Editor's note: This story is part of Southwest Michigan Second Wave's On the Ground Battle Creek series.
For the creators of food and beverage products taking their businesses to the next level in Battle Creek is about to get a lot easier.
Within the next eight to 10 months the Southwest Michigan Accelerator Kitchen is expected to be ready to welcome and support food-related small businesses looking for a place to grow, says Shabaka Gibson, Vice President with Battle Creek Unlimited, a partner in the venture with St. Philip Church and the Diocese of Kalamazoo.
BCU and St. Philip Church issued a joint announcement Monday that says the U.S. Department of Commerce, Economic Development Administration approved an economic development grant of more than $2.092 million for the Accelerator Kitchen. The grant, along with locally raised matching funds, will help with the $4 million renovation of the property at 30 W. Van Buren Street.
“Although we’ve made the announcement we’ve still got a long way to go with the design, engineering, and construction that needs to be done,” Gibson says. “I expect the project to be done in the middle of next year.”
The Van Buren Street entrance to the Tiger Room. A $4 million renovation of the building will convert it into an Accelerator for food businesses.
The Accelerator Kitchen will be housed in a building formerly known as the Tiger Room. The five-level, 20,000-square-foot building has been owned by the church since the 1960s and was used primarily for youth activities, including dances. Connie Duncan, St. Philip Project Manager says at one time there also was an alternative school there.
Once completed the Accelerator Kitchen will have space for eight food-related businesses on the ground level with additional room for expansion, Duncan says.
“There will be multiple kitchens on that level,” she says.
Father John Fleckenstein on the steps at the Van Buren Street entrance to the Tiger Room. A $4 million renovation of the building will convert it into an Accelerator for foodnd beverage product businesses.
The ground level of the building currently houses a Thrift Shop operated by the church and its maintenance department. Duncan says Rev. John Fleckenstein, Pastor of St. Philip Church, is discussing alternative spaces for the shop and maintenance area.
Half of the first level will be used as an event space where the church plans to offer classes on nutrition and health with vulnerable populations as its target audience. Duncan says the other half of the first level will be available for use by businesses in the Accelerator Kitchen program.
The remaining three levels will be leased to businesses participating in the Accelerator Kitchen or businesses and individuals involved in the health and nutrition fields, she says.
Gibson says that businesses that are categorized as late Stage One and early Stage Two companies would benefit from the program . “They know their market, understand packaging, have their pricing down, and are making sales,” he says. “They’ve got a good business that’s just really small. The Accelerator gives them the space to grow their products, but also provides business services.”
They just need to grow, he says. “The Accelerator is for food companies. It can be anything in the food space. There are businesses out there making baked goods or frozen products or liquids like beverages. Most of these companies we have been working with are either right here in Battle Creek or within a 10-mile radius.”
Gibson declined to identify the businesses they have been working with because some of them may be in a lease or have other relationships that he doesn’t want to disrupt.
Unlike incubators which are for individuals who have ideas but don’t yet have a product or a company put together, accelerators are for those who have graduated from an incubator or have matured beyond incubation, Gibson says.
Through partnerships with companies and institutions, including Kellogg, JPG Resources, Second Muse, Western Michigan University, and Michigan State University, owners of businesses in the Accelerator will have access to specific programs, expertise, and guidance.
Businesses looking to land in the Accelerator will go through an application and interview process and pay to lease space in the building. Gibson says if “you put someone in there and they’re not paying any type of lease or rent they will build that into their business model.
“We are looking for companies that are ready to accelerate, not looking to start. We’ll determine if they’re a good fit and if they are we need to determine if we’ve got space and get them in. The Accelerator programming is for us to help a company grow with the idea that the company eventually leaves and continues to grow outside of the Accelerator.”
The length of time in the Accelerator will be different for every company, but Gibson says two to three years will be the maximum.
According to DowJones Venture Source, which was acquired in July by CB Insights,
in the United States, food and beverage start-ups raised almost $550 million in the first nine months of 2015, compared to about $375 million in the whole of 2014 and about five times the level seen in 2011.
One growing platform for new companies entering the food and agriculture space has been the emergence of business accelerators, according to Rabobank, which has become the world's leading financial services provider for the food and agribusiness sector.
“Accelerators have been around since the 1960s but more recently popularized by their successful application in the Silicon Valley tech industry,” according to an article
on the company’s website. “Applying and adapting accelerators to the world of food has only really taken off in the last few years.”
This increase has led to larger companies' interest in the accelerator businesses because accelerators act as filters in picking proven winners, the article says.
“Consequently, we expect an increasing number of the larger food companies to start paying more attention to accelerators (either as co-investors or early acquirers of recent graduates) rather than waiting for them to hit their normal acquisition sweet spot of $30 million to $50 million in sales.”
Gibson says there are two different models used for Accelerators and Incubators – a private model where there are individuals and organizations that fund the work and the space, charge a fee and make an investment, and the nonprofit model which does the same thing without the goal to take shares of the company or make a significant profit. The latter is the model being used for the Southwest Michigan Kitchen Accelerator.
Gibson says the Accelerator Kitchen is an economic development tool that will benefit Battle Creek and Calhoun County.
“Most people understand that jobs are created by small and medium-size businesses and not the very large businesses,” he says. “This is an opportunity to grow small companies into large companies that provide job creation here in Battle Creek.
“Because we’ve got strong food assets in Calhoun County and a long history in the food industry, this Accelerator makes sense. It serves as a magnet for food companies inside and outside of the state. They can see Battle Creek as an opportunity to grow their company. When you get past 10 and 15 employees, it’s easier to stay here in Battle Creek and continue to grow.”
Duncan says, “this is the next stage for food businesses. We’re taking a historic building that’s not in great shape and turning it into something that will serve the church and the community.”
Discussions about the transformation of the building began in 2014 with the idea of turning it into an incubator kitchen that would serve the community.
“The initial idea was to serve the mission of the Parish and give back to the community with economic development,” Duncan says. “The building would be sustainable, but also serve the mission of the Parish with programs on health and nutrition for our vulnerable populations.
“Two years ago BCU contacted Father John and I and asked for a tour of the building.”
The partnership with BCU followed soon after that.
The initial investment for the project from the Diocese of Kalamazoo was made possible through the donation of a restricted gift. Other project funders include the Kellogg Company Twenty-Five Year Employees' Fund, the Battle Creek Community Foundation, the Binda Foundation, the Catholic Campaign for Human Development Foundation, Michigan Department of Agriculture and Rural Development, and many individual donors.
In addition to a $500,000 total gift in support of the Southwest Michigan Accelerator Kitchen, Kellogg Co. will provide subject matter expertise and support to Accelerator participants and offer small-scale manufacturing support via the pilot plant, located in the W.K. Kellogg Institute for Food and Nutrition Research in Battle Creek.
“We are very excited and grateful to see this tremendous opportunity coming to fruition,” Fleckenstein says. “Because of the hard work of so many, an old, empty, yet historic building has new life breathed into it. This new chapter begins, driven by a dynamic partnership that will help serve the poor and vulnerable through health and nutrition programming, grow entrepreneurship, and strengthen our beloved Battle Creek community.”