CATI business model unique in industry
But the really groundbreaking aspect of the center, according to CATI director Matt Wagner, will be the way the non-profit incubator and technology transfer organization will be conducting business.
Positioned to take advantage of the lack of tech-oriented incubators between Evanston, Ill., and the Technology Innovation Center at Milwaukee County Research Park, Wauwatosa, the Racine facility will hook up businesses with services and support appropriate for companies with a high-tech focus.
While CATI will definitely be a tech incubator, Wagner said it will not feature a concentration on "bleeding edge" technology. Rather than using technology developed through academic research to jump-start businesses, Wagner and the new organization will use the resources of educational institutions to leverage technologies and businesses developed in the private sector.
CATI’s 40,000-square-foot facility, which was designed by Eppstein-Uhen Architects and will be constructed by Berghammer Construction Corp. – both of Milwaukee – will include:
* 10,000 square feet for business incubation.
* 20,000 square feet for classroom space.
* On-site office space for various economic development and educational organizations, including the Racine County Development Corp., University of Wisconsin-Parkside, Carthage College and Racine Area Manufacturers and Commerce.
Wagner said the organization is well on its way to filling the incubator, and negotiations already are under way with three prospective occupants.
CATI has already blown the doors off of its initial goal of assisting 10 nonresident companies; Wagner has already engaged in projects with 18 companies, including some that will generate licensing revenue for CATI for the next five years.
That private sector revenue will be critical to CATI’s success. While funds for the building’s construction are coming in part from a bond issued by Gateway Technical College, under state law 30% of the cost to construct the building, 100% of the direct operating costs and 20% of the indirect operating costs of the applied technology center must come from private-sector sources.
The requirements, contained in former Gov. Tommy Thompson’s final biennial budget, allow technical colleges to borrow up to $5 million to construct applied technology centers without a referendum.
CATI, Moraine Park Technical College’s Center for Applied Manufacturing Technology and a Center for Advanced Telecommunications Technology under development at Gateway’s Kenosha campus are the only such centers that will be completed before the provision sunsets at the end of this year.
One year, 18 clients
One year into CATI’s history, Wagner has already received calls from the University of South Carolina’s Technology Center, the Japan External Trade Organization and other economic development and technology organizations.
The organizations are interested in determining exactly how Wagner is going to integrate several business models to provide operating revenue for the organization. Like other technology incubators, CATI will rely on licensing revenue from technology and ideas developed under its tutelage.
Unlike TECHSTAR, the technology transfer organization launched last year to leverage research from academic institutions in southeastern Wisconsin, CATI is not affiliated with a major research center.
"They got some community colleges involved, a couple other colleges involved," said Joel Stevenson, founder of the University of South Carolina Technology Incubator. "They are making a whole lot out of something that is not readily available like it is here at the University of South Carolina, where we have a major research program."
A Chicago-based agent of the Japanese government was fascinated at how CATI will act to support and enhance the manufacturing infrastructure of southeast Wisconsin.
"CATI is doing something that is very, very unique," Ralph Inforzato of the Japan External Trade Organization (JETRO) said.
Inforzato works to connect Japanese companies with their US counterparts.
"They are a bootstrapping manufacturing processes incubator. If we look around the U.S., we find things like IT incubators, biotech incubators. But you don’t find anything to help manufacturing companies get off the ground – or help existing manufacturing companies spin off to another company," Inforzato said. "In Japan, there are a lot of small manufacturers. They know how to build things, but they don’t know how to build a business around it."
Inforzato stressed that another difference between CATI and many other incubators is its business-driven focus.
Instead of university "long-hairs," Wagner said his business plan calls for development of ideas from the for-profit sector – from owners of existing companies and smart people with good ideas.
"A lot of them are full-time workers that tinker around in their garage or basement," Wagner said. "Some are retired professionals like engineers or chemists who are still young and looking to develop some of their own things."
Other CATI clients – those not needing incubator space – will be existing businesses in need of reinvention or other high-end consulting services.
CATI’s first nonresident client was Runzheimer International, the Waterford-based business travel and relocation consulting firm.
CATI hooked Runzheimer up with Carthage College, Kenosha. Students from Carthage College’s ScienceWorks program will explore new product ideas for Runzheimer, using market research and financial analysis methodologies.
Some companies in need of only minimal consultation may be able to get assistance pro bono, Wagner said.
"We are mission-driven," Wagner said. "We are working with a lot of companies who are really bootstrapped. If a project is minor, it may just fall within our mission to help them with it."
Community involvement key
According to Stevenson, in a situation where there is no major research university involved, Wagner’s work to involve the community will be critical to CATI’s success.
"What I think he has done is he’s done his homework," Stevenson said. "Getting the community college – Gateway – involved is an excellent idea. "
But Stevenson stressed that maintaining enthusiasm in the community and educating the public about what incubators are will present challenges.
"Somebody needs to tell the community what our business editor here in Columbia continues to stress – that this is not an overnight sensation," Stevenson said "Getting to 1,000 jobs is not going to happen for six to seven years."
Inforzato agreed that CATI will be a long-term proposition for the community.
"At the Evanston incubator, we have launched 144 sustainable companies," Inforzato said. "Give CATI 10 years, and I think you will see they are a catalyst for business development."
Given the long-term nature of incubation, selling the incubator experience to tenants and the community on an ongoing basis will take some doing, Stevenson said.
"If they have never had an incubator before, and they don’t know a lot about incubators, you have to have somebody sell it," Stevenson said. "Consider McCormick’s reaper or the light bulb, when they were coming about. Nobody wanted them. People thought light bulbs would kill you. People used to think riding on the railroad would make your heart slow down. Anything new – good luck."
Sept. 13, 2002 Small Business Times, Milwaukee
