Business

Pipeline's work attracts attention across nation

Brian Pettey's Winfield company, Robotzone, built an 80,000-square-foot building and hired three full-time employees.

Todd Gentry just wrapped up Inno-Labs' second consecutive year of 300 percent sales growth. He, too, added three new jobs at his Winfield company.

And Nate Gregory's Wichita company, MoJack, is investing $3.6 million in new facilities and equipment and expects to add 40 new jobs this year and next.

All three entrepreneurs are past or present members of Kansas Pipeline, a program begun in 2006 to identify the state's most promising entrepreneurs and provide them with training and access to venture capitalists and mentors to help them grow and keep their companies in the state.

"We would probably be two years behind where we are now had I not done Pipeline," said Pettey, a 2009 Pipeline graduate whose company designs and manufactures robotics systems.

Since its inception, Pipeline has trained 36 entrepreneurs — six from Wichita — who run businesses that have the potential to make a lot of money and employ a lot of people.

It's getting ready to train another 10 beginning next month.

The program has attracted the attention of venture capitalists and high-tech organizations on the East and West coasts. It's also garnered national attention through write-ups in Fast Company and Inc. magazines.

But the program's long-term future is uncertain as the state wrestles with recession and lower tax revenue.

Gov. Sam Brownback's fiscal year 2012 budget, unveiled earlier this month, includes a provision to eliminate Pipeline's funding.

But Pipeline proponents say the program is low-cost economic development and one of the most effective ways to nurture promising new companies to grow and stay in Kansas.

"I understand we're in difficult times and hard decisions have to be made," said Chris Shipley, a former national adviser to the program and CEO of San Francisco-based Guidewire Group, a technology consulting firm. "I just think there's tremendous value in the investment,... value that stays in the community and grows in the community."

Reach of program

The program offers a yearlong fellowship to entrepreneurs, whom Pipeline calls "innovators," in areas such as market validation, business models and financing. Training sessions, which happen four times a year and last three days, are led by local, regional and national entrepreneurs, entrepreneurism educators and venture capitalists.

Pipeline participants also are exposed to a network of local, regional and national entrepreneurs and venture capitalists.

An intended byproduct of the program is the creation of a statewide network of entrepreneurs —both those who have gone through Pipeline and those who haven't — angel and other investors and support agencies such as Wichita Technology Corp.

That network has since reached "critical mass" inside and outside the state, said Pipeline president Joni Cobb.

Trish Brasted, CEO of Wichita Technology and a partner in Midwest Venture Alliance, an area group of angel investors, agreed.

"We now have a huge network of people to support (entrepreneurs) and support their businesses," Brasted said. "You can't put a value on it. (But) it is significant."

Entrepreneur Joey Blue, who was in the first class of innovators and the first from Wichita, said the breadth of the network now is unbelievable.

"There may be 10 people who get to go through the program (each year), but the reach is way beyond that," said Blue, who runs a data warehousing and business intelligence firm called Embark Blue.

Cliff Reeves is an example of Pipeline's national reach. He is a national adviser to Pipeline. Reeves is also general manager of Microsoft's emerging business team.

"Certainly Pipeline has high visibility and puts Kansas in a strong position," Reeves said. "They've got people at MIT. They've got VCs who are working with them. They're very well known, extremely well connected at Silicon Valley Bank."

Reeves said Pipeline's connections and visibility outside of Kansas is the result of the entrepreneurs it selects to be innovators. It's the quality of innovators and the professionalism of the program that prompted him to volunteer. Those qualities helped build its national reputation, too, he said.

"They are choosing extremely well," Reeves said.

Alumni entrepreneurs

Another byproduct of the program is the formation of an alumni group that includes most of the Pipeline graduates. The group meets quarterly, in conjunction with Pipeline's training sessions, where alumni discuss their enterprises, successes and challenges, and seek advice from one another.

"It's one of those things where the energy and being around entrepreneurs who are doing things just kind of builds upon itself," Blue said of the alumni meetings. "It gets the competitive juices flowing. It makes you better than what you are by yourself."

Those get-togethers have, in some cases, led to alumni investing in each others' businesses or to explore joint projects, Cobb and innovators said.

Inno-Labs' Gentry, for example, said he is working on a project with Toby Rush of Rush Tracking Systems, who was in the first class of innovators. He declined to discuss the project for competitive reasons.

Some things have changed with the program since its launch.

The most notable of those changes is the elimination of a stipend that innovators used to receive. Entrepreneurs in the program's first class each received $36,000. That stipend was offered as a way to attract entrepreneurs to a program that otherwise didn't have a reputation.

Since then, the stipend was gradually reduced, then eliminated.

Cobb said that's partly because "before we started this program we didn't have an economic crisis going."

Moreover, as the program has matured, and its reputation has grown, there is no longer a need to use a stipend or grant to attract the most promising entrepreneurs.

"The program has proved out its value," she said.

Moving forward

Its proof of value beyond entrepreneurs and venture capitalists isn't as clear given the uncertainty of continued state funding.

Pipeline received $471,000 in funding from the Kansas Technology Enterprise Corp. in the current fiscal year, which is most of its funding.

Cobb said that though Brownback's budget calls for eliminating Pipeline funding next fiscal year — and rolling parts of KTEC into the Kansas Department of Commerce —"it's far too early to tell what's going on here and what's going to happen."

"We are absolutely moving forward with the new class," she said. "We've started working with the new class; we brought in judges from across the country; we've begun the process."

She said plans have been completed for the new class's first training session next month in Lawrence.

"We are opening up a robust dialogue with leaders right now," Cobb said. "I am confident we can find a strategy to keep this program going."

A little more than a year ago the program was spun off from KTEC and organized as a nonprofit, allowing it to take in funding from private sources, including grants.

Cobb said private funding is an option. So, too, are federal grants. But because its mission is to find and help entrepreneurs from across the state, which in theory will benefit the state from additional revenue and more jobs, she said she thinks some state funding is essential.

"We were created as an economic development program," Cobb said.

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