When Arm & Hammer Animal Nutrition’s parent Church & Dwight came calling here, it found Agro Biosciences, a four-year-old maker of natural feed additives that the New Jersey conglomerate determined could be worth as much as $100 million.
Such a big number begs the question: What were the keys to Agro’s success?
Like many top-notch ventures, Agro created a viable product through innovative technology, found a path to market and had a competent and experienced management team that was able to execute a well thought out business plan. It helped that Agro’s founders were serial entrepreneurs with many years in the industry.
In Agro’s case, however, there was another key factor that may not be as immediately apparent: Location. Since 2013, Agro has been located in the Technology Innovation Center at the Milwaukee County Research Park in Wauwatosa, Wisconsin.
The 138,000-square-foot Technology Innovation Center is one of the largest tech-oriented business incubators in the country and has graduated numerous successful companies. Medical Advances, a spinout from Medical College of Wisconsin, was acquired by Intermagnetics General Corporation of Latham, New York, which was in turn acquired by Royal Philips Electronics N.V. of the Netherlands. Internet Connect, acquired by Time Warner Telecom, is now part of Level 3 Communications. ZyStor Therapeutics was bought by BioMarin Pharmaceutical of Novato, California. Tushaus Computer Services, after making a number of acquisitions, was eventually acquired by Dedicated Computing but is still in the research park; in a new building they built across the road.
Including Agro, the value of these companies is in excess of $330 million.
At the incubator, each of those companies found a community of entrepreneurs in a place with a positive environment, corporate culture and access to important resources.
Agro’s founders will tell you about one more thing: incubator staff was able to rapidly and effectively meet the company’s need for more and more laboratory and manufacturing space.
During its four years in the Technology Innovation Center, Agro went from four employees to 38 and 806 square feet of space to 10,120. It didn’t happen all at once; it was one or two offices and one or two laboratories at a time. Responsiveness to this type of growth is impossible to find in the commercial real estate market.
At the end of the day, our incubator built out three additional laboratories just for Agro totaling about 2,100 square feet, one large blending room of 800 square feet, and warehouse space of 1,600 square feet. Two of the other wet laboratories occupied by Agro had previously been built for other tenants of the incubator. As employment grew, additional office space was renovated and acquired. The labs especially did not come cheap. They included state of the art bench work, ventilation and other equipment.
Our investment in Agro totaled approximately $300,000 and was self-funded. Some of this was recouped through the rent they paid. But, it was still a big upfront number. Self-sufficiency helped immeasurably in our responsiveness to Agro’s needs.
There are many frustrations in running a large technology-oriented business incubator. It is no small matter when founders like Tom Rehberger or Mark Biebel come to you and say Agro has discovered another market opportunity, is hiring five more scientists and needs another laboratory in four weeks.
But when you’re able to pull it off, it kind of makes your day. And when a lot of those days add up to an exit that could be worth as much as $100 million, well, that should make everybody’s day.
Guy Mascari is the executive director of Milwaukee Regional Innovation Center, Inc., which manages the Milwaukee County Research Park and Technology Innovation Center.