired wet- and dry-lab spaces. Smith has had to repeatedly turn away prospective tenants because there just wasn't any available room.

Startups line up

All seven of those startups are planning to move from 333 Parkland Plaza (Smith has another tenant lined up for the building) to the new, larger incubator later this year. Another 7-8 have signed up to join them. There is room for another dozen or so, maybe more depending on their size.

Smith's incubator would occupy a little more than half of the buildings on the campus. He has an anchor tenant lined up for one of the buildings and plans to turn the other structures into space for a number of startups. Plans to close on the space are within the next 30-60 days, followed by the big move in and then a campaign to revamp and rebrand the campus. Smith is toying with the name Michigan Innovation Headquarters (MIHQ).

"We want companies to put down roots," Smith explains. "Our goal is to create the infrastructure that supports these companies at an effective cost so they can use their money where it should be used, like product development and drug discovery."

With that in mind, he intends to renovate the facilities to be 21st Century friendly, adding more daylight, updating the lab spaces, and refashioning the entrances. The incubator will include in-house support that can offer expert advice/services in business mentorship, investment, legal, human resources, accounting, marketing, small-batch manufacturing, and grant applications, among others.

"A lot of small companies get grants," Smith says. "But if they came from the university there is a whole department that can handle that for them. When they have to take care of it themselves it's a little more daunting. We try to remove those barriers. We want to give them the right support so they can grow."

The campus will also offer a number of high-tech amenities, such as fiber-optic Internet, high-tech conference rooms, 3-D printing, rapid prototyping, warehousing, and small batch manufacturing. The idea is to create a professional environment that aggregates the presence of many small companies in order to create a more impressive appearance.

"When the Department of Defense comes knocking on your door to do a site audit, it doesn't want to see two guys and a desk," Smith says. "They want to see a real office. They want to see that there is some substance to the company."

And there is a big demand for this in the local tech world. Ann Arbor SPARK's downtown Ann Arbor incubator manages a consistent flow of early stage startups, and it can facilitate a maximum of almost 50 workers at a time.

"That's a drop in the bucket when it comes to the needs of incubator space," says Bill Mayer, vice president of entrepreneurial services for Ann Arbor SPARK. "The reality is real-estate is difficult to secure in today's market."

And there is a dearth of wet lab space in the region. The University of Michigan's Venture Accelerator in the North Campus Research Complex is only open to U-M spinouts. Private wet lab space on the city's edges, like 333 Parkland Plaza, are already posting no vacancy. The Michigan Life Science and Innovation Center in Plymouth is at capacity despite the recent graduation of some companies. There is clearly need, need Smith's big tech incubator intends to meet.

"That's the kind of thing that makes the entrepreneurial ecosystem more attractive," Mayer says. He adds, "It's critically important to our whole startup ecosystem that it's not only SPARK that offers that space."

Community builders

The most exciting aspect for Smith is the potential for collaboration among a broad variety of tech entrepreneurs. He sees the depth of Ann Arbor's tech talent pool and plans to channel it into the right place.

"Where else can you go to the hardware store and bump into a nuclear physicists in one aisle, come around the corner and talk to an astronaut in the next aisle?" Smith says. "These are true rocket scientists. This is a great town that way."

Which is why Smith becomes giddy when he starts to talk about the co-working space for his incubator. He plans to turn a large section of plain-jane offices in the building into a Tech Brewery-style co-working space.

The co-working space, which will operate under a membership model, will have about 50-60 members when it reaches full capacity. The entire incubator will have 200-300 new economy entrepreneurs working there each day when its fully occupied. All of them will be bouncing ideas off each other and coming up with new ideas that could lead to new companies.

"It takes a different perspectives to see a new solution," Smith says. "By bringing people in from different disciplines we can see things in a different way and come up with new ideas."

The incubator will also have recreational options. Smith wants to turn it into a destination where local entrepreneurs can work, play, and be a five-minute car ride from downtown Ann Arbor and everything else Tree Town has to offer.

"We're trying to create a community resource here that is business, recreational and social at its base," Smith says. "We want to cover all those bases so there is a reason to come here that isn't just work."

The incubator will also have an open-door policy. If a startup grows to the point where moving to a bigger facility makes more sense, Smith is happy to help facilitate. He hopes his operation will have enough things going for it that it will make such decisions to move away hard ones for the companies calling it home.

"We want to cultivate new businesses," Smith says. "We want to take what's bad and turn it into good."

Jon Zemke is the Innovation & Jobs News Editor for Concentrate and its sister publications, Metromode and Model D. He is also the Managing Editor of SEMichiganStartup.
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