Out on a Limb: Venture North helps budding entrepreneurs launch
Venture North isn’t afraid of it.
A quarter of its clients were under the age of 40 when they sought out financing help from Venture North or its predecessor programs.
Today, with a track record of 104 loans made to businesses and no defaults, Venture North Funding & Development has successfully helped entrepreneurs young and otherwise in northwest Michigan start their businesses.
Take the youngest duo – brothers ages 15 and 18 when they got their first loan to sell a fledgling LED lighting system for sporting equipment.
Now, at 21 and 24, they helm a business with international sales and a growing following.
“As young kids, it’s hard for two 20-something-year-olds, or back then, two teenagers, to go to a bank” and get a loan, said Garret Porter, who with older brother Dakota owns 45th Parallel Lighting LLC, producer of ActionGlow LED sport kits for snow, water and street sport enthusiasts.
“A disadvantage of being a young entrepreneur – people don’t think you’re serious about it,” Garret Porter said. “That’s one thing that made us the most mad and irritated when we were up-and-comers, was people saying we weren’t going to stick with it. Eight years later, we are still selling our products, still developing our products all the time.”
Laura Galbraith, Venture North executive director, said that of the $5.7 million that Venture North has lent to businesses, $867,000 has gone to young entrepreneurs, from startup seed capital to money needed for a next stage of growth.
For many, the road to financing means first turning to Venture North partners like SCORE and the Michigan Small Business Development Center (SBDC), for crucial mentoring, consulting and help, including putting together a solid business plan, Galbraith said.
“That’s why, when we looked at their application, even though they might have been on the young side, it was fully thought out,” she said. “They had solid market research, a good market plan, reasonable cash flow projections.”
After working with the SBDC to write a business plan, Kalkaska’s 31-year-old Kristin Andrews in September opened doors to her Blue Fish Early Learning Center with the help of $15,000 from Venture North. She used the money for startup costs like egress improvements at the approximately 9,400-square-foot building she is leasing, and equipment purchases – propelling her vision of giving to the community where she went to school and is raising a family.
“The community I’m rooted in needs childcare,” said Andrews, who holds an associate’s degree in early childhood education from Baker College in Cadillac and has worked in the childcare arena for nearly a dozen years. The center, open initially with slots for 48 children but able to accommodate more, is “something that my own community needed, and it was time to give back to the community,” she said.
Blue Fish employs eight and already has a waiting list. “It has taken off a lot faster than what I anticipated,” Andrews said.
And she said along the way, Venture North has provided guidance and helped her think critically about the business in both near-term and long-term ways, checking in periodically without being overbearing. “It’s another set of eyes for you, and that’s what is helpful,” Andrews said.
Another Venture North client is Becky Tranchell, owner of Rose and Fern Café on Traverse City’s Eighth Street. Tranchell, a graduate of Northwestern Michigan College’s Great Lakes Culinary Institute (GLCI) with about a decade in the food and restaurant industry, said she has always wanted to have her own coffee shop/café and was confident that the neighborhood would support her vision for the space owned by Mike and Kathy Potter and joined to their Potter’s Bakery.
In summer 2018, Tranchell said she approached the Potters with her idea. They formed an arrangement for her to operate a pop-up and soon feature her own menu, with Tranchell an hourly paid employee and the Potters buying the food and receiving the profits. While operating the pop-up, she connected with Venture North.
“I went to some local banks and credit unions … a single 30-year-old-woman who doesn’t own a house” or have anything for collateral, Tranchell said. “Running into walls” with high interest rates and down payments requiring money she didn’t have, she approached Venture North for money to turn space she would lease from the Potters into a full-fledged café.
“It was crazy, I did not expect them to offer me the full amount that I needed,” she said.
A loan for just over $26,000 helped support kitchen equipment purchases, surfaces for tables and countertops and other improvements, including electrical upgrades and equipment for what would become a coffee bar with whole beans roasted and supplied by Stockist Co.’s Jeffrey Brown.
Tranchell employs seven, including Brown and a GLCI graduate and current student. She said the café has exceeded her expectations and while she’s thought about future growth, she’s “in the moment of this place” and the rewards it brings, including being able to support employees. Her advice to other young entrepreneurs: Be tenacious, curious, and forward-thinking.
“Curiosity is so important, when a problem faces you rather than to let it shut you down … it’s always being curious and working with what you have,” Tranchell said. “And, kind of sticking to your guns. You’re going to hear ‘no’ and you’re going to have doubts and you’re definitely going to hit walls, but just having some ability to not have it stick to you and keep moving forward” is important.
Galbraith said the portfolio of young Venture North clients splits about evenly between women and men and is diverse, touching a variety of pursuits and industries including retail, manufacturing, food service and landscaping. About half of the businesses pursued loans from Venture North’s Micro Loan program, which offers loans up to $50,000 with repayment terms up to 36 months. Micro Loan requirements include personal federal income tax returns, business plan and projections; funds can be used for equipment, inventory and working capital.
Others have tapped Venture North’s Small Business Loan program, which offers loans from $50,000 to $250,000 to those two years in business with an on-time payment history. Loan terms are up to 60 months and proceeds can be used for equipment, inventory, working capital, short-term bridge financing, gap financing and real estate.
Created in 2015 with the consolidation of the Traverse Area Chamber Foundation and the Traverse Bay Area Economic Development Corp., Venture North provides small business loans and resources for economic and community development. A federally certified Community Development Financial Institution, it is an alternative lender to entrepreneurs who can’t access traditional financing routes.
That can even be those who need a parent to co-sign, like 16-year-old Brent Brisbois. He had the idea for a virtual reality arcade in Traverse City after stopping at one during a family trip to Marquette, and eventually approached Venture North after SBDC helped him write a business plan and apply for a loan.
Looking to cover startup costs and three months of operation in a spot in Traverse City’s Warehouse District, Brisbois, a junior at Traverse City West Senior High School, received $15,000 from Venture North that helped cover parts to build computers, purchase headsets and make leaseholder improvements like tearing out walls, painting and furniture, he said. An additional $5,000 came from a family member, Brisbois said, and he received $500 from TCNewTech that went toward his loan’s closing fee.
Verge of Reality opened in June. Brisbois said his parents are co-owners in the arcade, where patrons wear headsets and use hand controls to experience more than 50 virtual reality games. Venture North is also providing a grant that Brisbois can use for marketing and other professional services.
The organization has been “very helpful,” he said. “It’s not like we’re putting more work on them … they just want to help us,” he said.
Galbraith said a few clients have come to Venture North multiple times as needs have arisen.
“We’ve been able to see them … over the years, have progression and growth in their businesses, which was good to see,” she said.
For the Porter brothers, a $2,500 loan in 2013 for equipment, supplies and inventory needed to ramp up ActionGlow assembly for the Christmas rush was big. But it was just part of the road in a venture that’s grown as the brothers earned associate’s degrees in business from NMC and followed their vision, researching and developing new products.
The two share responsibilities: CEO Dakota created and designed the company’s first logos, videos and websites and is “very big” into electronics, design, and thinking about how something “would work when it comes to the actual application, actual product,” said COO Garret, who calls himself “more of the numbers guy.” His focus includes financials, sales and strategy.
The two obtained a patent covering decorative lighting systems for sport equipment and have products for snowboards, skis, wakeboards, surfboards, stand up paddle boards, kayaks and canoes, longboards and bikes. Still working out of Acme, they have two part-time employees and website sales that include customers in Europe, Australia, New Zealand, Canada and the United States.
In 2016, the Porters tapped a $3,000 Venture North loan for website redesign – a move that Garret said significantly ramped up sales. More recently, they received a $1,800 grant through Venture North’s professional service provider program, which offers clients matching dollars for services such as legal assistance, accounting and bookkeeping, human resources, advertising and marketing.
The program, launched in 2018, initially was funded by a $30,000 U.S. Department of Agriculture grant. This summer it was boosted by $50,000 from the Consumers Energy Foundation. The program to date has assisted 20 clients. For the Porters, the money will pay for an Atlanta, Georgia agency to design an ActionGlow social media marketing campaign.
Apparel is coming soon and the Porters are working toward launch of ActionGlow2, a system that will use a rechargeable battery instead of the current nine-volt. The brothers are converting a school bus they purchased into a motor home and plan to take it around the country next year, selling to surf, bike, snowboard and ski shops.
“We’ll stop everywhere there is a good place for our lighting systems to be sold,” Garret Porter said, adding that they will chronicle the journey with videos they’ll upload. They also want to stop at schools and universities to give presentations on youth entrepreneurship.
When it comes to entrepreneurship, persistence is key, he said. “What I would share with anyone is just stick with it,” he said. “No matter what people say, prove them wrong.”
And the brothers haven’t lost sight of the passion that led them down their business path. “We are exactly who we are targeting; we are action-sport junkies,” Garret Porter said. “At the end of the day we are still two kids in our twenties that enjoy having a good time.”
Amy Lane is a freelance journalist and former reporter for Crain’s Detroit Business, where she covered business, state government, energy and utilities for nearly 25 years.