Money trail: Three of MTI's earliest grant recipients reflect
Photo/David A. Rodgers
Philip Grant, president of IC Solutions, on site at client, Clynk
Photo/Courtesy of University of Maine Orono
George Markowsky, co-founder of MAUVCO (now called Global Threat), says MTI seed grants helped his company explore the market
Photo/Courtesy of Coastside Bio Resources
Funding from MTI has helped Coastside Bio Resources market its sea cucumber products internationally, according to Peter Collin, president and owner
The latest report on the economic impact of the Maine Technology Institute awards was released on Jan. 15. Principal investigator Charlie Colgan found much, once again, for the Maine business community to be excited about: From 2007 to 2008, the $7.1 million in MTI grants awarded to businesses in 14 counties leveraged $117 million in public and private matching funds for research and development. That’s $14.27 for every $1 in MTI funding.
Since it was founded by the Legislature in 1999, MTI has awarded more than $50 million in development and seed grants to Maine businesses, as well as millions more for its smaller programs like cluster enhancement. Recipients’ ability to snag non-MTI matching funds rose in fiscal years 2007-2008 by more than $2 for every MTI dollar invested, from the 2002-2006 rate of $12. And MTI grant recipients report they rely on product sales for the majority of their revenue — 64%, grants for 27%, and other funding for 9%, with the relatively young biotechnology sector relying the most on grant monies for around 40% of their revenue.
Colgan did find unmistakable room for improvement at the R&D engine — employment at MTI-funded companies slipped slightly from 2007 to 2008, from 5,207 people to 5,120; recipients in the forestry/agriculture and composites sectors continued to bleed workers; and, while new product development has improved steadily since 2002, none of the companies that received grants from as far back as 2002 reported a certainty level above a six on a one-to-10 scale (10 being “virtually certain”) that their MTI-supported products would hit the market within two years.
Story continues after the charts
One way to identify how MTI has impacted the business community is to gauge the success of some of its earliest grant recipients. Mainebiz interviewed three business owners who were among the first class of seed grants awarded by MTI in 2000. Seed grants are MTI’s version of starter funding — capped at values of $12,500, seed grants support early-stage research and development of products and services. MTI also offers six other types of funds — some created after 2000 — that nurture a business in later stages of development. These include awards intended to help Maine companies obtain the kind of federal and private funding of upwards of hundreds of thousands of dollars most R&D efforts need to enter the market. But the seed grant, with its gesture-of-good-faith undertones, remains the hope for thousands of startup companies looking to try out their big idea.
Of the 20 companies that received seed grants in 2000, seven were confirmed out of business or no longer pursuing the research that the grant supported. Of the five others who agreed to speak with Mainebiz about the impact of their awards, the feedback on MTI was universally positive — in keeping with Colgan’s finding that more than 97% of surveyed grant recipients reported a positive working relationship with the institute.
The following is an edited transcript of conversations with three of MTI’s earliest seed grant recipients.
Philip Grant
president, IC Solutions, Scarborough
Founded: 1998
Employees, 2000: Two to three
Revenue, 2000: $178,000
Employees, 2009: Five
Revenue, 2008: $435,000
2000 seed grant: $10,000 for business plan and corporate structuring
Total value of MTI grants received: $10,000
Website: www.icsic.com
“[The grant] helped us to find a market.” -Philip Grant, president, IC Solutions
We provide custom software development solutions as well as development market packages [and] software packages for the nonprofit and banking industries. [The 2000 seed grant] meant a lot, actually. We were in the process of working and changing our corporate structure and we were developing a business for a product called Member Advantage which is sold to nonprofits. Through that process we changed the way we looked at that product and it changed the way we looked at our company as well. Member Advantage has been a part of IC Solutions for about 15 years and we rebranded the product during that phase. We came up with the Member Advantage brand.
[The grant] helped us to find a market. Member Advantage is a small part of what we do right now, but [the grant] helped us sort of figure out what to do and what not to do with that product. Since then Member Advantage has grown — it’s used by nonprofits across the country. The Federal Reserve Bank [New England] Public Policy Center uses it. [Member Advantage] enhances the nonprofit’s ability to communicate with its membership.
Specifically, we were able to really dig in and look at the competition. At that time, there were a lot of companies that were raising a lot of money to buy products like Member Advantage. And what we realized … was that a lot of the direction that they were taking, we were looking at that same direction. The way these other companies were doing it, even the way we were thinking about doing it, wasn’t going to work. And it turns out that several of the large players at the time, those companies are no longer in business.
We really refocused and concentrated more on the product and servicing the market and less on trying to accomplish the goal that these other large organizations were trying to go after. We heard their pitches and we were looking at them as competitors. I had been in that market a long time and some of the assumptions that they were making about the adoption rates and the ease of employing the software just weren’t realistic. We didn’t make those assumptions, which is why we kind of pulled back and changed direction.
We brought on a person because of that grant and that person stayed. We still have that position.
[The seed grant] allowed us to go through a business-planning process that helped us make a better decision and the result was we [added] an employee and we grew.
George Markowsky
co-founder, MAUVCO, Orono
Founded: 1999, changed name in 2001 to Global Threat and altered mission
Employees, 2000: Two
Revenue, 2000: $0
Employees, 2009: Four
Revenue, 2008: Less than $2,000
2000 seed grant: $9,950 for Maine autonomous underwater vehicle development
Total value of MTI grants received: $19,950
“The seed grant is enough to sort of explore in the area, but it’s not really enough to build from.” -George Markowsky, co-founder, MAUVCO
We were trying to get an effort under way to build autonomous underwater vehicles and the purpose of the grant was to enable us to get a [National Science Foundation grant]. So we put [a proposal] together but we didn’t get funded [by NSF]. We were trying to put together a group to design these underwater vehicles, but we never got funded and we went on to other things. I changed [the company] to a different name [in 2001]; it’s call Global Threat. We work on land-based security systems.
We thought we had some good ideas, but it takes a certain amount of capital. The seed grant is enough to sort of explore in the area, but it’s not really enough to build from. Under the new name we got another grant [from MTI] to work on the security system. We built some prototypes and we’re still working on that. Actually, as grant-making agencies go, [MTI is] a good group. At least they’re willing give people a chance to work out some ideas. I think it was mostly a matter of getting enough funding [for MAUVCO]. Now they’ve even introduced a new class of grants, which is like an SBIR [federal Small Business Innovation Research] grant. Its purpose is directly to help you put together an SBIR grant. At the time we were writing [MAUVCO’s MTI grant application] if that variant were available then maybe that’s what we would have picked, but initially they had only one kind of seed grant.
Peter Collin
president and owner, Coastside Bio Resources, Stonington
Founded: 1994
Employees, 2000: Two
Revenue, 2000: $600,000
Employees, 2009: Four
Revenue, 2008: $1.2 million
2000 seed grant: $10,000 for drug development from fishery waste in Maine
Total value of MTI grants received: $524,100
Website: www.seacucumber.com
“We ended up having a large collaboration with the Russian Academy of Sciences, and without the help from MTI that would never have happened.” -Peter Collin, president, Coastside Bio Resources
Ok, it’s funny you should call right now, I’m writing a long letter to a colleague describing our success. We’ve published a peer-reviewed journal paper on one of the anti-cancer compounds we were supported by from MTI and it’s forming the basis for future developmental work.
There’s two sides to the Coastside Bio. We have health food products from sea cucumbers in the world market, in the U.S., Canada, Australia, New Zealand and in the U.K., for people and pets. [Sea cucumber products] have a very unique anti-inflammatory effect and we have about 10 to 12 U.S. patents covering that work.
I’ve had four of those [seed] grants, plus a large development grant from MTI, so they all run together, but they all focus on allowing us to take marine natural products that are in the waste stream — a waste stream is whatever a fish processor doesn’t want — and make anti-cancer, anti-inflammatory compounds with them. So that first seed grant was us saying, “We know that there’s something here, that there’s an anti-cancer, anti-inflammatory effect in these products, and we’ve gotten a grant with the National Cancer Institute, but we need support.”
[The 2000 seed grant] led to four or five peer-reviewed papers in scientific journals and that’s basically the credibility that we’ve gotten.
We ended up having a large collaboration with the Russian Academy of Sciences, and without the help from MTI that would never have happened.
Sara Donnelly, Mainebiz managing editor, can be reached at sdonnelly@mainebiz.biz.
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