Small Business

The Underground incubator grows businesses in seven Thumb-area counties

The Underground is a thriving incubator in downtown Port Huron, in the basement of the old Sperry’s department store on Huron Street in what is now the Sperry Moviehouse, a boutique cineplex.

The theaters had their grand reopening in December 2016. As part of a $1 million federal Brownfields Economic Development Initiative grant to help fund renovation costs, Chuck Reid, a Holland-based entrepreneur, agreed to allow a business incubator to be housed in the basement.

The result has been a low-overhead structure for the Underground and lower rents for its tenants. It had its ribbon cutting in March 2017 and landed its first tenant that April.

Reid gets 90 percent of the tenants’ rent and pays all the taxes and utilities except for internet costs. The incubator keeps 10 percent for its operating costs.

“We’ve visited a lot of incubators, and they often have trouble paying the bills. Our agreement allows us to keep rent low. We have an incubator that is really sustainable,” said Dan Casey, the CEO of the Economic Development Alliance of St. Clair.

The incubator is a partnership between the EDA and the state’s central Thumb-area SmartZone, which covers seven counties. The region’s Small Business Development Center is also based in the Underground.

Normally, the EDA would only be involved with businesses based in St. Clair County, but because the SmartZone covers seven counties, the incubator also includes what are called virtual tenants — members that have chosen to operate their business elsewhere, but do want access to mentoring, conference rooms and events.

“We knew there would be people who wouldn’t want to drive here every day but wanted the benefits of the program,” said Casey.

There are levels of membership depending on the needs of the member entrepreneurs, from renting an enclosed private office space to co-working space that allows members who often have day jobs to come in at night and weekends and occupy a desk or chair in a common area.

Tenants get 24/7 access, IT support, Wi-Fi, a graphics work station, office equipment and supplies, design help for ads, brochures and other printed material and access to what is called the Edison Think Tank, a 40-seat space in the back of the incubator that can be rented for training or conferences.

Tenants also have in-person, online or phone access to Matt Fernandez, who in addition to running the incubator has the titles of mentor-in-residence and CEO-in-residence. He is a serial entrepreneur who is CEO of two Port Huron businesses, the North Coast Golf Co., which designs and makes high qualify golf gloves, and the Tee Box Club, an e-commerce company focused on golf.

An enclosed office for up to four persons costs $250 a month. Access to a desk and chair on a first-come, first-served basis is $40 a month. Virtual tenants pay $90 a month.

Quentin Bishop, the director of business attraction at the EDA and director of entrepreneurial services for the SmartZone, said the incubator needs four tenants of enclosed offices, 10 co-working tenants and five virtual tenants to break even on costs. Currently it has five in enclosed offices, 10 co-workers and six virtuals.

Tenants can get startup funding of $5,000 in grants from the Emerge Fund, a fund created by $25,000 in donations a year, half by the EDA and half by the Community Foundation of St. Clair County. Grantees must create an acceptable business plan and accept members to an advisory board.

As of the end of January, the Community Foundation approved another investment fund of $33,000. Unlike the Emerge Fund, which provides grants, this one will provide funding to companies in exchange for 5 percent of equity. The fund will be split among three winning applicants. They will receive 12 months each of incubation services in the Underground and can spend their $11,000 on such things as legal fees, patent work and prototyping.

Bishop said tentative names for the new fund are the Emerge Fund 2.0 or the Proving Ground Fund.

Tech companies are welcome at the Underground, but its founders want to encourage entrepreneurs of all kinds. A recent graduate that has moved into its own store across the street is a nonprofit teaching area high schools girls the ins and out of retail; another makes plastic hoops to help backyard farmers grow tomatoes; another etches designs on glass tumblers and wine glasses for local bars and restaurants. (Read more about several successful businesses incubated at the Underground.)

“If you want to move back here from Chicago and start a business, we have everything you need,” said Casey. “You don’t have to be high tech. We’re not Ann Arbor Spark and the University of Michigan, we don’t have a lot of tech companies here with a lot of grant funding. We’re happy to help create small companies that will employ local workers.”

Casey said the Underground has worked so well he plans to open a satellite incubator in the south end of the county. “I hope to find space and sign a lease in the next couple of months,” he said.

Source

neallesh@yahoo.co.uk

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