20Fathoms Goes Deep for Start-Ups: Entrepreneur incubator opens shop on Front Street
After a number of false starts over the past few years, 20Fathoms opened in late July, moving in to 5,700 square feet of space on the second floor of 101 North Park at the corner of Front and Park streets.
The technology business incubator, which has signed nine entrepreneurs/tenants hoping to grow their businesses, hopes to give a major boost to Traverse City’s nascent start-up culture.
“There’s an abnormally high concentration of entrepreneurial activity in Traverse City,” said Andy Cole, executive director of the nonprofit. “Out of every five people you meet, one of them is doing something that just astounds you.”
Many entrepreneurs are working alone out of their homes or coffee shops. Those involved say the collaborative environment and educational programs at 20Fathoms could help those lone entrepreneurs accelerate their businesses.
“Everybody in there will help everybody else. That’s the beauty of it,” said Russell Schindler, a local tech entrepreneur who was involved in the effort to create 20Fathoms.
Schindler’s company, SampleServe.com, a three-person environmental mapping and data analysis business, is also one of the incubator’s tenants.
Securing a home for 20Fathoms – formerly known as Startology – was a lesson in patience for Cole and his board of directors. Several attempts to secure office space had failed, prompting the board to undertake a name change, Cole said.
“It was time to rebrand and say that we’re serious,” he said. “We conducted a brainstorming process and brought in a consortium of local marketing experts who helped us for free.”
Water experts at the Great Lakes Maritime Academy, who were consulted, noted that Grand Traverse Bay is clear to 20 fathoms, or 120 feet. And “fathom” can mean gaining an understanding a difficult problem on the way to solving it, Cole said. Thus, the name 20Fathoms was selected.
While water inspired the name, his tenants won’t have a view of it. Although the rent was the same for either a city or bay view, Cole chose the street.
“I don’t want people looking out their window and wishing they were on the beach,” he said. “There’s a lot of energy down on the street and we want to capture that.”
The incubator has received financial backing from dozens of investors and businesses, including Casey Cowell’s Boomerang Catapult venture capital firm and Northern Michigan Angels, a group of wealthy investors that invests in early-stage companies.
A fundraising goal of $500,000 was set. So far nearly $400,000 has been raised, including $20,000 from 4Front Credit Union to help pay for the incubator’s high-speed fiber internet service.
Much of the money has come from investors who want to remain anonymous, Cole said.
In addition, Traverse City’s Downtown Development Authority was recently awarded a $92,000 United States Department of Agriculture Rural Business Development grant to assist 20Fathom’s launch.
About a third of the 55-person capacity of the incubator is filled, Cole said. He’s going slowly to fill the remaining space in order to take time to capture the best talent and business ideas.
“We have an extensive vetting process,” Cole said. “You want to start out with the best talent. A-gamers attract A-gamers.”
20Fathoms is designed to house a variety of startups with one to three employees. Those that grow to 5 or 6 employees will generally be ready to leave the incubator.
The location includes private offices designed for larger companies, including those outside Traverse City, looking for an offsite location. Tenants pay rent ranging from $100 a month for a day-use pass to $1,500 a month for a private office.
The goal is to be self-sustaining in three years, Cole said.
Tenants also can take advantage of a variety of educational and business consulting services provided by Michigan Technological University, Michigan State University and Grand Circus, a Detroit-based firm that offers coding boot camps and digital marketing classes.
Cole said 20Fathoms initially is concentrating on attracting local entrepreneurs to start and grow their business in the incubator. The next phase will involved attracting out of town entrepreneurs to come to Traverse City.
“People tend to be attracted to the lifestyle here first,” he said. “We want to try to attract them here first for the business opportunities.”
Some of them might be “boomerangs,” people who grew up in Traverse City, moved away to make a living and are looking to return.
Cole counts himself among them. A Traverse City West High School graduate, Cole earned an MBA in entrepreneurship from Babson College and worked as a business consultant in Boston before returning to Traverse City several years ago.
“Andy is definitely the right guy for the job,” Schindler said.
The success rates of business incubators are mixed, and there is much debate by experts over the value they provide to entrepreneurs and startup businesses.
Larry Molnar, associate director of the University of Michigan’s Economic Growth Institute, said savvy management is key to a business incubator’s success.
“If incubators are operated in a prudent manner and with best practices, they’re successful,” said Molnar, who also is the past president of the Michigan Business Innovation Association, which promotes business incubators in the state.
The association lists 31 business incubators in Michigan. Molnar said incubators are increasingly becoming “accelerators,” in which startups are expected to quickly scale up and graduate from incubators in months, rather than years.
“You rapidly mature these companies and if they fail, they fail fast,” he said. “It’s better than just hanging on for a long time without much success.”
Cole said 20Fathoms plans to offer accelerator programs sometime next year.
“We’re not going to conquer the world right now,” he said. “We think we will in due time.”
In addition to SampleServe, the following companies have rented space at 20Fathoms:
– Atlas Space Operations, a Traverse City cloud-based satellite communications company
– Mango Languages, a Farmington Hills-based language learning company
– Electric Forge, A Traverse City-based company that “delivers industrial scale cryptocurrency mining products to large scale renewable energy producers”
– Inc. Technologies, a California-based cloud computing, network design and technology solutions company
– HealthBridge Financial, a Grand Rapids company that designs health care payment systems involving employers, patients, insurers and health care providers
– Aveopt, an Ann Arbor-based virtual reality company
– Starboard Solutions Corp., an Ann Arbor-based logistics, supply chain and warehousing company
– But Everywhere, a service allowing remote workers to travel across America while working in the latest collaborative workspaces