News

NEXTEP SYSTEMS began selling its own full-service tech solution a little more than a year ago, and the foodservice tech firm's growth has been a sight to behold since then.

The Troy-based company has watched its revenue jump 60 percent in 2012, up from its average annual growth rate of 30-40 percent since its founding in 2005. That has allowed the hiring of six new people in software development, project management, installation and sales. The company, which has a staff of 30 people and the occasional summer intern, is now looking to hire a services technician, purchasing agent and graphic artist.

NEXTEP SYSTEMS specializes in producing self-order kiosks that allow customers to order their own food or coffee, grab a ticket and wait for it come up. The technology is being used in a wide variety of places, including restaurants, airports, casinos, convenience stores, grocery stores, educational facilities and sporting venues. It recently released its Foundation5 platform that is an all-in-one solution for eateries, which has proved quite popular.

"They (a business owner) could make one phone call and purchase all of the software and hardware to run their restaurants," says Tommy Woycik, president of NEXTEP SYSTEMS. He adds this sort of streamlining allows eateries to focus on the food instead of the technology needed to serve it.

NEXTEP SYSTEMS is currently working on a cloud-based version of its point-of-sale technology and hopes to expand it into more chain eateries in 2013.

"More and more of our system is moving upstream to the cloud," Woycik says. "That is our focus for the year."

Source: Tommy Woycik, president of NEXTEP SYSTEMS
Writer: Jon Zemke

Internet start-up Seelio has landed an investment from the Michigan Pre-Seed Capital Fund, which is part of a larger angel round worth slightly more than $600,000.

The investment has allowed the downtown Ann Arbor-based company to expand its staff to 10 employees and two interns. It is now looking for strategic investors and has moved into the offices of Menlo Innovations, which is helping mentor the 1-year-old firm.

"We're very proud to be based out of Ann Arbor," says Moses Lee, co-founder & CEO of Seelio. "We have a very good team that is committed to the state of Michigan."

Seelio is developing a software platform that allows college students to showcase their portfolio of work. "We're able to document the entire story of a project and who you worked with," Lee says.

The platform is currently being used in 800 college campus across the U.S., including the University of Texas, UCLA, MIT, Albion College, Eastern Michigan University, Wayne State University and the University of Michigan, among many others. Seelio plans to expand its geographic reach around the world with universities in Europe the next in line.

"Some major universities are interested in this platform," Lee says.

Source: Moses Lee, co-founder & CEO of Seelio
Writer: Jon Zemke

Detroit’s most famous restaurant is currently going through a much-needed expansion.
 
Slows BAR BQ, which has been covered in national media from the New York Times to Food & Wine and was a 2012 finalist in Adam Richman’s Best Sandwich in America on the Travel Channel, is largely credited with kick-starting the rebirth of Corktown, attracting several new independent businesses on its block of Michigan Avenue and leading to what is now a total lack of available rental units according to Ryan Cooley, co-owner of Slows and owner of O’Connor Realty.
 
The original Slows space, which seats about 80 indoors (not including the seasonal outdoor patio), was ill-equipped to handle large parties, and long wait times inside the enormously popular restaurant inevitably led to a lot of bottle-necking at the front door by the bar.
 
"We're adding on the new space but it will serve as more a beer bar, private dining room and waiting area," Cooley says. "With bigger parties this is really going to help with efficiencies."
 
The new 1,200-square-foot space, which is overtaking the former office of O’Connor Realty (which has since relocated down the block), will be connected by a door to the original location but will in effect be its own separate space ideal for private parties and grabbing a drink while waiting for a table.
 
The new bar will feature 36 tap handles, many of which will be duplicate selections from the bar in the main restaurant for efficiency’s sake. The beer cooler will be expanding and moved into the basement, freeing up additional space upstairs.
 
Behind the scenes, the kitchen will also be expanding into the new space and will be fully updated. "We opened on such a shoestring budget the first time through we had to buy used equipment. This will allow things to be more streamlined," Cooley says.
 
This is good news for serious barbecue enthusiasts, as this will enable Slows to slow down their smoke times and make a good product even better. Chef and co-owner Brian Perrone will also be able to host more beer dinners and run additional specials, allowing him more creativity in the kitchen.
 
Cooley says that by the time the kitchen is expanded and bathrooms added, the new space will add about 20 new seats. "We didn’t want to add to ton of space, really. We didn’t want a huge open-feeling space. We kind of wanted to keep it small and intimate."
 
At press time the main restaurant is on track to re-open on their target date of Jan. 9, while the new space may be delayed just a day or two.
 
Source: Ryan Cooley, co-owner of Slows
Writer: Nicole Rupersburg

Huron Capital Partners has closed on a $500 million investment fund, allowing the downtown Detroit-based private-equity firm to hire six people over the last year.

The 20-person firm now takes up most of the 27th floor of the Guardian Building. It's new hires are mostly investment professionals. A large quantity of them earned their MBAs locally.

"The University of Michigan is educating more of our team than any other school," says Michael Beauregard, senior partner at Huron Capital Partners.

Huron Capital Partners (Michigan's largest private-equity firm) invests $20-$50 million in companies with high growth ceilings in need of fresh capital, such as corporate spinoffs and family business succession. It got its start in 1999 with a $72 million fund. Since then it has raised two more funds that have been deployed worth $185 million and $385 million.

It now has a controlling stake in 61 companies. Three quarters of those are in the U.S. The remainder are Canadian-based. Three of those 61 companies were locally based, including Quest Specailty Chemicals, Matrix System Automotive Solutions and Michigan Orthopedic Services. Huron Capital Partners exited all three firms. Huron Capital Partners was named Private Equity Firm of the Year for 2010 by Mergers & Acquisitions, the pre-eminent magazine for private equity, for its Ross Education deal, which produced 18.7 times its original investment and a 76-percent internal rate of return.

That deal/award helped set the stage for Huron Capital Partners' fourth fund. The recently closed investment vehicle is worth $500 and received some significant investments from institutional investors, including $15 million from the University of Michigan's Endowment Fund. Beauregard, a member of the investment committee at Huron Capital Partners, expects this latest fund to invest in about a dozen platforms which will trickle down into 20-25 companies.

"I expect there will be a handful of companies based in the area that we will invest in and help them grow their base here," Beauregard says.

Source: Michael Beauregard, senior partner and member of the investment committee for Huron Capital Partners
Writer: Jon Zemke

Bank of Ann Arbor is seems to come up with new ways to grow each year with its newest innovation comes from acquiring Ervin Leasing Co, an equipment leasing and financing firm.

The Ann Arbor-based firm and its 15 employees were a subsidiary of Ervin Industries. It successfully navigated through the last recession and was ready to ramp up business when its lines of credit, about $100 million, were sidelined. Bank of Ann Arbor will now provide funding for that growth.

"It's an opportunity for us to add some diversification to our loan portfolio," says Tim Marshall, president & CEO of Bank of Ann Arbor.

Bank of Ann Arbor has been consistently growing its core business, too, over the last few years. Its total assets have expanded from $689 million in 2010 to $774 million in 2011 and $889 million in 2012. It has hired about a dozen people over the last year, bringing its staff to 148 full-time employees.

Bank of Ann Arbor is also about to expand the reach of its branches. The downtown Ann Arbor-based bank plans to open a new branch in Saline early this year, which will mean another five new jobs. Bank of Ann Arbor. The bank also plans to expand the staff of Ervin Leasing Co by more than double in the coming years.

"Our goal is to be at 35 employees there within the next 36 months," Marshall says.

Source: Tim Marshall, president & CEO of Bank of Ann Arbor
Writer: Jon Zemke

Kiva Detroit is expanding into a couple of different areas, making loans to start franchise businesses and partnering with Detroit SOUP to create KivaSOUP.

"You will continue to see more things like this come down the pipeline," says Elizabeth Garlow, director of strategic initiatives for Michigan Corps which runs Kiva Detroit.

Kiva Detroit got its start last year by providing an internet platform that enables local residents to improve their communities by making microloans to local businesses and entrepreneurs. Through Kiva Detroit, individuals can lend as little as $25 to local, small businesses looking for capital to launch or expand.

Detroit SOUP serves a similar purpose. The monthly event gathers Detroiters to a communal dinner featuring soup. Each attendee pays a small entrance fee, which goes for the food and a pool of money that a handful of local entrepreneurs make pitches for. Attendees get one vote and the winner walks away with the pool of money, usually a few hundred dollars, to use as start-up capital.

KivaSOUP combines the two funding sources to help create start-up funding synergies. The event will be held at 5:30 p.m. Thursday at 2900 E. Grand Blvd. The entrance fee is $5, which gives each attendee dinner and a vote. "We may look at an ongoing partnership," Garlow says.

Kiva Detroit is also launching a new micro-franchise program through a partnership with Thrive Detroit. The program allows users to raise money to begin their own Pro Windshield Repair business, giving them access to turn-key businesses with proven roads to entreprenuerial success.

Source: Elizabeth Garlow, director of strategic initiatives for Michigan Corps
Writer: Jon Zemke

Last year was more than a good year for Fathead, the downtown Detroit-based poster-decal firm.

The 7-year-old company watched its revenues jump 20 percent in 2012. It hired 25 people last year, expanding its staff to 84 employees and six interns who work on the ninth floor of the Compuware Building. It has four positions for salespeople open now and expects to keep hiring at that pace through 2013.

"We completed our best year in the history of the company," says Patrick McInnis, CEO of Fathead. "A big part of it is our corporate solutions for the likes of athletic facilities and auto shows."

Fathead's bread and butter has been life-size poster decals of athletes, celebrities and fictional characters. Last year, it expanded its product portfolio to include what it's calling corporate solutions. These usually consist of large illustrations put on the sides of buildings. Fathead has covered 14,000 square feet of Cobo Hall with its graphics for the North American International Auto Show that highlight classic cars and downtown's reinvigorated skyline.

"We wanted to come up with something fun and indicative of the resurgence of Detroit," McInnis says.

Source: Patrick McInnis, CEO of Fathead
Writer: Jon Zemke

Michigan Pre-Seed Capital Fund has struck again, investing $1 million into four local start-ups.

The four start-ups include Fusion Coolant Systems, Local Orbit, New Eagle Products, and Seelio. Seelio, New Eagle Products and Local Orbit are based in Ann Arbor. Fusion Coolant Systems was launched in Ypsilanti and is now based in Detroit on the campus of Focus: HOPE.

"The seeds that were planted several years ago are starting to bear fruit," says Skip Simms, senior vice president at Ann Arbor SPARK who oversees the Michigan Pre-Seed Capital Fund. "The ecosystem the state has created has really improved the quality of entrepreneur who is coming to us with better thought-out ideas and products that are further along."

The Michigan Pre-Seed Capital Fund is a collaborative effort of Michigan's SmartZones to support product commercialization at local start-ups. It has awarded more than $19 million in seed funding to 83 Michigan companies. One of the early recipients was Compendia Bioscience, which was acquired by Life Technologies last fall.

The Michigan Pre-Seed Capital Fund had its most aggressive year yet in 2012, making deals with 23 companies. Simms says he doesn't expect the fund to surpass that number again this year but there is more than enough demand from a plethora of quality companies.

"It has been growing," Simms says. "It has been evolving. The good news is it has been evolving and snowballing in a good way."

Source: Skip Simms, senior vice president at Ann Arbor SPARK
Writer: Jon Zemke

Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.

Delphinus Medical Technologies has begun raising a Series B round of fundraising, setting a goal of scoring $17 million by this summer.

The Plymouth-based start-up that calls the Michigan Life Science Innovation Center home is spinning out technology for an alternative test to mammography from the Karmanos Cancer Institute. It has already raised $12 million in a Series A round.

"Our current investors are willing to put in a substantive portion of this round," says Bill Greenway, CEO of Delphinus Medical Technologies.

The 2-year-old start-up's principal product is SoftVue, which works to effectively differentiate between benign and malignant masses in breasts. The idea is to help eliminate false positives and reduce unnecessary biopsies. It can also accurately measure breast density, a known risk factor for developing breast cancer, as well as detect many early stages of cancer in women with dense breast tissue, which is often not picked up by mammography.

SoftVue works by surrounding a breast submerged in warm water with an ultrasound ring that captures detailed, three-dimensional images with sound waves. The results are similar to an MRI, but the procedure takes only a few minutes and costs much less. The procedure was the inspiration for the company's name, which is Latin for dolphins.

The first prototype of the technology is currently being used at the Karmanos Cancer Institute. Greenway expects to ramp up commercialization and sales of SoftVue by the end of this year. He points out that St. Mary's Hospital at the University of Toronto is also in line to receive the second one. "We have a number of sites that are interested in a system," Greenway says.

Delphinus Medical Technologies currently employs 19 people after hiring five people in 2012. He expects to hire another five or six people this year.

Source: Bill Greenway, CEO of Delphinus Medical Technologies
Writer: Jon Zemke

The Michigan University Research Corridor (URC) helped create $2.6 billion in added economic impact in Michigan compared to similar figures released in 2007, according to a report released by the non-profit earlier this month.

The URC is a consortium of the state's three research universities (University of Michigan, Michigan State University and Wayne State University) focused on helping creating synergies between Michigan's universities and increasing research that comes from them. Its more recent report shows the URC contributed $15.5 billion to the state's economy.

"We think that is pretty impressive when we benchmark ourselves against Research Triangle and Massachusetts and Northern California," says Jeff Mason, executive director of the Michigan University Research Corridor.

One of the factors in that growth is the increase of spin-out companies from technology developed at research at Michigan's three research universities. In 2011, the three universities spun out 18 companies, which ranked it third against other similar innovation clusters.

"What you see is these institutions spinning out on average of one company every month," Mason says.
 
Source: Jeff Mason, executive director of Michigan University Research Corridor
Writer: Jon Zemke

LOVELAND Technologies got its start as sort of a happy-go-lucky group of friends leveraging software, crowd funding and art to launch a start-up. Today the 3-year-old company is expanding its client list, adding to its staff and focusing its business plan.

"We're trying to get smarter about how we make money," says Jerry Paffendorf, co-founder of LOVELAND Technologies.

The start-up's signature piece work is WhyDontWeOwnThis.com, a website that maps property ownership in Detroit. It got its start mapping out the thousands of tax foreclosed properties in Wayne County in 2011. Today it includes maps of government-owned land and is getting ready to launch a new version with more detailed views of all of the properties in the city and that helps people prepare for the tax foreclosure auction and prevent tax foreclosure.

"Now we're trying to make WhyDontWeOwnThis.com year round," Paffendorf says.

LOVELAND Technologies has also taken on more custom software projects, which has allowed it to add another staffer to its four-member team. The firm is also looking at launching a $100,000 fundraiser later this winter that will allow users to buy shares in the company in exchange for access to its newest tools.

"We're at the stage now where everything is functional, it just needs polishing," Paffendorf says.

LOVELAND Technologies has also moved from its Corktown office space to the Department of Alternatives in downtown Detroit. The new collaborative space at the corner of Washington Boulevard and Clifford Street is focused on providing office space for startups making a positive impact on the city.

Source: Jerry Paffendorf, co-founder of LOVELAND Technologies
Writer: Jon Zemke

Jesse Cory didn't make the decision to move his Internet art start-up to Detroit's Eastern Market by himself. He had his wife, his partner and five of his employees with him when they walked through 1410 Gratiot in the middle of last summer.

They saw the century-old building's vintage features, high ceilings and exposed brick walls. They saw that the renovation was practically complete and the finished space was perfect for a growing, edgy business like their's. And they'd only seen the first floor when they knew 1410 Gratiot had to be their next home.

"We walked through it and said, 'You want to sell this?'" Cory says.

1xRUN is a spin-off of 323 East and the Ohm Creative Group, a combination art gallery and marketing agency. Remember the Kwame mugshot mugs? Those came from the Ohm Creative Group and were sold at 323 East. Cory and his partners founded the quirky, art-inspired business in an odd-shaped commercial building on the eastern edge of downtown Royal Oak in 2006. The marketing agency magic took place in the back and the front gallery sold the wares of local artists with a heavy emphasis on graffiti art.

323 East and the Ohm Creative Group launched 1xRUN in 2010 as a way to sell limited editions of art prints. The idea took off and the business has grown rapidly since. It now employs eight people and a handful of independent contractors, becoming the centerpiece of the 323 East and Ohm Creative Group business empire.

323 East's downtown Royal Oak location couldn't keep up with 1xRUN's growth and increasing need for space to warehouse more art. The L-shaped building only consisted of a few 100 square feet on one floor. Cory and his partners began looking for a new home for their business and Detroit's greater downtown area was at the top of their list.

"There is an energy in the city we felt we were missing," Cory says.

He adds that he and his colleagues spent months speaking to every local economic development agency they could find and looking at even more spaces. There wasn't much in the way of what they were looking for, which consisted of a historic, urban building with three sizeable floors (a ground floor for an art gallery, a floor for 1xRUN art storage and work space and a floor for Cory to live on) that was largely renovated. Cory and his team didn't want an extensive renovation to take away from building their business.

The three-story building on Gratiot turned out to be perfect for those needs. The previous owners that had rehabbed it in 2005 were ready to move on after other opportunities led them elsewhere. They offered a Cory and his partners a land contract to purchase the building. And then there was Cory's familiarity with the block's emerging Bohemian atmosphere of artists and entrepreneurs.

"It's a very inspiring street," Cory says. "There are a lot of artists that have been there for years. We're excited to be part of the rebirth of that block."

Source: Jesse Cory, president of 1xRUN
Writer: Jon Zemke

Swift Biosciences has scored a $750,000 Series A investment from the Michigan Accelerator Fund I, money that will help the life sciences start-up accelerate the commercialization of its products.

"The extra financing will help us with product development and launch," says David Olson, CEO of Swift Biosciences.

The Ann Arbor-based start-up is developing molecular biology reagents for research and diagnostic applications that provide new ways to examine disease-related genes. This technology is expected to help researchers analyze samples faster, at a higher volume, and at a lower price per sample. The 3-year-old company launched its first product (a consumable product for genetic analysis that helps detect mutations in things like cancer, with high sensitivity) last year and is set to launch more similar technologies this spring.

Swift Biosciences has hired one person (a scientist) in 2012. It now employs 11 people and expects to add more people to its staff, but not in the next few months.

"We do expect to expand but it will be later in the year and in 2014," Olson says.

Source: David Olson, CEO of Swift Biosciences
Writer: Jon Zemke

Sawyer Altman and Matthew Tukel, high school students at the Jewish Academy in Bloomfield Hills, started their first business a few years ago. The idea? Bottle tap water from Detroit and brand it after the Motor City.

"We pitched it around and found out that no one wanted to drink Detroit River water so that did not sell," Altman says. "Matt and I sat down and said Detroit doesn't need water. It needs energy. That's how 313 Energy was born."

That was late in 2011. Today, 313 Energy is in 26 retail outlets across Metro Detroit. It donates 11 cents from each sale to the Detroit Public School Foundation. Altman and Tukel, now seniors, have moved their business and its team of three people into the M@dison Building in downtown Detroit.

The company hopes to be in even more retail outlets across the region and elsewhere in the Midwest by the end of this year. The firm is already looking at creating 216 Energy (216 is the area code for Cleveland) later this year.

"School is fading to the background and business is coming to the foreground because we're seniors," Altman says, adding "we want people to drink this instead of Red Bull."

Source: Sawyer Altman, co-founder of 313 Energy
Writer: Jon Zemke