U-M Welcomes Startups to New Venture Accelerator on Former Pfizer Campus
“There’s not any other place I’d rather be right now,” Brandon McNaughton said standing at the door of his lab space at the University of Michigan’s Venture Accelerator, which opened officially on Tuesday.
Those aren’t words most would expect to hear from a California native looking to launch his own start up. But McNaughton, the founder of Life Magnetics—an Ann Arbor-based company that aims to provide a faster means for testing whether antibiotics are slowing bacterial growth by measuring the rotation rate of tiny magnetic beads placed in a bacterial solution—says he couldn’t have imagined his company taking off anywhere else.
And U-M officials hope that with the opening of the accelerator more scientists like McNaughton, who began developing his technology in 2004 while he was a graduate student at the university and spun off his company a few years later, will want to stay at U-M and in the state instead of fleeing for the coasts.
“I can’t wait until the day comes when people come here to Michigan, and say what’s going on here is better than what’s going on on the coasts,” U-M’s President Mary Sue Coleman told the hundreds assembled at Tuesday’s unveiling, before cutting the ribbon to officially open the space.
The accelerator, 16,000 square feet of offices and labs housed in U-M’s North Campus Research Complex, aims to give startups with connections to the university a space with resources such as lab equipment and access to mentors that could help them become more viable companies, faster. U-M purchased the NCRC site from Pfizer in 2009 after the drug company closed its Ann Arbor facility.
Stephen Forrest, U-M’s vice president for research, told the crowd that the accelerator will “assist from the ground up a home grown enterprise, giving the founders world class lab space and at the same time world class business intelligence to provide them with the best possible opportunities to succeed and help them improve our state.”
Five startups were on display at Tuesday’s event, ranging from Life Magnetics to Civionics, which develops sensors that it hopes can detect signs of bridge damage and avert disasters like the notorious 2007 Minnesota bridge collapse. So far Life Magnetics is the only company that’s officially moved in—the other four are still in negotiations—but Jim O’Connell, the associate director for business formation at U-M Tech Transfer, says officials are hoping to lease space within the accelerator to 10 or 15 companies.
Though the space in its current form is mostly empty offices and labs complete with desks, chairs, and lab sinks begging to be used, officials like Coleman and Forrest hope the accelerator will become a physical representation of the culture of entrepreneurship they’re trying to foster.
“Without a doubt innovation is the future of the University of Michigan, of the city of Ann Arbor, and of the state of Michigan,” Ora Pescovitz, U-M’s executive vice resident for medical affairs, told the crowd on Tuesday.
Ken Nisbet, the executive director of Tech Transfer, echoed Pescovitz’s sentiments, saying, “I think this is a great symbol of what we want to say to Michigan: full speed ahead.”
According to O’Connell, the accelerator will also serve as a feeder to the outside world for technologies developed at U-M. “The hope is that by using the accelerator to add a little runway we’re going to be able to house our companies for a little bit longer—for 12, 18, maybe 36 months—and give them a better chance to accelerate so that they have more speed when they get out to market,” O’Connell said.
And the companies are also hoping that being in the accelerator will give them a leg up. According to Nesbit and other officials, rent for the space is at the higher end of the market value spectrum, but of course the aim of the accelerator is to provide more than just a place for companies to locate.
U-M engineering professor Nilton Renno is co-founder and CEO of EngXT, one of the four companies planning to move into the NCRC in the next few weeks. He said it was more than cost—which he called “reasonable”—that convinced him to move his startup, which makes an electric field monitoring system, to the accelerator. In addition to the “atmosphere that’s generated by all of the high tech companies in the building,” Renno said that working in the accelerator provides more opportunities for exposure to venture capitalists and others by dint of being near the Tech Transfer office.
McNaughton agreed, adding that being a less than five-minute indoor walk to U-M’s Center for Business Engagement and the Tech Transfer office makes it easier to take advantage of their resources.
“We’re pretty far along, but there are still more pitfalls, and having something like the accelerator serves as one more support,” he said. “We looked at a lot of spaces and we didn’t see anything like this, and to be able to have that at a competitive rate and to move in and to get to work is important.”
McNaughton added that with his company set up in the accelerator—Life Magnetics’ new lab became fully functional Tuesday—and funding secured from Ann Arbor-based venture firm Arboretum Ventures, he doesn’t have any plans to return to California.
“I’m not convinced that this would have happened anywhere else but here,” he said. “In grad school I was always thinking, ‘Oh, I’m going to go back.’ But the whole time it just felt right, it just felt like a good fit.”
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