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With over a half-million dollars in funding, the Efactory business incubator in downtown Springfield has provided an initial boost to 17 startups through its accelerator program. Officials say the investment is paying off for the local economy.
Since summer 2016, the Efactory has held four cohorts of its intensive three-month crash course on business ownership and development. Entrepreneurs are paired with mentors, provided training and given $30,000 in funding in exchange for 8% equity in their companies.
“It was a way that we could invest capital so that companies have a chance,” said Rachel Anderson, director of the Efactory, a Missouri State University entity. “And so they don’t have to leave Springfield.”
Anderson said so far through the Springfield Innovation Inc. board, which manages the investment in the accelerator companies, a $510,000 investment has been made among the companies.
Efactory Program Coordinator Paige Oxendine said money is recouped from the startups if they are sold, but that’s not the accelerator’s sole focus.
“We view our investment in these companies as an investment not only in them, but in our region as a whole,” she said. “The creation of the fund and the accelerator program allows us to support entrepreneurs, foster innovation and create jobs.”
As a nontraditional investor, Anderson said this allows the focus to be on helping the companies grow.
“This is some of the friendliest money you’re going to get with investors,” she said. “They’re really setting up their company to be successful if they’re taking on smart investment.”
Among the 17 graduates of the accelerator, Anderson said MOFIN Labs is the only business that’s closed and Eagle Speak LLC is the only company that’s been acquired. That deal with health care startup Hearo Technologies LLC closed on Dec. 31, 2018, for undisclosed terms, according to past Springfield Business Journal reporting.
Easy Access Hunts LLC’s founder and CEO Joey Pate said a $35,000 investment from the accelerator and the Efactory’s Spin 66 Pitch Pit is the only outside money he’s taken for the company described as the “Airbnb for hunters.” In addition to the investment from being in the third accelerator cohort, the company took home an extra $5,000 by winning the 2018 pitch pit competition, funded by event sponsor RMI Inc.
“We’ve had a lot of interest,” he said of potential investors. “We want to do a slower growth on this one. We don’t want to rush into those things.”
Easy Access Hunts has developed software that connects private landowners with hunters to book short- and long-term lease agreements. About 18 months after launching, Pate said the company has posted its first profits and works with 25 landowners spanning 10,000 hunting acres and 90 active hunters.
After initially building the company to only provide short-term arrangements, which are uncommon in the industry, Pate said he pivoted and added long-term leases this year.
“We were leasing some of our long-term leasing within hours of posting them,” he said, noting about a third of his properties are annual leases. “Some properties out there are just better suited for that.”
Another Spin 66 pitch winner and accelerator grad Amy Blansit, founder of Solely Jolie, also earned $30,000 from the Efactory, as well as $5,000 in capital and another $5,000 worth of business services from winning the 2017 pitch pit. She said without that funding, her product wouldn’t have been developed.
She stumbled upon the idea after discovering a need in her own life. She wanted to use the same brush to apply different makeup colors and accidentally discovered that a silicone bracelet she was wearing easily picked up the pigment. With Solely Jolie, she developed a silicone mat that cleans brushes without getting them wet.
Blansit, who’s also an instructor at Missouri State University and the founder of the Drew Lewis Foundation Inc., said she’s not pursuing the job as her full-time gig, but it is turning a profit on sales of roughly $10,000 last year.
“It’s kind of a hobby is the best way of seeing it. I’m not giving up on it,” she said. “We’re still patent pending to protect the idea. And we’ve been working with a company on the East Coast on potentials for licensing.”
The Solely Jolie mat sells locally at Acacia Spa and Ensley & Swann Boutique & Marketplace, as well as online at TheGrommet.com and through a licensing deal with a Japanese company.
The product is manufactured in China, but Blansit said she’d like to move the work stateside. She also has developed a line of brushes to sell as a kit that’s available with licensing deals.
“I’m in conversations with a lot of people in Europe,” she said. “I might be taking a fun trip in Paris to meet with a makeup artist who’s interested in promoting it.”
Blansit’s fellow cohort No. 2 grad Chad Boschert is pursuing his startup as a full-time gig. The founder and CEO of Apt Crowd LLC developed a natural language processing algorithm to help users in chat forums. Natural language processing analyzes the interactions between humans and computers.
“When someone asks a question, instead of waiting for people to answer them, we direct them toward other paths to resolution,” he said of the technology, which can answer user inquiries instantly.
He said his algorithm studies the query and links to relevant past conversations and advertising. Currently, he’s using the tech with professional engineering groups.
Since leaving the accelerator, Boschert said the company has two clients with forums totaling nearly 600 active users, and two more forums are in the pipeline. The forums are private and tailored to professionals within the engineering industry.
He said another revenue stream is from about a dozen clients that place advertisements within relevant forum threads. He said the company is profitable, and his only investment was from the Efactory.
“With these types of businesses, you start with survival and then you start thriving,” he said. “It’s getting past that tipping point. All the trends are in the right direction.”
Boschert’s working on growing forums and advertisers and is looking to expand the technology beyond engineering forums.
While Easy Access Hunts, Solely Jolie and Apt Crowd have focused only on Efactory support, one graduate of this summer’s cohort took a different approach.
As of last month, Compat.io had raised $1.25 million in investments for its cloud-based software, according to past SBJ reporting. The software platform enables dealers and merchants to sell customized products and services, and it’s now available on open-source e-commerce platform Magento.
“The world is changing, and it’s changing fast,” founder and CEO Tim Baynes said at Demo Day last month, the culminating event for the accelerator program. “E-commerce is now taking up over 10% of the market share for products sold every year, and it’s growing at over 1% per year.”
Pate said the investment and resources through the Efactory accelerator was a game changer for Easy Access Hunts.
“Just the exposure we got in the Springfield area was really beneficial,” he said, adding the key components were general business knowledge, mentoring, building a strategic plan and networking.
Blansit said the accelerator helped her refine the vision for Solely Jolie.
“One week you’re building this idea and the next you’re tearing it down,” she said. “It really helped me focus on the idea that I want to go into licensing. I don’t want a sales team and a storefront.”
Boschert said he plans to keep his tech company local. He has roots in Springfield and said the accelerator showed him how much support there is for a technology company in the Midwest.
“We have a lot of talent in our development community, and the cost of living is low,” he said.
Blansit said the help from mentors and fellow entrepreneurs has been invaluable.
“They’re there to guide you versus someone else who is investing in you and expecting outcomes,” she said. “Most investments don’t operate that way.”
Anderson said across all the Efactory’s programs supporting small businesses, the incubator has served over 900 businesses that have created 1,500 jobs. She said those businesses have secured more than $56 million in capital and equity, and her five-year goal is to grow that by another $40 million.
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