In 2010, the Ottawa County (Michigan) Board of Commissioners directed the Planning and Performance Improvement Department (PPID) to increase job creation in the County without duplicating existing economic development activities that are being performed by other agencies.
In order to accomplish this directive, the PPID developed the idea of creating an agricultural technology business incubator. This idea was based on the fact that Ottawa County is one of the top producing agricultural counties in the State of Michigan, one of the most diversified ag-producing counties in the nation (second only to California), and at the time no other business incubators were focused on assisting farmers and entrepreneurs with commercializing ag-technology inventions.
In 2011, the PPID received a grant from the USDA to complete a Market Needs and Feasibility Study for an ag-tech business incubator. The Incubator Study, which was completed in 2012, verified there were a large number of entrepreneurs in the region with agricultural technology ideas who needed assistance to develop these ideas into businesses. To accommodate the demand for services among ag-tech entrepreneurs, the consultant recommended that the County construct a 20,000ft2 incubator facility.
However, many business incubators have facilities which required significant effort to maintain costly capital assets (e.g. buildings). One of the consequences of this traditional incubator model is that attention is diverted away from entrepreneur services to ongoing maintenance and fundraising to keep the capital assets operational. Additionally, once the capital assets are in place, it becomes difficult to divest of the assets if results are not as positive as anticipated. Further, the PPID heard from a number of ag-tech entrepreneurs that their needs revolve around business start-up services and not office space.
In 2012, the PPID began a “Pilot Incubator Project” with 3 ag-tech entrepreneurs. The inventiveness of the Pilot Project is that the Incubator does not provide physical building space for clients. Instead, resources are dedicated solely to staff who help commercialize, license, or sell client technology. When facilities are needed for clients, the Incubator will broker space (office, loading dock, warehouse) on a piecemeal basis from existing landlords in the community.
One client in the Pilot Program, Frank VanKempen, started a company with his partners that manufactures machines to produce on-farm ethanol. GrassRoot Energy’s technology works by extracting ethanol molecules that attach to the water vapor that is created during the fermentation process. "The expert assistance provided by this Incubator is exactly what our company needed to propel us forward,” stated Frank VanKempen, Managing Member, GrassRoots Energy. “I would strongly encourage farmers and entrepreneurs with ag-technology ideas to connect with the Incubator if they want to establish a business and rapidly generate sales."
The Grand Opening
In December 2014, the Great Lakes Ag-Tech Business Incubator, now known as ACRE AgTech, officially opened its doors. ACRE AgTech’s low investment, low risk, performance driven model is one that resonated with funders, clients, partners, and its Board of Directors. In fact, the State of Michigan awarded $500,000 to support the innovative ACRE AgTech organization . "Ottawa County has built something entirely unique for farmers and entrepreneurs,” said Representative Haveman at a Grand Opening Celebration. “I am pleased to announce that the State will make a three year, $500,000 investment in this first of its kind incubator model to help develop businesses and jobs in the ag-technology sector.”
The state funding commitment is in addition to funds that have been pledged by private sector Sponsors. The investment by ACRE AgTech sponsors includes cash contributions and in some cases discounted service rates which can reach values in the tens of thousands of dollars for clients.
The new business incubator model also includes an innovative, long-term funding plan that is based on a private sector mindset and performance-based results. All entrepreneurs receiving services from the ACRE AgTech will be required to provide a Business Service Fee (at least 2% of gross sales). To justify this type of funding, it necessitates the services of the Incubator be valuable enough to warrant a 2% payment by start-up companies, and that the start-ups are of an adequate caliber to generate long term operational revenue for the ongoing success of ACRE AgTech.
This innovative business model also allows “Member Counties” to join ACRE AgTech in order to allow entrepreneurs from their County to access the unique services that are provided while having that business develop and grow in their own County. Each Member County must commit to provide funding to cover the cost of services for each business that accesses services.