Student Incubator in Ann Arbor

http://www.crainsdetroit.com/article/20090721/GEO01/907219994

Student-run incubator hopes to breed next wave of tech moguls
By Dustin Walsh

TechArb, a UM student-run incubator, is an extension of the RPM-10 program for student entrepreneurs led by RPM Ventures and the College of Engineering's Center for Entrepreneurship.

Under Google's imposing shadow on East Washington Street in Ann Arbor, more than two dozen University of Michigan students click-clack on keyboards and discuss third-party software, iPhone applications and angel investors. They are all attempting to grow technology-based startups and to see their big ideas succeed as part of the student-run incubator, TechArb.

TechArb, with its 29 budding entrepreneurs representing 11 companies, is the upshot of UM senior Jason Bornhorst's involvement in the entrepreneurial summer internship program, RPM-10.

RPM-10 is a 10-week technology-based accelerator, created by Ann Arbor-based venture capital firm RPM Ventures and the College of Engineering's Center for Entrepreneurship.

Now in its second year, RPM-10 selects three UM student-run startup companies a year and provides them with mentorship and capital to build their company.

The Center for Entrepreneurship provides each company with up to $25,000 of funding. The idea is to have a product and customers by the end of the program.

“We talk a lot about turning Michigan's economy around,” said Marc Weiser, managing director for RPM Ventures. “You can spend a lot of time in the classroom, but the best way to learn about entrepreneurship is to get out there and start a company.”

Thomas Zurbuchen, director of the Center for Entrepreneurship, said the center spent about $70,000 on RPM-10 companies in 2008.

Ann Arbor Spark also provided financial support for some of the companies, said Skip Simms, executive director for the business accelerator, although, he declined to share details.

Bornhorst, 22, participated in last year's RPM-10 program. However, his appetite for startup glory wasn't realized as his Web-based company, Campusroost Inc., couldn't secure advertising revenue.

But he wasn't discouraged. In fact, he approached RPM Ventures and the Center for Entrepreneurship, with a group of fledgling student entrepreneurs, who called themselves Maize Ventures, and the need for office space.

The group received a portion of the 30,000 square-foot basement office space in the adjacent parking garage to the McKinley Towne Centre, which houses Google. With a site secured, TechArb became an extension of the RPM-10 program.

TechArb companies received rent-free space from May through September, courtesy of Ann Arbor-based real estate firm McKinley Inc.

Weiser is the son of McKinley founder Ron Weiser and currently serves on the firm's board of directors.

Bornhorst, who's in UM's computer science engineering program, started the tech company Mobil33t L.L.C., which resides at TechArb. The company released the free iPhone mobile application DoGood on June 7. The application encourages users to commit a specific good deed each day.

It's not an overly complex application, but it's popular. Since its June launch, the application has been downloaded by almost 43,000 iPhone users at press time. It has also been featured in Forbes and The New York Times.

Bornhorst said the program doesn't generate revenue for Mobil33t, as it was designed to build exposure for the company. Mobil33t is a bootstrap company and has not received outside funding.

Brett Wejrowski, a TechArb co-founder, launched the Web application development firm The Wojo Group, when he was 18. He's 23 now.

His other company, Carrier Mobile L.L.C., operates out of the TechArb offices and is part of this summer's RPM-10 program. Phonagle L.L.C. and Shepherd Intelligent Systems are also part of the RPM-10 program and housed at TechArb.

Carrier Mobile developed GPS-enabled smart phone software to aid truck drivers in automatically logging their driving hours. The company is still in the development phase and has not produced any revenue.

Wejrowski, also a senior in UM's computer science engineering program, said TechArb's strongest asset is that it provides the opportunity to collaborate with fellow participants.

“It's great to be able to get advice from other students that go through the same things,” Wejrowski said.

Bornhorst called TechArb an entrepreneurial fraternity.

“Collaboration is one of the biggest things that happen here,” he said. “You may have a down week, but when you come down here and see 30 others with the same troubles; it picks you up and keeps you going.”

Zurbuchen of Center for Entrepreneurship calls TechArb a “beehive for entrepreneurs” and said the entrepreneurial mindset is the most important value the university can provide students outside of its primary curriculum.

“We need people with an entrepreneurial mindset to address the problems we have within Michigan, within the U.S.,” he said. “TechArb will hopefully become a core support mechanism for student entrepreneurship — and, eventually, faculty entrepreneurship — on the Michigan campus.”

For now, TechArb is an entrepreneurial experiment for the 11 companies, RPM Ventures, UM and McKinley. If the students find it useful and the university sees it as successful, TechArb could become permanent.

The TechArb entrepreneurs are currently working with RPM Ventures on a proposal for UM.

Zurbuchen said he thinks the university can sustain TechArb in its current location for under $300,000 a year, depending on staffing needs. He said the university would likely leave TechArb at its current McKinley-owned location, opposed to moving it on campus, at least in the short-term.

“My feeling is that it's working where it is,” he said. “It's really about what happens with the newly acquired Pfizer area. If it's going to be an entrepreneurial center, of course, we'll want to be near it.”

Don Reimer, director of the Lear Entrepreneurial Center in the College of Engineering at Lawrence Technological University, said all of the state's universities are trying to develop strong entrepreneurs.

“The entrepreneurial minds in Michigan are now taking leadership roles within the state, and now we're competing globally, so the mindset, in terms of innovation, is very important to the economic development in Michigan,” he said. “I think the university (UM) would be wise to take a good look at what these kids are doing.”

Lawrence Tech does not currently have a student-run incubator, Reimer said, but the university offers an entrepreneurial internship program where selected students work with local entrepreneurs.

Wejrowski said the TechArb residents are cataloging data in an attempt to formalize the benefits. But, he said, success is the best — and easiest — way to secure funding.

“The biggest thing that can happen to move this forward is for one of these companies to take off,” he said. “Then, we can tell the university they started here at TechArb.”

Facebook was launched from a Harvard University dorm room. Michael Dell founded Dell Inc. while attending the University of Texas. Weiser hopes TechArb's gifted entrepreneurs can rise to tech mogul status.

“It will definitely help raise the profile of Michigan as an entrepreneurial university,” he said. “Fifteen years ago Larry Page was no different than these kids are today.”

Larry Page is the 26th richest person in the world, worth $12 billion, according to Forbes. He grew up in Lansing and graduated from UM with a bachelor's in computer science. He's the co-founder of Google.

“Five years from now, when Michigan has the next Dell or Facebook,” Weiser said. “People won't talk about how it started in a dorm room; they'll talk about how it was started at TechArb.”