ES 395 1

Factor Business Incubator

Business Plan

April 17th

Josh Bloom

, 2008

Adam Finkel

Sam Garfinkel

Rich Nemesi

Gary Weintraub

ES 395 2

NONDISCLOSURE AGREEMENT

This Business Plan was assembled by Josh Bloom, Sam Garfinkel, Gary Weintraub, Adam Finkel, and Rich Nemesi for the use of potential investors or their agents in considering their interest in support of the MFactor Business Incubator. The information included in the Plan was created to assist interested parties in making their evaluation of the Project and does not purport to contain all of the information that a potential investor may need to complete its analysis. The work contained in this business plan has not been independently verified. In addition, we do not make any representation or warranty as to the accuracy or completeness of this Plan, nor shall we assume any liability for any of the representations (expressed or implied) contained in this plan, or any other written or oral communications provided to the recipient during its evaluation of the Project. It is expressly understood that it is the obligation of any investor or recipient of the Plan to conduct its own due diligence regarding the project and its industry. By accepting this plan, the recipient agrees and acknowledges that: (1) all of the information contained herein is highly confidential, and that none of the information will be used by the recipient or any of its employees or representatives in any manner whatsoever, in whole or in part, other than in connection with its evaluation of the Project for the purpose of considering its investment in the Project; (2) the recipient will not reproduce this Plan, in whole or in part, and will not distribute all or any portion of this Plan to any person other than a limited number of the recipient's employees or representatives who have a clear need to know of such information for the purpose set forth above, and who are informed by the recipient of the confidential nature of such information; (3) if the recipient does not wish to pursue this matter, it will immediately return this Plan to us, together with any other material relating to us or the Project which the recipient received from us and will destroy all memoranda, analyses, compilations, studies and other documents containing or reflecting information set forth in the Plan or otherwise received from us that relates to the Project and will confirm such destruction in writing to us, and, (4) any proposed actions by the recipient which are inconsistent in any manner with the foregoing agreement will require the prior written consent.

ES 395 3

Executive Summary

The MFactor Business Incubator will be a “pure play” business incubator located in Ann Arbor, Michigan. We envision MFactor becoming the best University affiliated business incubator in the country. A business incubator in Ann Arbor is uniquely positioned to achieve this goal because of its access to the faculty and students of an elite university, a strong business community, and numerous potential investors for clients.

Business Concept

MFactor will offer comprehensive business plan assistance as well as start-up funding to its clients. To begin the process, potential clients will apply for year-long admittance to the incubator. Once admitted, our executive director will serve as a counselor and business strategist to our clients while they develop their business plan. In addition to the executive director, MFactor will employ legal, accounting, strategy and IT advisors to provide expertise on their respective portions of the client’s business plan. During their time in the incubator, clients will have access to work space, computers, full-time secretary, and wet lab facilities (access to wet labs depends on the location we are able to secure). Finally, upon graduating from the incubator, clients will receive start-up funding from the incubator to cover some of their initial costs. MFactor expects to handle six clients at a time initially. Of these six clients, we anticipate four students and two entrepreneurs from outside the university; however this may be adjusted based on demand. Students will not be required to pay rent, while outside entrepreneurs will be required to pay a sub-market rate of $500/month. MFactor hopes to recruit an elite Board of Directors to serve as the backbone of the organization. With that in mind, we have identified 15 potential board members with entrepreneurial experience as well as influential ties to the Michigan business community. The Board of Directors will be instrumental in the application review process as well as recruiting staff for the business incubator. It is unclear at this point how much support we will receive from the University of Michigan. Ideally, the University will see our incubator as a tremendous differentiating opportunity, and fully support us through underwriting our expenses and boosting our brand image. However, we are financially and strategically sustainable without University assistance and still could capitalize on the wealth of human resources it provides.

The State of Michigan has fallen on extremely difficult economic times, with an unemployment rate of 7.6% at the beginning of the year.

The Market

i

Both Governor Jennifer Granholm and University of Michigan President Mary Sue Coleman have stated that entrepreneurship will be a key thrust to turning Michigan’s economy around. President Coleman has gone so far as to appoint Cynthia Wilbanks to head up the University’s entrepreneurial endeavors. In addition to what is happening at the State and University level, the New Economy Initiative is a $100,000,000 fund targeting entrepreneurial initiatives in Southeast Michigan. We have met with representation from the New Economy Initiative and received positive feedback on our idea.

Our incubator will be located in Ann Arbor, MI, near the central campus of the University of Michigan. This will provide access to 41,000 students as well as approximately 114,000 residents in Ann Arbor.ii Ann Arbor was also recently named the 42nd best place to start a business in the country.iii In terms of competition, Ann Arbor offers only SPARK, which does not provide the type

ES 395 4

of in-depth services our incubator will offer. However, as we grow in size and prestige, we hope to compete on an international level with the finest incubators in the world.

MFactor will target two types of customers: University of Michigan students and local entrepreneurs. Within both categories, we will focus on ideas that can be harvested into sizable businesses. We will target our customers through our company website, entrepreneurial groups on campus, pulsed advertising via newspaper, and social networking sites.

Customer

The key to our business incubator will be the people we find to work in it. To recruit the type of entrepreneurs we are targeting, it is vital that our incubator boast employees with impressive backgrounds in entrepreneurship. Another key advantage for our incubator is convenience for our University clients. We are only targeting locations close to campus to be as accessible as possible to U of M students and faculty. Additionally, we will explore the possibility of independent study credit for student clients to free up more time for them to work on their entrepreneurial idea.

Strategy and Competitive Advantage

We have identified two potential locations for MFactor: (1) Off State Street in the Nichols Arcade or (2) the University of Michigan Life Science Building. The Life Science Building is our ideal choice but could be contingent on University affiliation. Both of these locations offer the proximity to campus necessary to draw in students.

Operations

Potential clients will have to apply to be in MFactor; the applications will be reviewed by the Board of Directors. If accepted, clients will go through a twelve week process of building their business plan. For the remainder of their year in the incubator, clients build their business so it is ready to move out at the end of the year. Clients that need another year to develop their business will have the opportunity to reapply at the end of their first year.

During the fundraising stage of this project, our management team will consist of the five founders: Josh Bloom, Adam Finkel, Gary Weintraub, Sam Garfinkel, and Rich Nemesi. In addition to fundraising, the management team will also be recruiting potential members for the Board of Directors. Once we have received the necessary funding and identified a location, the management team and Board of Directors will conduct a search for the Executive Director, who will be the face of the incubator.

Management Team

After conservative financial analysis, we found our business incubator to be both profitable and sustainable for the long term. Our projected cash outflows will be approximately $400,000 per year. Also, we will have a start-up fund to provide approximately $400,000 per year in seed funding to graduated businesses. To sustain our operations, we will take a 5% equity stake in graduated businesses and will begin to receive equity payments when graduated businesses pass the minimum threshold of $500,000 in revenues. In year 3, we receive our first equity inflow from companies which totals $281,637. In year 4, our equity inflows will sustain our business operations cash outflows, and in year 6, they sustain our start-up fund outflows.

Financial Projections

To cover our cash outflows up until our operations and start-up fund become sustainable, we are requesting $2,500,000 in funding. The fund we have targeted is the New Economy Initiative

ES 395 5

located in Southeastern Michigan with total funds of $100,000,000. The breakdown of our grant request is in the following table.

Operations

Grant Request $870,000Reason

Start-up Fund

Grant Request $1,630,000Reasons

*$819,013 will cover the cash outflows until year 3. In year 4, equity income will sustain our operations*Our request for $870,000 is to cover expected error in our budget projections

*$1,593,202 will cover the cash outflows until year 5. In year 6, equity inflow will sustain the fund*Our request for $1,630,000 is to cover expected error in our budget projections

TOTAL FUNDS REQUESTED$2,500,000

The New Economy Initiative has a pool of $100 million dollars that we’d like to tap into for early funds. This is a revolutionary venture from Michigan’s ten largest foundations. Its mission is to provide grants for ideas like ours to accelerate a more innovative economy. As it has already been recognized by President Coleman and is linked with many of Michigan’s most successful business leaders, it is a highly credible group. Its sole purpose is to promote entrepreneurship in Southeast Michigan, including in the Ann Arbor area. Our vision is in line with the objectives they hope to accomplish. Our growth would help them fulfill the metrics they hope to achieve. Our success would empower them to become a catalyst for the new, creative economy they desire. We’ve already had discussions with the executive director and chairman of the organization whom have encouraged the development of MFactor. This is a highly promising resource that we feel we are well-timed to utilize.

Possible Financial Source

ES 395 6

Table of Contents Executive Summary 3 Company Description 7 Market Analysis 9 Competitive Analysis 10 Customer Analysis 11 Marketing Strategy 12 Operations 14 Management Team and Ownership 16 Risk Analysis 20 Financial Section 21 Future Orientation/Next Steps 23 Conclusion 24

AppendicesApplication 25

27

Elevator Pitch 28 Interviews Conducted 28 Prospective Board Candidates 29 Additional Financials 32 Founders Resumes 39 In-Depth Interviews 44 Sources/Citations 48

ES 395 7

Company Description

MFactor will help entrepreneurs at the University of Michigan as well as in the Ann Arbor area develop their business ideas to create an actual enterprise. Entrepreneurs will have to fill out an application to be reviewed by an oversight board for acceptance into the incubator’s development program. The executive director at the incubator will then work side-by-side with the entrepreneur to assist him/her through the set stages of business development. In addition to a director, entrepreneurs will have access to office space, lab space (potentially), and a team of experts in fields such as law, accounting, strategy, and finance. At the end of their stay with the incubator, clients may be funded by the start-up arm of the incubator; clients will also introduced to a network of potential investors looking to fund emerging businesses.

Company Description

Become the best University-affiliated business incubator in the country. Vision Statement

Create successful start-up businesses and act as a business catalyst and development agency to advance the Michigan economy while maintaining a healthy profit.

Mission statement

We have identified two locations for the business incubator. A major factor towards determining the location of MFactor will be if we can gain University of Michigan affiliation, or at least the University’s permission to use the Life Science Center. With that in mind, we will discuss the possible locations in later sections of this document.

Location

Relative Size of Targeted Customer Group Market Opportunity

Even though every University of Michigan student could eventually become an entrepreneur, our target customer is of a different mold. As stated above, our target collegiate entrepreneur is highly motivated with the “big idea”. We plan to use the membership rosters of the following organizations and courses as a pipeline: Entrepreneur and Venture Club, Ross School of Business ≈ 50 Entrepreneurial Management Course (ES395) ≈ 120 MPowered of College of Engineering ≈ 300 Entrepreneurship (IOE422) ≈ Total ≈ 530 Students

60

Even though 530 is a small pool to pull from, we are only looking for 4 students per year. 4/530 is under 1%. Also, the student population including graduate students surpasses 40,000 students and therefore, we are not concerned about the pipeline of collegiate entrepreneurs.

Service Products/Services & Technology

Feature Benefit Legal Attorneys/Business Law

professors Experienced counseling on corporate forms and legal issues in client’s industry

ES 395 8

Accounting Accountants/Accounting professors/MAcc students

Help creating balance sheets, cash flow statements, doing breakeven analysis

Strategy Successful entrepreneurs, corporate strategists

First-hand insight on start-up challenges; inspiration on possibility for success; experienced advice creating a business plan

Office Space Office, meeting rooms, phones, copiers, faxes

Tools necessary to conduct a fledgling business

Administrative Assistance Part-time administrative assistant

Someone to answer phones, take messages, assist with in office activity

Lab Space* Clean rooms, lab stations, wet labs, chemicals

Potential to develop biological and chemical entrepreneurial ideas

Funding Networking Networking opportunities with local venture capitalists/angel investors

Introduction to people looking to fund entrepreneurial endeavors

We are planning on registering as an LLC in the state of Michigan. An LLC is ideal because it provides limited liability to owners and allows us a lot of freedom regarding management rights.

Legal Form and Location

Based on conservative graduating rates of our entrepreneurs, as well as national statistics on business incubators, MFactor will be sustainable in year 4 of operations. Attached to our incubator model is a start-up fund that will be managed by the executive director and the board. The goal of the fund is to provide up to $400,000 a year of seed funding for graduated businesses based on their working capital requirements. The goal of this incubator above all else is to help create successful enterprises, and we believe a start-up fund will allow us to provide the necessary seed money to achieve a success rate of 87% for graduated businesses becoming sustainable enterprises.

Financial Projections

Our grant proposal consists of two grant requests that total $2,500,000. Our team requests a grant of $870,000 to cover the cash outflows for the first 3-4 years. At this point, our business would be creating enough revenue to become sustainable. In addition, we need $1,630,000 to create the start-up fund and cover the outflows up until year 6, when our revenues could also cover our start-up fund cash outflows. Our target fund is the New Economy Initiative, based in Southeastern Michigan, because they are targeting organizations that have a focus of fostering innovation and entrepreneurship. This fund has roughly $100,000,000 at their disposal, and our incubator is a target organization for them because of our mission statement and business objectives. We were able to have a conversation with the chair of the fund, Steven Hamp, and gave him an elevator pitch of our business plan. Mr. Hamp had nothing but strong encouragement for our idea.

ES 395 9

Market Analysis

Political & Legal Market Analysis - PEST+G

The combination of political factors affecting our business proposal is like a double-edged sword. There are both positive and negative factors to be noted. Currently, politicians in the sate of Michigan are looking for ways to boost the struggling economy. Since Ann Arbor is the home of the prestigious University of Michigan and a flourishing urban center, politicians see the town as an opportunity to spark substantial economic growth. In her speech entitled “Five Years Forward – An Address to the University of Michigan Community” given on November 15, 2007, Mary Sue Coleman proclaimed:

For our state to prosper, we absolutely must cultivate a stronger culture of innovation and entrepreneurship…The Michigan Innovation and Entrepreneurship Initiative, with at least $100 million available in resources, will be funded by foundations and universities themselves...iv

Unfortunately, politicians have yet to allocate funds for entrepreneurship and other ventures could be pursued. Many politicians see Ann Arbor growing and would rather utilize funds to spark growth in other areas of Michigan. In addition, the bureaucracy associated with University Affiliation complicates the funding process. In regards to the legal environment, there are several Ann Arbor zoning restrictions regarding opening a business that we must work around. Also, at the beginning of the year, Ann Arbor repealed its Single Business Tax (SBT) or payroll tax and replaced it with the Michigan Business Tax, which offers a number of credits to help businesses reduce taxes.v

Economic The Michigan economy is in a state of crisis. In 2006, Michigan was the only state in America with a shrinking Gross Domestic Product. Comerica Bank’s Chief Economist stated, “A lot needs to go right for the state economy to bottom out…Michigan's one-state recession is now three years old and counting.”vi Currently dependent on the success of the auto and manufacturing industry, Michigan must diversify its business portfolio and pursue ventures in other industries. We see an Ann Arbor business incubator as a potential long-term contributor to the turnaround of the Michigan economy, and others agree. Big-time entrepreneurs and foundations recognize the problem and are seeking multiple ways to boost the economy. We have spoken to a few of these people and they were very interested in the prospect of a business incubator in Ann Arbor. Stephen Hamp, Chairman of the New Economic Initiative, said, “If a business incubator like yours is going to succeed in Michigan, it is going to be in Ann Arbor. You have what it takes.”vii

The volume and plethora of intellectual resources in Ann Arbor and at the University of Michigan is encouraging. The state must capitalize on the resources available if it wants to turn things around. Unfortunately, with the state in economic crisis, funding will be difficult to find. We must look to foundations and investors instead of the state government.

Social Entrepreneurship has been playing a more significant role in Ann Arbor’s social climate over the past few years. New businesses are continuously opening their doors and prospering including BTB & BTB Cantina, No Thai, Bubble Island, and more. These businesses are not only successful in Ann Arbor. Their owners have all opened other locations. In addition, both the Stephen M. Ross School of Business and the College of Engineering are promoting entrepreneurship via various courses and clubs, which we will elaborate on later. Both of these schools could potentially assist

ES 395 10

with our business incubator. Additionally, there is a greater American trend towards entrepreneurship. The U.S. government has supported entrepreneurship because of the link between entrepreneurship and economic growth.viii Finally, Fortune Small Business recently named Ann Arbor the 42nd “Best Place to Live and Launch” because of the “strong high-tech industry, eco-minded area, and abundant college sports.”

v

Technological The quality of our business incubator will rely almost exclusively on the people we recruit as staff rather than technology. However, if we are able to develop a facility with high-tech capabilities, it could establish a larger competitive advantage. The Life Science Building possesses several wet labs and these may serve vital to incubator occupants with innovative tech ideas. Also, we will have the most-up-to-date technological resources via the University of Michigan. Lastly, technology is a huge area of opportunity. One “big idea” could sustain the incubator and provide plenty of funding for future occupants. The only downside to tech ideas is they tend to necessitate large research and development costs and take years to develop. Global Initially, this project is geared specifically for Ann Arbor and the University of Michigan. We would like to capitalize on the vast resources provided by the University including brilliant and driven students, experienced and helpful faculty, top-of-the-line facilities, and unparalleled networks. However, if we have success locally, there is always the opportunity to take our business plan and apply it at other universities with similar prestige and capabilities. Globally, more and more incubators are sprouting. There are many successful incubators around the world including in Ireland and Israel. They can be extremely profitable with the right ideas and resources. If we were successful, we would not expect another competitor to open its doors in Ann Arbor. However, if we eventually expand globally, we will be facing competition from these foreign incubators.

There are a few indirect and direct competitors for MFactor. The chart below highlights the presence of key incubator resources or lack thereof in the competitive set:

Competitive Analysis

SPARK Enterprise

Ireland Independent

Entrepreneur Mpowered

& Ross MFactor University Affiliation Proximity to Campus Consistent Working Relationships (Accountant, Lawyer, & Strategist) Full-time Entrepreneurial Guidance Office Space Networking Funding Growth Fund

For our target market of University of Michigan students, our only viable competitor offering a packaged service is SPARK. Even though SPARK’s mission as an incubator is similar to ours, their approach is very different. During our visit to SPARK’s office on E. Liberty Street, we

Similar Products/Solutions Available to Target Market

ES 395 11

obtained valuable information about their strategy and the overall competitive landscape. Instead of providing a framework for business growth, SPARK coordinates large-scale weekend seminars and workshops and provides low-rent office space. At these seminars, professionals present to entrepreneurs on various topics including writing a business plan, incorporating, preserving intellectual property, obtaining funding, and more. After the sessions, entrepreneurs can approach the presenter or panel to chat for a few minutes individually. However, our full-service bundle or one-stop shop enables a competitive advantage. Entrepreneurs need more than a weekend session and a few minutes of advice. They need personal and consistent attention from experienced professionals who know their business concept in detail. Instead of using a business incubator, Michigan students can individually utilize university resources. Students in the Stephen M. Ross School of Business may access the Zell Lurie Institute or Entrepreneur and Venture Club but these organizations cannot provide the full-service bundle of MFactor. Also, students in the College of Engineering may belong to MPowered, its entrepreneurial organization. MPowered simply recommends classes, arranges contacts, and promotes entrepreneurship on campus but does not provide entrepreneurial guidance, strategy, funding, or consistent working relationships with professional accountants and lawyers. We are optimistic that the aforementioned organizations will be pleased to work directly with MFactor and provide a pipeline of potential entrepreneurs and viable business ideas. All in all, we foresee future collaboration, not competition.

The one alternative way to start a business is to do it independently. If an entrepreneur is confident in his or her abilities, one could attempt to launch the business without any outside guidance. This is extremely risky, especially for a college student with minimal disposable income and responsibilities in the classroom. The other option for someone who is not seeking a full-service business incubator is to hire a lawyer, accountant, and strategist individually. Overall, the entrepreneur would be creating a small-scale incubator. Even though this can be done, it is not financially optimal. MFactor will provide this professional help plus the aforementioned resources including networking, funding, office space, and more. Overall, we feel that there are minimal substitute ways to obtain guidance on opening a business and therefore, we are proposing the University of Michigan business incubator, MFactor.

Alternates & Substitutes to Meet Market Need

Customer Analysis

Customer Groups The customer group that we are looking to serve is the collegiate and local entrepreneur. We hope to solely have collegiate entrepreneurs in the incubator long-term and consequently, we will focus our customer analysis on the collegiate entrepreneur. The collegiate entrepreneur is an on-campus student (from September to April) with many responsibilities and very little experience in the business world. The collegiate entrepreneur is seeking guidance from experienced professionals to avoid catastrophic mistakes and help grow the business. To gain a better understanding of the collegiate entrepreneur, we conducted several in-depth interviews. See the Appendix for full interview transcript. A few quotes are below: Would you have been interested in utilizing a business incubator at the University of Michigan and for what assistance?

ES 395 12

“Of course! I dove in way too early without understanding the entire process. A diverse network of key contacts would have been extremely helpful!”ix

“Absolutely! I could have benefited from creating a much more detailed plan…I had no formal business education. I had never even heard of PEST, SWOT, matrices or the Porter model, all of which are useful resources.”

x

“Yes. We could make it on our own right off the bat if we had the time (no school) and drive, but having an expert strategist and entrepreneurial network at our disposal would mean the difference between crawling for a few years and taking off running.”

xi

Clearly, there is a need for a business incubator in Ann Arbor. Back to the collegiate entrepreneur, he/she must balance academics, social life, and an entrepreneurial drive while maintaining a healthy lifestyle. He/she is extremely driven and motivated with a big idea but the overall stress and demands of college lift can be very daunting. The collegiate entrepreneur likely has 15-20 hours of class per week plus the related workload including homework, essays, tests, group projects, and presentations. With such a demanding lifestyle, our customer will demand the best service from our incubator. If successful, we will generate positive word-of-mouth via the student body and the applications will pile in. The Solution to Collegiate Entrepreneur’s Problem Our target customer, the collegiate entrepreneur, lacks the experience and knowledge to start a business. They are young and need the guidance of experienced entrepreneurs and professionals before pursuing a risky venture. Also, these collegiates have yet to develop a meaningful social network, which is vital in building a team and obtaining funding. MFactor is the full-service solution to the collegiate entrepreneurial problem. Our schedule, structure, strategy, and professional services will help the collegiate entrepreneur launch the business idea with the optimal potential for success and profitability.

Marketing Strategy Segmentation Sides – Students with small business ideas hoping to make a little extra money on the side while obtaining an education. While the business ideas may be interesting, these students lack the level of commitment necessary to start a serious business. In addition, the ideas may have limited potential as the student has not given the venture much thought. Big Ideas – Students (both undergraduate and graduate) with big entrepreneurial ideas looking to pursue their own interests rather than succumb to corporate America. These students are looking for more than a short-term college business. They aspire to start a very profitable company and sustain consistent growth for the next five to ten years. Their ideas have serious potential for growth on a regional, national, or even international scale. Scavengers – Ann Arbor residents looking to create or purchase a small family business. While the idea may be financially sound, it has limited potential. The entrepreneur is thinking local with their family’s financial stability in mind.

ES 395 13

Hunters - Ann Arbor residents or professors with a passion for excitement and a business idea with the potential to become a major force in an industry. They have a big idea that they are wholeheartedly dedicated to pursuing. The Hunter is the older version of the Big Idea. Park Rangers – National or international entrepreneurs with a history of successful business models looking to create large conglomerates. They may be living in the Ann Arbor area but are usually involved with many businesses and travel often. Their experience allows them to invest without much guidance or support. Targeting We are pursuing a multiple target market approach, targeting both the Big Ideas and Hunters. Since these target customers are different, we will employ unique marketing plans for each. We chose these two target markets because our business incubator is thinking big. We do not want our incubator to help small-businesses with limited potential. On the contrary, we intend to grow the incubator and consequently, we must take on large projects and the associated risk. The other market segments just do not have the drive or idea that our incubator is seeking. Positioning For the Big Ideas, we will be the primary resource for building a business while attending class and tending to a social life due to our inexpensive office space and expert advice from experienced professionals. For the Hunters, we will be the most efficient way to start a new business because of our networking opportunities, funding, expert advice, and in total, the one-stop shop. Marketing Mix - Promotion For the Big Ideas, we will utilize a variety of marketing mediums. The goal is to surround our target with different mediums at key points throughout the year. We will access the entrepreneurial pipeline via the entrepreneurial clubs on campus including the Entrepreneur and Venture Club, Ross School of Business Entrepreneurial Management Course (ES395), MPowered of College of Engineering, and the College of Engineering’s Entrepreneurship course, IOE422. Our research suggests that word-of-mouth is the optimal way to reach our target and therefore, we intend to give multiple in-class presentations in both the business school and school of engineering at the undergraduate and graduate level. We will also utilize e-mail via iMpact, the business school network. In addition, we will maintain an up-to-date website as well as Facebook group and blog. We plan to have several informational meetings, DIAG events throughout the year, and business plan competition sponsorships. We will also advertise in “The Michigan Daily”. The detailed marketing plan is below and will be pulsed three times throughout the year. We are pulsing the marketing at key points in the school year including July/August/September, November/December, and March/April. This way, we will have the most application submissions at the beginning, middle, and end of the school year. Lastly, we plan to speak with guidance counselors who will recommend our incubator to students interested in entrepreneurship. To reach the Hunters, we will advertise in the Ann Arbor Observer and Detroit Free Press. We will also use bank and venture capitalist networks to raise awareness.

ES 395 14

Marketing Plan Local Newspaper Ads

Ann Arbor Observer [$310 x 6 days (1/16 page)]xii

Detroit Free Press [$392.99 for 28 days]

$1,860 xiii

The Michigan Daily [$50.55 for 2 weeks]

$393 xiv

$2,348

$95

Web-site N/A*

Facebook & Blog N/A*

Informational/Orientation Meeting $150

Flyers/Posters on Campus $200

Brochures $150

DIAG Event $100

Presentations to Clubs and Organizations $150

BBA Orientation

Entrepreneur and Venture Club (EVC)

ES395

MPowered

IOE 422

Business Plan Competition Sponsorship $200

*Web-site and Facebook/blog costs are covered in Webmaster’s salary

Total $3,298

Operations

Geographic Location The business incubator will be located either just off State Street in the Nichols Arcade or in the University of Michigan Life Science Building that is directly between CC Little and The Hill on campus. The reason we have chosen to be so centrally located is that we have seen our predecessor in the on campus business incubation industry fail in large part because students and staff were either unwilling or unable to walk to the Main Street office. In addition to its tremendous location, the Life Science Building would provide access to wet labs and the opportunity to grow within the same building. Facilities & Improvements Below is the outline of our office facility. When you first walk in you will be greeted by a secretary who is working under the umbrella of all the businesses in the incubator. To the right of the secretary will be our Executive Director who provides logistical support and day to day advice with problems that may arise during the businesses term in the incubator. Behind him will be the work space for our smaller businesses in the incubator who employ fewer than three employees. Finally, in the back of the office will be those businesses that have more than three employees and require a separate workspace from the rest of the incubator.

ES 395 15

Depending on whether or not we choose to locate in the University of Michigan Life Sciences Building there may be the option of having wet lab facilities within the incubator. Those facilities will not be located within the main incubator office, but rather down the hall for logistical reasons. Additionally, as the incubator grows so too will our offices. The Life Sciences Building provides an easy growth model because expansion within the same building becomes possible. However, if we were to locate on State Street we would need to relocate to a larger space once the threshold is reached that is discussed in the financial section.

Strategy and Plans (Growth) Our long term location strategy is to open up offices in various metropolitan areas to service the needs of our growing businesses. We plan to model our national and international growth strategy after Enterprise Ireland, in terms of the way they have been able to provide continued support to the business that became successful within their incubator throughout the world. Keep in mind that this is an extremely long term strategy, and for the relevant future we intend on carving out a niche in the Ann Arbor market and establish a strong revenue stream in that location.

Secretary Executive Office

Small Work Area

Cafeteria/ Kitchen

Small Work Area

Small Work Area

Small Work Area

Large Office (for businesses with more than three employees)

Large Office (for businesses with more than three employees)

Bath

Conference Room

ES 395 16

Management Team and Ownership Organization Chart

Strengths, Challenges, Opportunities, Threats

Management Overview The structure of the management is meant to create a first-rate team of leaders to develop and grow the University of Michigan’s premier business incubator; MFactor. We wanted to ensure that the executive team has the diversity and experience to not only operate the incubator, but make sure that it provides a solid return to participants and has long term viability. We also took into consideration that the operations of the business incubator would need to be especially focused

Strengths Proximity to campus

Caliber of staff and mentors

Availability of funding for projects

University of Michigan affiliation

Challenges Gaining credibility as a new venture

High overhead costs

Bureaucracy of involving U of M/Government

Sustaining profitability

Opportunities Utilize resources of MPowered and new entrepreneurship center at engineering school.

Abundance of wealthy investors in Ann Arbor

New community grants and resources focused on MI entrepreneurial growth

Threats Failing to obtain facility close to campus

Over-involvement of University

Competing resources arise to serve student and local business community

ES 395 17

during its early years. It would need to prove that its formula is effective and could not have excessive expenses that would detract from its chief focus of growing and spreading student enterprise. A key component of the management structure is to allow it to be and act as entrepreneurially as it can. This is meant to eliminate bureaucracy and better recruit creative thinkers to become supporters and participants of the program. The management team also has positions that, at least at first, may not be full time. Advisory positions at the incubator could be assumed by students, recent graduates, faculty at the Zell-Lurie Center and even retired entrepreneurs. It’s important that our program attracts members of the business community from diverse age groups. To do this, we plan on being a haven for youthful, creative thinkers and equally welcoming to experienced, successful business leaders who can help mentor, network with, and invest in, student ideas. Management Descriptions Executive Director: The executive director leads the business incubator. This position oversees day-to-day operations, making the final decision on all matters of the program. Working with the executive team, the Executive Director ensures that each facet of the business incubator is making and setting goals to increase effectiveness. The Director also develops a long term strategy to grow its operations. This is a crucial position, especially during the early stages of existence, as the business incubator needs to earn and sustain credibility amongst its leaders, supporters, funders and participants. Financial responsibilities include overseeing all of the money that is raised and spent at the business incubator. This includes such expenses as talent, real estate and supplies. This positions works with the board to ascertain how much money is needed to manage the program on a day-to-day basis and what will be needed to grow it in the future. A key component of the financial department is to connect entrepreneurs with capital to help them successfully develop and spread their ideas. Marketing responsibilities include promoting the resources we offer to students at the University of Michigan. It is important to continually asses how the business incubator should be positioned to best attract students. This position oversees the workshops, speakers, networking forums and other events offered. The marketing department is also responsible for student recruitment, and oversees the process each year to select the top ideas to be incubated. An interactive website, a key tenet of our business incubator, will also be developed by the chief marketer. An additional facet of the Executive Director’s responsibilities includes external relations. In this capacity, the Executive Director engages with the university community, local business community and supporting philanthropists. This position finds roles for supporters to become better connected with University of Michigan’s only business incubator. Foundations and benefactors wishing to support new venture creation at Michigan would work with the Executive Director to grow the program and support student ideas. The External Relations department also has a relationship with the local press to keep them abreast of continuing developments at the business incubator.

Office Assistant: The Office Assistant provides key support for the administration of the business incubator. These responsibilities include connecting entrepreneurs with community resources, scheduling talks for the Executive Director in the local business community and fielding initial questions from

ES 395 18

prospective supporters about the mission of the business incubator. This position ensures that the business incubator is open and active during normal hours, has the appropriate supplies and promptly addresses inquiries received from interested parties. Finally, this role will provide support for businesses within the incubator that may require such services. Part-time positions: In addition to the full-time staff, MFactor has a committed team of professionals available to serve the entrepreneurs. These include experts in the fields of law, accounting and strategy. They are available throughout the week to answer any pressing questions that may arise. Each week, they will also visit MFactor for a personal consultation with each group. MFactor also employs a technology expert. This person will be utilized to create our website and be available to consult on the technology needs of the entrepreneurs in the business incubator.

Management Compensation After researching similar programs at a collegiate level and local economic development organizations, we’ve created a compensation level that is reasonable for the given jobs and competition for high-caliber people. Each of the salaries easily fit within our budget and we do not feel that we are over paying for any of the jobs. The Executive Director salary of $120,000 is a significant first year expense for our organization, but a vital amount to attract the high-caliber talent we require. This salary is in-line to attract an experienced MBA-educated candidate. The part time salaries are able to attract local professionals to devote about six hours a week and share their expertise with our organization. The secretarial salary is also a competitive salary and will allow us to find an experienced employee to put in the hours and time needed.

Year 0 Year 1 Year 2 Employee-Related Operating Expenses: Executive Director Salary $0 $120,000 $120,000 Part Time Accountant $0 $49,200 $49,200 Part Time Lawyer $0 $49,200 $49,200 Part time Strategist $0 $49,200 $49,200 Part Time Web Master $0 $5,100 $800 Secretary Salary $0 $50,400 $50,400

Ownership Ideally, MFactor will be originally established as a club within the University of Michigan. This will allow us to be affiliated with the University of Michigan and receive University funds while also maintaining a distinct identity and largely unregulated business mission. It will provide us the credibility that many competing resources in the area lack within the student body. Once the incubator is established, a separate entity will be established to oversee the capital that is used to fund new ventures. This will be overseen by the Board of Directors of the incubator and run through the university. It is important that we are connected with the development office at the University of Michigan to become eligible for funds from foundations in the state. If we are unable to secure University affiliation, we will lean more heavily on outside investors for funding.

ES 395 19

Board/Management Assistance

We have identified several people we feel would be ideal to serve on our board of directors. There names are listed below and their backgrounds are available in Appendix D. Top Row: David Brophy, Professor of Entrepreneurial Finance at the Ross School of Business; Doug Rothwell, CEO of Detroit Renaissance; Denise Ilitch, former President of Ilitch Holdings; Stanford Ovshinsky, founder of ECD Ovonics; Jeffrey Schox, Schox PLC Intellectual Property Lawyer

Middle Row: Andy Lawlor, Professor of Strategy at the Ross School of Business; Michael Finney, CEO of Ann Arbor SPARK; Leonard Middleton, Professor of Entrepreneurship at the Ross School of Business; Gauri Nanda, founder of NANDA Home, Marc Weiser, founder of RPM Ventures

Bottom Row: Tom Porter, General Partner, Trillium Ventures; Dr. Larry Brilliant, President of the Google Foundation; Cynthia Wilbanks, Vice President of Governmental Affairs at the University of Michigan; Bruce Wasserstein, CEO of Lazard Capital; Steven Hamp, Chairman of the New Economy Initiative.

Outside Support The MFactor will utilize the resources of the local and state business community. Prominent communal partners will be the Detroit Renaissance, which brings together incubators in the state of Michigan and Ann Arbor SPARK, the economic development organization for the Ann Arbor community. A mentorship board will be providing startup advice to aspiring entrepreneurs. It will be composed of experienced, successful leaders from diverse areas including marketing, science

ES 395 20

and engineering. Members will participate on a volunteer basis and offer their services pro-bono to students. This is a great way for alumni and business leaders in the community to help develop future business talent. The volunteer board will include a few dozen members who will typically spend about five hours a month mentoring other entrepreneurs.

Risk Analysis

Issues and Mitigation There are several issues we face as we develop and grow this venture. While many are easily dealt with, there are issues that can become of concern to us and we hope to plan accordingly to overcome them if they do arise. These issues include preparing for the potential of weakening foundation and communal grants to our incubator, decreased University Support, if economic and financial projections do not scale as planned and internal disagreements arise with entrepreneurs or employees of the incubator. Additionally, especially during the first few years, it is vital that MFactor effectively markets itself, communicates its message, executes its mission as planned and earns the needed credibility of its vested partners. We’ve taken these issues seriously throughout the business plan by offering conservative financial estimates and creating alternative plans to pursue in case we face difficulty with our first plan of action. For example, we are depending on support from the University of Michigan to financially support our venture. However, we have a plan in place to seek funding from external sources such as grants from state foundations to fully underwrite all our expenses. We’ve researched successful incubators around the world and have also studied incubators on the collegiate level. This information has allowed us to learn the best-practices needed to effectively create a sustainable incubator. This has also allowed us to learn from the challenges and mistakes other business incubators have made to better prepare our idea to become commercially feasible once it is launched. To help us get through additional challenges, we’ve composed an advisory board of some of the most successful entrepreneurs in America. We can rely on them for advice and support to help us mitigate issues that arise as we open and grow MFactor. Finally, MFactor is an ambitious idea that fills a large demand at the University of Michigan. It is an unprecedented program at Michigan and is structured different from any other incubator. Yet, we do not have unrealistic plans. We start out by selecting a few entrepreneurs to service that we will competitively select. They will have our undivided attention as we seek to gain credibility through the quality – not quantity – of successful business launches. Thus, we will not try to do unrealistic things for Michigan’s economy or Michigan entrepreneurs that are outside of our reach. By having and maintaining a disciplined focus, our objectives will be easier to reach and sustain. Exit Strategy If our projections are incorrect and we are unable to become a sustainable enterprise in year four, it is important to have an exit strategy in place. Disassembling the business would not be difficult as we do not have many fixed assets to sell off. However, it is important that we have an exit strategy for the clients that would be currently using the facilities, as well as the employees. In the first several years of business we will establish ties with incubator organizations, venture capital firms, local banks, accountants, and lawyers. If we had to close down operations, we would tap into our network to re-direct clients and employees as part of the winding up stage of shutting down.

ES 395 21

Financial Section Overview Our operations have a cash outflow of approximately $400,000 per year. This covers employee salaries, rent, utilities, marketing budget, and insurance expenses. We projected out two scenarios for calculating our cash outflows based on whether the University of Michigan chooses to underwrite our employee salaries, and allow us to operate in the Life Sciences Building. Our revenue comes from two sources: charging below market rental prices to non-student entrepreneurs, and a 5% equity stake in graduated companies revenue streams after they hit a minimum threshold of $500,000 in revenues. Based on conservative numbers for graduation rates, growth projections, survival rates, and revenue growth rates of graduated businesses, we will begin to receive equity income in three years of operations. Attached to our business operations will be a start-up fund that will be managed by the executive director and the board. Upon graduation, clients will present to the board with a request for seed capital from our start-up fund, and the board of directors will grant businesses with sufficient working capital based on their individual needs to become sustainable enterprises. We projected to use approximately $400,000 of seed funding per year, with no set amounts for individual grants. Income Statement Expenses on the income statement consist of salaries expense, rent expense, insurance expense, utilities expense, and start-up funds expenses. Under option A, we would have total operating expenses of approximately $770,000 annually. The grant request of $2,500,000 is factored into our year 1 revenues, which explains why in year 1 we report a positive net income, but in years 2-5 our net income is negative. In year 6, our equity income from graduated businesses covers all operating expenses and we report a positive net income of $179,152. Under Option B, the University of Michigan would underwrite approximately $361,000 of our annual expenses which would include salaries and rent expenses. Under this option, we report a positive net income in year 4 of $ 48,282. A snapshot of our income statement is below, and the full income statement is included in our appendix. Option A Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Total Revenues $0 $2,508,000 $12,000 $293,637 $470,875 $689,791 $950,386Total Operating Expenses $0 $790,182 $771,234 $771,234 $782,633 $771,234 $771,234Net Income $0 $1,717,818 -$759,234 -$477,597 -$311,758 -$81,443 $179,152

Option B - University Plan Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6Total Revenues $0 $2,508,000 $12,000 $293,637 $470,875 $689,791 $950,386Total Operating Expenses $0 $424,842 $410,194 $410,194 $421,593 $410,194 $410,194Net Income $0 $2,083,158 -$398,194 -$116,557 $49,282 $279,597 $540,192 Cash Flows As stated earlier, our business operation has approximately $400,000 in cash outflows per year. Year 3 is the first year that we receive equity income, and in year 4 the equity income will sustain our operations portion of the incubator. To cover cash outflows up to year 3, we would need $870,000 in grant money. Also, the start-up fund has a cash outflow of $400,000 a year, as the incubator will provide seed funding to graduated businesses. To sustain this fund up until year 6

ES 395 22

(when our equity income can sustain it), we need $1,630,000 in grant money. Below is a snapshot of our cash flow statement for Option A. Business Operations Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Equity $0 $0 $281,637 $458,875 $677,791 $938,386 $1,240,661 Grants $870,000 $0 $0 $0 $0 $0 $0 Rent Payments $8,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000Total Cash Inflow $878,000 $12,000 $293,637 $470,875 $689,791 $950,386 $1,252,661Cash Outflow $390,182 $371,234 $371,234 $382,633 $371,234 $371,234 $371,234Net Cash Flows $487,818 -$359,234 -$77,597 $88,242 $318,557 $579,152 $881,427

Begin Balance $0 $487,818 $128,584 $50,987 $139,229 $457,785 $1,036,938End Balance $487,818 $128,584 $50,987 $139,229 $457,785 $1,036,938 $1,918,365

Start-up Fund Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7Grants $1,630,000 $0 $0 $0 $0 $0 $0 $0Equity Inflow $0 $0 $0 $0 $88,242 $318,557 $579,152 $881,427Capital Outflow $0 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000Net Cash Flow $1,630,000 -$400,000 -$400,000 -$400,000 -$311,758 -$81,443 $179,152 $481,427

Beginning Balance $0 $1,630,000 $1,230,000 $830,000 $430,000 $118,242 $36,798 $215,951Fund Balance $1,630,000 $1,230,000 $830,000 $430,000 $118,242 $36,798 $215,951 $697,378

*In year 4, equity income will sustain our operations*A grant request of $870,000 will cover expected error in our budget projections

*In year 6 equity inflow will sustain the fund*A Grant request of $1,630,000 will cover expected error in our budget projections Revenues We make revenue from taking a 5% equity stake in businesses that have graduated from our incubator. Once those businesses pass the minimum threshold amount of $500,000 in revenue, the incubator begins to receive payments from those businesses. We receive our first payment in year 3 of $281,637. The equity payments depended on projecting out revenue growth for graduated businesses, and we based our growth figure on a national statistic for businesses that have graduated from incubators. Below is a snapshot of the revenue projections for a single graduated business, broken down into either a student business, or a local entrepreneur business. Our appendix includes the entire sales projections statement.

$239,5355%

Individual Entrepreneur's Firm ProjectionsPost Incubator Graduation Year 0 Year 1 year 2 Year 3 Year 4 10 Year TotalsClient Annual RevenueStudent Entrepreneurs $0 $200,000 $439,535 $679,070 $918,605 $12,779,075 Equity Payments $0 $0 $33,954 $45,930 $606,977Local Entrepreneurs $0 $400,000 $639,535 $879,070 $1,118,605 $14,779,075 Equity Payments $0 $31,977 $43,954 $55,930 $718,954

Entrepreneur Growth and Equity Stake Projections

Equity StakeAverage Annual Sales Growth Figure

ES 395 23

Start-up Fund Upon graduating, each entrepreneur will present their business to the board and the director, and potentially request a funding amount. The start-up fund will allow the board and director to allocate $400,000 per year to graduated businesses, based on their individual needs. Growth Projections If our projections are accurate, our operations will be sustainable in year 4, and our start-up fund in year 6. If this is the case, under Option A we will expand our business into another location in year 6. Under Option B (with University underwriting, and space in Life Sciences Building), we will simply expand the number of clients we have per year. The appendix includes the statements for our growth projections. Funding To cover the cash outflows until our operations and start-up fund is sustainable, we our requesting a grant of $2,500,000. $870,000 will be directed towards business operations and covering annual cash outflows. $1,630,000 will be directed towards our start-up fund and covering the $400,000 annual seed-funding outflows. Based on our projections of revenue, our operations will be sustainable in year 4, and our start-up fund will be sustainable in year 6. Target Fund The New Economy Initiative is our target fund. Ten foundations have each contributed ten million dollars for a $100 million venture to fund promising ideas that promote Michigan entrepreneurship. The ability for us to gain support from this group is high because the fund has told us we are the exact type of concept that they are looking to assist. They have big money, big resources and big names with the hope that they can create a big impact on our state’s economy. We feel MFactor can become a catalyst for their goals: retaining talent, promoting entrepreneurship and embracing innovation. Thus, it is likely that they will fund our concept. If we become affiliated with the University of Michigan and can have the donation go through the Office of Development, that will provide us the credibility needed to obtain suitable grants for a sustainable business incubator. Our financial documents are included in our appendix to go into further detail of the financial projections for MFactor.

Future Orientation and Next Steps Major Milestones – Timeline (Action Plan - Project Chart) Submit Business Plan (4/17) Contact Potential Donors (4/24) Receive Funding (6/2) Select Location (6/9) Contact Potential Board Members (6/23) Finalize Board Membership (7/1) Begin Hiring Process (7/8) Establish University Relationship (8/1) Post Applications (8/15) Admit First Class Into The Incubator (9/1)

ES 395 24

Operational Plan The application process will be evaluated strictly by our Board of Directors. In the preliminary stage, the application submissions will be divided evenly amongst the members and evaluated individually. Applications of interest will then move on to the next stage of evaluation where the entire Board discusses each application. Members of the board will then each vote on their top four ideas. The votes will be compiled assigning 4 points for a vote of best idea, 3 points for second best, etc. and the points will be totaled. The four applications who receive the most points will then be accepted into the program. This process will be the same for the Hunter group, however there will be two open spots rather than four, and voting will follow accordingly. During the program, there will be one full time staff member who is an experienced entrepreneur. This staff member will be available by meeting request during regular business hours. On Tuesday and Thursday our part-time panel will be available for meetings by request. The part-time panel will include an attorney, accountant, and an additional successful entrepreneur. There will also be a full time administrative assistant at the front desk to facilitate the appropriate business functions.

Week End of the Week Progress/Presentation 1 Present Raw Business Idea to Board 2 Develop/Present Business Plan Outline 3 Develop/Present Business Strategy 4 Develop/Present Marketing Plan 5 Operations Model 6 Obtain Legal Documentation/ Licenses 7 Develop/ Present Financial Model 8 Finalize Location 9 Establish Supplier Relationships 10 Finalize Funding 11 Misc. Activities Related to Start of Operations 12 Misc. Activities Related to Start of Operations

As discussed earlier, following this twelve week process the entrepreneurs will begin to take those steps required in order to establish their business. Because these entrepreneurial steps are so unpredictable, it is difficult to create an exact schedule. Finally, after the year term has expired, entrepreneurs will have the opportunity to re-apply to the incubator, request funding, or a combination of the two.

Conclusion The window of opportunity for this project is now. The State of Michigan and the University of Michigan have both stated that entrepreneurship will be a catalyst for revitalizing Michigan. The New Economy Initiative is looking to invest $100,000,000 in entrepreneurial initiatives in Southeast Michigan and its Chairman likes the potential of a business incubator in Ann Arbor. MFactor can be part of the solution that Michigan leaders are seeking. MFactor will help take advantage of the vast resources of the University of Michigan and help bring businesses and jobs back to Michigan. Not only is the external environment positive, there is significant demand for a business incubator in Ann Arbor. Numerous in-depth interviews highlighted collegiate entrepreneurs' frustrations and

ES 395 25

fears associated with starting a business. In addition, Ross School of Business and College of Engineering students have displayed unprecendented interest in entrepreneurship via the related courses and organizations. But these opportunities are not enough. There is a hunger for our generation to become entrepreneurs and hundreds of those bright, clever minds are students in Ann Arbor. Finally, MFactor allows the University of Michigan to become even more competitive with schools like MIT, Stanford and the University of Pennsylvania which currently house incubator for students to harvest their ideas. With a suitable external environment and demand, the only remaining obstacle is financials. After a detailed financial analysis, our business incubator, with a 5% equity stake, will be profitable and sustainable for the long-term. There is no time like the present to make this a reality. We see this as a definite "go" opportunity.

ES 395 26

Appendix A: Application

MFactor

2008

Business Incubator Application for Admission

ES 395 27

In order to review an application a student must have completed the following sections. Once all sections are completed, and the student has submitted their application to the board, we will begin the evaluation.

Idea In 500 words or less, please present a compelling business concept that addresses the three questions below in addition to describing the general business purpose and function.

Value Proposition Please identify how your proposal will add value either to the customer or supply chain.

Problem Solved How does your product/service solve a problem that currently exists in the market.

Target Market Please identify and explain your target market

Market Size/Potential Please provide justification for the following numbers in appendices that will be attached to the end of this application. Label the appendices with the title used in the left columns.

Overall Market Size (Source)

_____________________________________

Expected Market Share: _____________________________________

Growth Expectations: _____________________________________

Financials Please provide a detailed analysis of the financial numbers quoted below in your appendix. If your company is currently doing business, please provide any financial statements you may have.

Is the company making money? Yes No

If yes, what are revenues/

current gross margins? _____________________________________

Burn rate: _____________________________________

Revenue forecasts: _____________________________________

Expected margin: _____________________________________

Industry margins: _____________________________________

Breakeven: _____________________________________

Customer acquisition costs: _____________________________________

Revenue growth rates: _____________________________________

ES 395 28

Technology Technology preference: Buy (out of box) Build

ٱ ٱ

Does the company have YES NO

proprietary technology? ٱ ٱ

Any patents granted/pending? YES NO

ٱ ٱ

Is solution/offering scalable? YES NO

ٱ ٱ

Time frame for development: _____________________________________

_____________________________________

Appendix B: Elevator Pitch We would like to start a business incubator affiliated with the University of Michigan. The University of Michigan is an ideal site for a business incubator. First it offers a premier faculty and student body to provide clients and employees for the incubator. Additionally, Ann Arbor was recently voted one of the top 100 places to start a business. Politically, we feel that now is the time to implement this project. Michigan is undergoing a single-state recession and needs to create jobs, and community leaders such as Jennifer Granholm and Mary Sue Coleman have both cited entrepreneurship as one of the keys to turning around Michigan’s economy. Our incubator can be a catalyst for the type of change Michigan is searching for. In sum, our incubator has a tremendous opportunity for success through combining the resources available at U of M and in Ann Arbor with a state thirsting for economic growth.

Appendix C: Interviews Conducted Steve Hamp- Chairman of the New Economy Initiative

Mark Neathercit- Executive Director of the New Economy Initiative

Glen Lappin- Director of Development, Detroit Renaissance

Kathryn Simon- Former Entrepreneurship Director at the University of Colorado

Alan Bloom - CEO and President of Bloom General Contracting

Ann Arbor, MI

Laura Berdish – Kresge Librarian

ES 395 29

Justin Vincent – BBA Class of 2008, Stephen M. Ross School of Business at U of M

Jerry Kozak - BBA Class of 2008, Stephen M. Ross School of Business at U of M

David Landau - BBA Class of 2008, Stephen M. Ross School of Business at U of M

Daniel Epstein – President & Founder, Billboard Bands™ LLC & PMbuzz.com

Appendix D: Board of Directors Prospects Len Middleton: Len provides unparalleled expertise into the growth of new ventures. He is an Adjunct Professor of Corporate Strategy and International Business, and Entrepreneurship at the University of Michigan Business School. He is Co-Director of the Global MBA Projects Course (international field studies). He is also a board member of the Samuel Zell & Robert H. Lurie Institute for Entrepreneurial Studies, faculty member with the William Davidson Institute, and faculty advisor for the Tauber Manufacturing Institute.xv

Jeffrey Shox: Jeffrey Schox provides legal expertise, with specific knowledge related to the legalities of startups and technology issues. He is a Registered Patent Attorney and the founding member of Schox Patent Group, a boutique patent firm devoted to inventors and entrepreneurs. Drawing on his experience of over ten years in the patent law field and his training in both mechanical and electrical engineering, he strategically advises his clients and advances their patent portfolios. He has filed of over 200 patent applications in a broad range of cutting-edge technologies, including hybrid vehicle drivetrains, semiconductor manufacturing, medical devices, wireless communications, computer software, and eco-technologies. Before starting his own law firm, Jeffrey worked at Brinks Hofer Gilson and Lione, one of the largest patent law firms in the nation, where he coordinated the majority of patent applications for a Fortune 100 company.xvi

Marc Weiser: Marc Weiser is a successful venture capital and provides insight into rapid prototyping, real estate and technology ideas. He brings 12 years of software, technology, and startup experience spanning roles that include marketing and engineering. At RPM, Weiser is involved with the boards of ATC Onlane, BountyJobs, Oxlo Systems, RiverGlass, and Xtime. He was previously involved with the boards of Entegrity Solutions, R4 Global Services, Applimation, and QuantumShift.xvii

Dr. Stephen Forest: Dr. Stephen Forest connects the business incubator with the university administration. He has expertise in engineering, and oversees Michigan’s tech transfer program. He currently serves as Vice President of Research at the University of Michigan and serves as an executive officer of the University, overseeing a research enterprise exceeding $750 million, one of the largest programs in the country.xviii Andrew Lawlor: Andrew Lawlor provides important insight into business finances and strategy. He is currently a popular Lecturer of Entrepreneurship and Strategy at the Ross School of Business. He also oversees the Global MBA Projects and is involved with the William Davidson Institute. His research focuses on new business development, market development, business planning and strategic planning.xix

ES 395 30

Denise Illitch: Denise Ilitch provides legal expertise, successful entrepreneurial experience and insight into the Michigan business climate. Denise currently serves as serves as a lawyer in Clark Hill’s Business and Government Policy practice groups and focuses her practice in the areas of business practice, corporate law, and government policy. Prior to joining Clark Hill, Ms. Ilitch was the president of Ilitch Holdings, Inc., a company that oversees the management and operations of such entities as Little Caesar Enterprises, the Detroit Red Wings, the Detroit Tigers, and Olympia Entertainment. Ms. Ilitch was also a part of the team that created a sports and entertainment district in the heart of the city, a project that brings millions of people into the city each year.xx

Bruce Wasserstein: Bruce Wasserstein is a former alumnus and serves as an honorary board member. He is a highly successful investment banker and the current CEO of Lazard. Over his career, he has spearhead over a thousand business deals collectively valued at over a trillion dollars. He brings his experience in the financial world and passion for new venture creation to the incubator.xxi

Larry Brilliant: Dr. Larry Brilliant is the Executive Director of Google.org. In this role, Larry works with the company's co-founders to define the mission and strategic goals of Google's philanthropic efforts. Google.org, the umbrella organization for these efforts, includes the Google Foundation as well as Google Grants (the AdWords giving program) and the company’s major initiatives aimed at reducing global poverty, improving the health of the least advantaged in the world, and working to halt or even reverse the effects of the climate crisis. In addition to his medical career, Larry co-founded The Well, a pioneering virtual community, with Stewart Brand in 1985. He also holds a telecommunications technology patent and has served as CEO of two public companies and other venture-backed start-ups. He was Associate Professor of epidemiology, global health planning and economic development at the University of Michigan.xxii

Cynthia H Wilbanks: Cynthia Wilbanks is Vice President for Government Relations and directs the University's Government Relations programs at the local, state and federal levels. Her responsibilities include planning and developing the institution's response to proposed legislation; developing and maintaining effective relationships with governmental agencies and officials; and analyzing and assessing legislative, administrative and regulatory activities as they pertain to University programs, activities and operations. She also supervises the activities of the State Outreach office. An additional responsibility that she recently attained which will be especially relevant to our venture is helping the University promote economic development.xxiii Gauri Nauda: Gauri Nanda works in design and engineering. She is a graduate of the Massachusetts Institute of Technology Media Lab. Gauri has also worked for Apple Computer and has a bachelors degree in computer science and art from the University of Michigan. Some of her notable designs involve computers that work by falling to the floor or after being ripped apart. After receiving her master's degree Gauri began Nanda, a company dedicated to bringing new intriguing products to market. Nanda's first product, Clocky, the alarm clock that runs away was launched in December 2006 and is available for sale at nandahome.com. Gauri is 27.xxiv

Tom Porter: Tom Porter is General Partner for Trillium Ventures in Ann Arbor, Michigan. Porter has a broad range of experience in founding, managing and advising successful technology growth companies. He co-founded and is a General Partner Emeritus in EDF Ventures, an Ann Arbor, Michigan-based venture capital firm investing in early stage market driven companies in health care

ES 395 31

and information technology. At EDF he served as interim Chief Executive Officer for several health care companies in the portfolio, and was a founder of five: Theragen, Inc.; Coagulation Systems, Inc.; Matrigen, Inc.; IntraLase Corp.; and HandyLab, Inc. He previously has held board positions for numerous health care and software companies.xxv

Steven Hamp: Steven Hamp enjoyed a 27-year career at the Henry Ford, during which he rose to serve as the historical institution’s President from 1996 to 2005. Under his leadership, the Henry Ford’s operating infrastructure was fundamentally revised, rebuilt, and expanded to include the establishment of the Henry Ford Academy, a public charter school academy, the Ford Rouge Factory Tour, Michigan’s only auto assembly plant tour open to the public, the Benson Ford Research Center, and other new user experiences and services such as the IMAX® theatre. Mr. Hamp was also responsible for increasing the annual budget from $25M to $55M, increasing the endowment from $175M to $285M, improving visitation from 1 million guests annually to over 1.5 million, and raising capital and project funds in excess of $150M.xxvi

Doug Rothwell: Doug Rothwell has been President of Detroit Renaissance since 2005. During Doug’s tenure he has led the development of the region’s first economic growth strategy, the Road to Renaissance, and helped found One D, a collaboration of the region’s major civic organizations. Prior to joining Detroit Renaissance, Doug served as Executive Director of Worldwide Real Estate for General Motors overseeing the largest private sector property portfolio in the world with 400 million square feet of real estate. Doug also founded and served as President and Chief Executive Officer of the Michigan Economic Development Corporation.xxvii Mike Finney: Mike Finney is president and chief executive officer of Ann Arbor SPARK. Prior to joining SPARK in November of 2005, he was president and chief executive officer of Greater Rochester Enterprise, the public/private economic development arm of the greater Rochester, NY area.xxviii Stan Ovshinsky: Stan Ovshinsky is Founder and Chief Scientist and Technologist of Energy Conversion Devices, Inc. (ECD Ovonics) headquartered in Rochester Hills, Michigan. He has about 350 U.S. patents and is the author of over 275 scientific papers ranging from neurophysiology to amorphous semiconductors. He serves on various scientific, educational and civic boards and is the recipient of numerous awards, including the Diesel Gold Medal for Invention presented by German Inventors Association.xxix

ES 395 32

Appendix E: Financials – backup documents

Source of FundsGrants and Donations $2,500,000Total of Funding Sources $2,500,000

Application of Funds

Business Operations Grant Proposal $870,000 Employee Compensation $323,100 Rent $36,000 Supplies $14,948 Marketing $9,894 Insurance $1,440 Utilities $4,800Total Funds for Annual Operations $390,182

Start-Up Fund Grant Proposal $1,630,000 Capital Investments $400,000Total Annual Funds for Start-up $400,000

*Start-Up Fund grant money will be used up until year 5

*Our Target fund is the New Economy Initiative Fund, based out of Detroit with available funds of $100 million

Sources and Uses Statement

TOTAL FUNDING REQUIRED$2,500,000

*Our incubator will on average give $400,000 per year to graduated clients to help with start-up costs

Funding Operations

*Grant proposals based on covering cash outflows until equity stream sustains the businesses*Business Operations grant money will be used up until year 3

Business Incubator Cash Flow Statement Option A Business Operations Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Equity $0 $0 $281,637 $458,875 $677,791 $938,386 $1,240,661 Grants $870,000 $0 $0 $0 $0 $0 $0 Rent Payments $8,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000Total Cash Inflow $878,000 $12,000 $293,637 $470,875 $689,791 $950,386 $1,252,661Cash Outflow $390,182 $371,234 $371,234 $382,633 $371,234 $371,234 $371,234Net Cash Flows $487,818 -$359,234 -$77,597 $88,242 $318,557 $579,152 $881,427

Begin Balance $0 $487,818 $128,584 $50,987 $139,229 $457,785 $1,036,938End Balance $487,818 $128,584 $50,987 $139,229 $457,785 $1,036,938 $1,918,365*In year 4, equity income will sustain our operations*A grant request of $870,000 will cover expected error in our budget projections

ES 395 33

*Business will begin operations in May of 2008May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Year 1 Total

Cash Inflows:

Revenues

Equity $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Rent $0 $0 $0 $0 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $8,000

Grants and Donations $870,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $870,000

Total Cash Inflows $870,000 $0 $0 $0 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $878,000

Cash Outflows

SG & A:

Executive Director Salary $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $120,000

Part Time Strategist $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $49,200

Part Time Accountant $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $49,200

Part Time Lawyer $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $49,200

Part Time Web Master $1,500 $1,500 $1,500 $0 $0 $200 $0 $0 $200 $0 $0 $200 $5,100

Secretary Salary $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $50,400

Rent $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $36,000

Liability Insurance $120 $120 $120 $120 $120 $120 $120 $120 $120 $120 $120 $120 $1,440

Utilities/Telephone/Gas $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $4,800

Marketing Expense $0 $0 $1,649 $1,649 $0 $0 $1,649 $1,649 $0 $0 $1,649 $1,649 $9,894

Office Supplies $3,737 $3,737 $3,737 $3,737 $0 $0 $0 $0 $0 $0 $0 $0 $14,948

Total Cash Outflows $35,257 $35,257 $36,906 $35,406 $30,020 $30,220 $31,669 $31,669 $30,220 $30,020 $31,669 $31,869 $390,182

Net Cash Flow $834,743 -$35,257 -$36,906 -$35,406 -$29,020 -$29,220 -$30,669 -$30,669 -$29,220 -$29,020 -$30,669 -$30,869 $487,818

Beginning Balance $0 $834,743 $799,486 $762,580 $727,174 $698,154 $668,934 $638,265 $607,596 $578,376 $549,356 $518,687 $0

Ending Balance $834,743 $799,486 $762,580 $727,174 $698,154 $668,934 $638,265 $607,596 $578,376 $549,356 $518,687 $487,818 $487,818

May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Year 2 TotalCash Inflows:

Revenues

Equity $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Rent $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $12,000

Grants and Donations $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Cash Inflows $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $12,000

$0

Cash Outflows $0

SG & A: $0

Executive Director Salary $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $120,000

Part Time Strategist $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $49,200

Part Time Accountant $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $49,200

Part Time Lawyer $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $4,100 $49,200

Part Time Web Master $0 $200 $0 $0 $200 $0 $0 $200 $0 $0 $200 $0 $800

Secretary Salary $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $4,200 $50,400

Rent $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $36,000

Liability Insurance $120 $120 $120 $120 $120 $120 $120 $120 $120 $120 $120 $120 $1,440

Utilities/Telephone/Gas $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $4,800

Marketing Expense $0 $0 $1,649 $1,649 $0 $0 $1,649 $1,649 $0 $0 $1,649 $1,649 $9,894

Office Supplies $100 $100 $100 $0 $0 $0 $0 $0 $0 $0 $0 $0 $300

Total Cash Outflows $30,120 $30,320 $31,769 $31,669 $30,220 $30,020 $31,669 $31,869 $30,020 $30,020 $31,869 $31,669 $371,234

Net Cash Flow -$29,120 -$29,320 -$30,769 -$30,669 -$29,220 -$29,020 -$30,669 -$30,869 -$29,020 -$29,020 -$30,869 -$30,669 -$359,234

Beginning Balance $487,818 $458,698 $429,378 $398,609 $367,940 $338,720 $309,700 $279,031 $248,162 $219,142 $190,122 $159,253 $487,818

Ending Balance $458,698 $429,378 $398,609 $367,940 $338,720 $309,700 $279,031 $248,162 $219,142 $190,122 $159,253 $128,584 $128,584

ES 395 34

*1/3 (2) of our entrepreneurs will be non-students, whom we will charge 70% of local market rental rates*Equity stake based off of 5% of graduated entrepreneur's revenue*Major Office Equipment has a 4 year useful life*Utilities based off of similar size building with similar operations*Insurance figure based from Len Middleton*Marketing Budget pulsed around 3 application times per year*Web Master paid every three months to update the site*$2,412,214 in Grant money will cover negative cash flows until equity stream can sustain our operations*$2,500,000 is what we request to cover error in budget projections

Assumptions

Option A Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Revenues:

Equity $0 $0 $0 $281,637 $458,875 $677,791 $938,386 $1,240,661 $1,584,615 $1,970,247 $2,397,559 Rent $0 $8,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 Grants and Donations $0 $2,500,000 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Revenues $0 $2,508,000 $12,000 $293,637 $470,875 $689,791 $950,386 $1,252,661 $1,596,615 $1,982,247 $2,409,559

Operating Expenses:

Employee Salaries Expense $0 $323,100 $318,800 $318,800 $318,800 $318,800 $318,800 $318,800 $318,800 $318,800 $318,800 Rent $0 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 Insurance $0 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 Utilities/Telephone/Gas $0 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 Marketing Budget $0 $9,894 $9,894 $9,894 $9,894 $9,894 $9,894 $9,894 $9,894 $9,894 $9,894 Office Supplies $0 $14,948 $300 $300 $11,699 $300 $300 $300 $11,699 $300 $300 Capital Investments $0 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000Total Operating Expenses $0 $790,182 $771,234 $771,234 $782,633 $771,234 $771,234 $771,234 $782,633 $771,234 $771,234

Net Income $0 $1,717,818 -$759,234 -$477,597 -$311,758 -$81,443 $179,152 $481,427 $813,982 $1,211,013 $1,638,325

Option B - University UnderwritingYear 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Revenues:

Equity $0 $0 $0 $281,637 $458,875 $677,791 $938,386 $1,240,661 $1,584,615 $1,970,247 $2,397,559 Rent $0 $8,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 Grants and Donations $0 $2,500,000 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Revenues $0 $2,508,000 $12,000 $293,637 $470,875 $689,791 $950,386 $1,252,661 $1,596,615 $1,982,247 $2,409,559

Operating Expenses:

University Underwrites

Employee Salaries Expense $0 $323,100 $318,800 $318,800 $318,800 $318,800 $318,800 $318,800 $318,800 $318,800 $318,800 Rent $0 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 Insurance $0 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 Utilities/Telephone/Gas $0 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800Total University Charges $0 $365,340 $361,040 $361,040 $361,040 $361,040 $361,040 $361,040 $361,040 $361,040 $361,040 Marketing Budget $0 $9,894 $9,894 $9,894 $9,894 $9,894 $9,894 $9,894 $9,894 $9,894 $9,894 Office Supplies $0 $14,948 $300 $300 $11,699 $300 $300 $300 $11,699 $300 $300 Capital Investments $0 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000Total Operating Expenses $0 $424,842 $410,194 $410,194 $421,593 $410,194 $410,194 $410,194 $421,593 $410,194 $410,194

Net Income $0 $2,083,158 -$398,194 -$116,557 $49,282 $279,597 $540,192 $842,467 $1,175,022 $1,572,053 $1,999,365

Business Incubator Income Statement

ES 395 35

Start-up Fund Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10Grants $1,630,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Equity Inflow $0 $0 $0 $0 $88,242 $318,557 $579,152 $881,427 $1,213,982 $1,611,013 $2,038,325Capital Outflow $0 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000Net Cash Flow $1,630,000 -$400,000 -$400,000 -$400,000 -$311,758 -$81,443 $179,152 $481,427 $813,982 $1,211,013 $1,638,325

Beginning Balance $0 $1,630,000 $1,230,000 $830,000 $430,000 $118,242 $36,798 $215,951 $697,378 $1,511,359 $2,722,372Fund Balance $1,630,000 $1,230,000 $830,000 $430,000 $118,242 $36,798 $215,951 $697,378 $1,511,359 $2,722,372 $4,360,697

*Equity Inflow based on Equity Payments Received and not used to cover expenses

*We plan on giving on average $400,000 a year to fund our start-up businesses*$918,363 grant will balance out our negative cash flow until our equity stream can sustain the fund*We are asking for $1,000,000 to initiate our start-up fund to account for budgeting margin of error

Start-up Fund

*$400,000 capital outflow based on Enterprise Ireland's 100K average capital requirements for a start-up firm * 4 firms graduating per year

$239,5355%

Individual Entrepreneur's Firm ProjectionsPost Incubator Graduation Year 0 Year 1 year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 10 Year TotalsClient Annual RevenueStudent Entrepreneurs $0 $200,000 $439,535 $679,070 $918,605 $1,158,140 $1,397,675 $1,637,210 $1,876,745 $2,116,280 $2,355,815 $12,779,075 Equity Payments $0 $0 $33,954 $45,930 $57,907 $69,884 $81,861 $93,837 $105,814 $117,791 $606,977Local Entrepreneurs $0 $400,000 $639,535 $879,070 $1,118,605 $1,358,140 $1,597,675 $1,837,210 $2,076,745 $2,316,280 $2,555,815 $14,779,075 Equity Payments $0 $31,977 $43,954 $55,930 $67,907 $79,884 $91,861 $103,837 $115,814 $127,791 $718,954

Cumulative Entrepreneurs Firm Projections

Post Incubator Graduation Year 0 Year 1 year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 10 Year TotalsClient Annual RevenueStudent Entrepreneurs $0 $348,000 $1,112,791 $2,294,373 $3,892,745 $5,907,909 $8,339,864 $11,188,609 $14,454,145 $18,136,472 $22,235,591 $87,910,499 Total Firms Graduated 2 3 5 7 9 10 12 14 16 17Local Entrepreneurs $0 $696,000 $1,808,791 $3,338,373 $5,284,745 $7,647,909 $10,427,864 $13,624,609 $17,238,145 $21,268,472 $25,715,591 $107,050,499 Total Firms Graduated 2 3 5 7 9 10 12 14 16 17Cumulative Client Revenue $0 $1,044,000 $2,921,582 $5,632,745 $9,177,491 $13,555,818 $18,767,727 $24,813,218 $31,692,290 $39,404,945 $47,951,181 $194,960,997TOTAL Incubator Equity Received $0 $0 $281,637 $458,875 $677,791 $938,386 $1,240,661 $1,584,615 $1,970,247 $2,397,559 $9,549,771

*Based on 4 student and 2 non-student firms always in the incubator program

*Each student firm will have sales in the first year of approx. $200K, with growth based on the average sales growth figure of post-grad incubator firms*Equity Payments based on 5% of annual revenue after $500k minimum threshold has been met

Entrepreneur Growth and Equity Stake Projections

*Each Non-Student firm will have sales in the first year of approx. $400K, with growth based on the average sales growth figure of post-grad incubator firms

Equity StakeAverage Annual Sales Growth Figure

*Year 0 is the year the clients are developing their business in the incubator

*2 student firms will graduate every year, while 2 will re-apply

*87% survival rate of businesses post incubation period of operations factored into formula by multiplying the annual revenue and the total firms graduated by .87*Based on 4 student and 2 non-student firms always in the incubator program*2 Non-student firms will graduate in approximately one year

ES 395 36

Business OperationsYear 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Assets Cash $878,000 $499,818 $422,221 $521,862 $829,020 $1,408,172 $2,289,599 $3,514,979 $5,114,594 $7,152,919Total Assets $878,000 $499,818 $422,221 $521,862 $829,020 $1,408,172 $2,289,599 $3,514,979 $5,114,594 $7,152,919

Liabilities Salaries Payable $323,100 $318,800 $318,800 $318,800 $318,800 $318,800 $318,800 $318,800 $318,800 $318,800 Rent Payable $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 Insurance Payable $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 $1,440 Utilities Payable $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 $4,800 Marketing Payable $9,894 $9,894 $9,894 $9,894 $9,894 $9,894 $9,894 $9,894 $9,894 $9,894 Accounts Payable $14,948 $300 $300 $11,699 $300 $300 $300 $11,699 $300 $300Total Liabilities $390,182 $371,234 $371,234 $382,633 $371,234 $371,234 $371,234 $382,633 $371,234 $371,234

Retained Earnings $487,818 $128,584 $50,987 $139,229 $457,786 $1,036,938 $1,918,365 $3,132,346 $4,743,360 $6,781,685Total Shareholders' Equity $487,818 $128,584 $50,987 $139,229 $457,786 $1,036,938 $1,918,365 $3,132,346 $4,743,360 $6,781,685

Balance Sheet

*Accounts Payable is office supplies

Efficiency

2 student firms every year, and 2 local entrepreneur firms every year530

Accepted into program 41%

Profitability

Individual Entrepreneur's Firm ProjectionsPost Incubator Graduation Year 0 Year 1 year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 10 Year TotalsClient Annual RevenueStudent Entrepreneurs $0 $200,000 $439,535 $679,070 $918,605 $1,158,140 $1,397,675 $1,637,210 $1,876,745 $2,116,280 $2,355,815 $12,779,075 Equity Payments $0 $0 $33,954 $45,930 $57,907 $69,884 $81,861 $93,837 $105,814 $117,791 $606,977Local Entrepreneurs $0 $400,000 $639,535 $879,070 $1,118,605 $1,358,140 $1,597,675 $1,837,210 $2,076,745 $2,316,280 $2,555,815 $14,779,075 Equity Payments $0 $31,977 $43,954 $55,930 $67,907 $79,884 $91,861 $103,837 $115,814 $127,791 $718,954

Return on Investment (Grant)Business Operations Grant Proposal $870,000

year 1 year 2 year 3 year 4 year 5 year 6 year 7Net Cash Flow -$382,182 -$359,234 -$77,597 $88,242 $318,557 $579,152 $881,427ROI -43.93% -41.29% -8.92% 10.14% 36.62% 66.57% 101.31%

Start-up Fund Grant Proposal $1,630,000year 1 year 2 year 3 year 4 year 5 year 6 year 7 year 8 year 9 year 10

Net cash Flow -$400,000 -$400,000 -$400,000 -$311,758 -$81,443 $179,152 $481,427 $813,982 $1,211,013 $1,638,325ROI -24.54% -24.54% -24.54% -19.13% -5.00% 10.99% 29.54% 49.94% 74.30% 100.51%

Ratio Analysis

Applications Reviewed

Acceptance Rate:

Company Turnover:

ES 395 37

Option A facility near campus year 1 year 2 year 3 year 4 year 5 year 6 year 7 year 8clients in program 6 6 6 8 8 14 14 14Locations 1 1 1 1 1 2 2 2

Option B facility in Life Sciences Building year 1 year 2 year 3 year 4 year 5 year 6 year 7 year 8clients in program 6 6 8 10 10 12 14 14Locations 1 1 1 1 1 1 1 1*Increase clients in year 4 due to sustained cash flows*Life Science building has the capacity for more clients already, goal is to sustain the existing program before growth

*We will target a similar size office and similar rental price of our existing facility, with location close to campus

Growth Projection

*Growth projections not factored into cash flow statements because of desire to remain conservative with numbers*Increase clients in year 4 due to sustained cash flows

ES 395 38

Appendix F: Founders Résumés

JOSHUA M . BLOOM 4155 Hickory Ridge Rd. • Ann Arbor, MI 48104

jmyles@umich.edu • 734.646.5620

EDUCATION UNIVERSITY OF M ICHIGAN Ann Arbor, M I Stephen M . Ross School of Business Bachelor of Business Administration, May 2008 • GPA 3.41/ 4.0 • Emphasis in Finance and Accounting • Member of Finance, Accounting Clubs • Selected by Accounting Club as Tutor for Financial Accounting • Currently Developing University Business Incubator

• Member of Tamid Investment Group, Non-profit Israeli investment fund Col lege of Li terature, Science and Arts Broad Liberal Arts curriculum with pre-business emphasis, April 2006 • GPA 3.5/ 4.0 (Fall 2004-Winter 2006) • Study Abroad, International Education of Students, Barcelona Espana EXPERIENCE INTEL CORPORATION FINANCE Portland, OR 2007 Financial Analyst • Participated on a finance team in actively managing a 1600 employee division with a

$400,000,000 spending budget. • Analyzed Intel's validation division by using a SWOT analysis to make the business more

cost-effective. • Created a should-cost project forecasting tool that allowed Finance to evaluate potential

projects, and more accurately budget their expenditures. Summer 2006 YAHOO!, INC. RESEARCH & DEVELOPM ENT Barcelona, Spain Researcher • Developed plan to reorganize Yahoo Question and Answer forum by analyzi ng consumer

behavior and customer segmentation, leading to program updates and increased costumer satisfaction

• Participated on cross-cultural team to improve Yahoo! information retrieval capabilities resulting in increased search engine efficiency

• Conducted independent research initiative on international professional business environment to analyze cross-cultural differences

Summer 2005 BLOOM GENERAL CONTRACTING Redford, M I Intern • Analyzed potential commercial building project in order to achieve company standard

return on investment of 10% • Processed receivables, payables, payroll and employee travel expenses and through

procedural refinement, increased efficiency of these processes and decreased loss caused by common accounting mistakes and delays

• Processed and assessed vendor proposals in medical and auto insurance resulting in cost reduction from $157,000 annual to $134,000 annual

2005-Present BOSS CONSULTING GROUP Ann Arbor, M I Project M anager • Managed a team that analyzed and improved several initiatives taken by the University

Health Services including: Aids Awareness, health Awareness program, and "Stay In The Blue" Alcohol Awareness program resulting in increased student participation

• Worked with team to re-organize the University's Student Activities Leadership Board improving overall organization in operations

• Built relationship and developed project with University Health Services resulting in the creation of a two-semester, 10 team member consulting project

ES 395 39

ADDITIONAL • Proficient in Spanish • PADI Certified Scuba Diver • Captain: Varsity, Junior Varsity, and Freshman High School Soccer teams • Interests: Soccer, Hiking, Mountain biking, Skiing, Rock-Climbing, Horseback riding

GARY DAVID WEINTRAUB 1320 Cambridge Road • Ann Arbor, MI 48104-3563

garydw@umich.edu • 610.999.1711

EDUCATION UNIVERSITY OF M ICHIGAN

Ann Arbor, M I

Stephen M . Ross School of Business Bachelor of Business Administration, May 2008 • Emphases in Marketing and General Management • BBA Marketing Club VP External Affairs and Michigan Gourmet Club member • G.P.A. 3.6/ 4.0 (Marketing Concentration G.P.A. 4.0/ 4.0)

Col lege of Li terature, Science and the Arts • Pre-Business and Hebrew and Judaic Cultural Studies emphases • University Honors Program • G.P.A. 3.5/ 4.0

EXPERIENCE S.C. JOHNSON & SON, INC.

Racine, WI

Summer 2007 M arketing Intern • Led eight cross-functions in year one launch management analysis and developed best

practices go-to-market strategy based on key drivers of success. • Worked with Promotion Department and performed A.C. Nielsen based analysis to

optimize value, creative, and circulation of 11/ 11/ 07 FSI (Free Standing Insert). • Collaborated with Art, Marketing Research, and Engineering Depts. to develop stimulus,

secure consumer feedback, assess costs implications, and recommend lead option for next generation unit.

• Recommended list of marketing tests to conduct for continued learning.

• Exposed to advertising progression, from initial story-boards to first cut.

2004-2006 PROGRESSIVE BUSINESS PUBLICATIONS

Bryn M awr, PA

Summers Col lege Intern Supervisor

• Promoted from Account Representative to Senior Representative July 2004 and College Intern Supervisor May 2005; maintained sales average in top 5% of 450 person division.

• Held dual responsibility of producing subscription sales of business publications to high level executives as well as supervising sales representatives.

• Implemented improved training programs such as monitoring sessions and workshops, contributing to 30% rise in office sales from previous summer, 18,500 to 24,000.

ES 395 40

• Interviewed 100 prospects for intern program, making independent hiring decisions.

2004-Present PSI UPSILON FRATERNITY

Ann Arbor, M I

President • Held positions as President 2006, VP Fall 2005, and Pledge Class President Fall 2004.

• Represented 68 member fraternity at weekly Interfraternity Council meetings.

• Led weekly Chapter and Executive Board meetings.

• Planned and executed innovative rush activities, leading to 100% increase in pledge class membership, from 12 to 24, and largest pledge class in over decade.

• Attended Archons' Academy, convention for Psi Upsilon Presidents where topics of discussion included leadership, goal setting, and communication.

2004-Present VOLUNTEERS IN ACTION

Ann Arbor, M I

Executive Board • Restructured marketing plan by repositioning organization and targeting additional

segments, leading to 75% membership increase, from 24 to 42. • Facilitated monthly trips to Food Gatherers' soup kitchen with group of 10 students.

• Tutored middle school students weekly at Peace Neighborhood Center.

ADDITIONAL • Interests include culinary arts, athletics, professional sports, and travel.

• Coached wheelchair basketball team of physically challenged adolescents, ages 12-14. • Graduated from Haverford High School, June 7, 2004; Varsity basketball team member. • Earned Jewish Community High School Diploma in Jewish Studies and Hebrew School

Teaching Certificate from Gratz College, May 16, 2004; fluent in Hebrew language. • Proficient in Microsoft Word, PowerPoint, and Excel.

ES 395 41

SAMUEL GARFINKEL 720 Arbor Street • Ann Arbor, MI 48104

garfisa@umich.edu • 301.943.9530

EDUCATION UNIVERSITY OF MICHIGAN Ann Arbor, MI Stephen M. Ross School of Business Bachelor of Business Administration, May 2008 • Emphasis in Marketing • G.P.A 3.4/4.0 • Marketing Club Member College of Literature, Science, and the Arts • Broad liberal arts curriculum with Pre-Business and Economic emphasis • Phi Beta Kappa Wheelhouse, University Honors Winter 2005 EXPERIENCE BEST BUY CO., INC. Richfield, MN Summer 2007 Buyer Analyst Intern • Led a cross-functional team in the introduction of a revolutionary gaming laptop. The

resulting marketing strategy created a unique partnership designed to become an industry leader despite having significantly fewer SKU’s than its competitors.

• Developed techniques to increase regional market share for the laptop category through the use of product assortment, space management, and advertising.

• Using demand curves, analyzed price fluctuations and their effect on sales to coordinate regional pricing strategies and end of cycle markdowns.

Summer 2006 SPHERE TRENDING Waterford, MI Summer Intern, Marketing Research • Conducted product and consumer trend research for Sphere Trending's "Monthly Macro

Report" used by clients to develop new products, line extensions, and marketing strategies.

• Assisted in demographic research and analysis to quantify market size which supported acquisition suggestions made to holding companies.

• Participated in ideation sessions to identify new product opportunities for retail and consumer goods companies based on extensive trend research. Many suggestions developed in those meetings are currently in production.

2006-Present SIGMA PHI EPSILON FRATERNITY Ann Arbor, MI New Member Developer, Greek Week Coordinator, Rush Chair • Integrate new members into the organization by designing a four month program

incorporating all necessary events, coordinating activities, and facilitating two meetings each week.

• Organized the fraternity's involvement in Greek Week, an extensive charity that includes more than 4,500 members of Greek organizations, raising thousands of dollars for charity.

• Promoted fraternity recruitment events to potential new members, resulting in record attendance for the fall of 2006.

Summer 2005 BEGAL ENTERPRISES Rockville, MD Office Assistant • Oversaw inventory management processes used to track status and location of client

items. • Communicated with clients on the status and location of their items in addition to

organizing delivery to ensure customer satisfaction. • Reformatted and updated warehouse maps to allow customers to view up to date

information on the location and condition of damaged items. ADDITIONAL • Played soccer throughout the United States and Europe on a travel soccer team, in

addition to being a member of the number one high school team in the Washington D.C. metropolitan area.

• Studied abroad in Spain at the University of Alicante.

ES 395 42

ADAM FINKEL 3872 Columbia • Bloomfield Hills, MI 48302 finkelad@umich.edu • Mobile: 248-302-3477

EDUCATION

THE UNIVERSITY OF MICHIGAN

Ann Arbor, MI

COLLEGE OF LITERATURE, SCIENCE AND THE ARTS Interdisciplinary Program, April 2008

• Focus in political science EXPERIENCE

Winter 2008-Present Fall 2007 Summer 2007 Summer 2007 Summers 2004-2006

AMBASSADOR RONALD WEISER Ann Arbor, MI Internship • Overseeing a legal settlement which will result in a cash reimbursement exceeding $18,000

THE WHITE HOUSE Washington, DC Internship • Interim staff assistant for the Deputy Director of Presidential Personnel • Researched and sourced senior level candidates recommended to the President • Helped form the President’s Advisory Council on Financial Literacy MICHIGAN NOW! Southfield, MI Internship

• Worked with Chief Financial Officer of top real estate group to analyze business needs of state and develop new venture to promote economic growth

• Created marketing and strategy plans for the twenty core partners of the program, the academic and media community, and prospective partners

MACHINETOOLS.COM West Bloomfield, MI Internship • Supported founder and CEO of top-ranked machinery website with daily

business functions; including billing, database management and customer support • Assisted development of new company targeted to fishing enthusiasts UBS FINANCIAL Birmingham, MI Internship • Followed trends for various industries and kept up on relevant analyst reports

• Researched foreign and domestic equities, as well as macroeconomic trends • Examined asset allocations of client portfolios, suggested diversification strategies

Summer 2005 STARTUPNATION

Internship Birmingham, MI

• Initiated research report for weekly small business radio show • Compiled facts and news articles to be used for future feature segments • Developed media library to keep track of articles about StartupNation Fall 2004-Fall 2005 CREATIVE CAPITALIST COLLOQUIUM East Lansing, MI Founder and President • Established a speaking series facilitating student discussion with prominent

entrepreneurs across the nation; Organized the logistic and publicity needs December 2004- September 2006

INTERNAL COMBUSTION Book Researcher

Internet

• Worked with award winning, bestselling author and international team of researchers on Pulitzer-nominated publication

• Assisted the research of an investigation into the effects of America’s dependence on foreign oil

Winter 2006 HILLEL BUSINESS AND TECHNOLOGY MISSION TO ISRAEL Israel Participant • Attended a highly selective, 10-day fact finding trip with students across the

nation that explored the current economic framework in Israel • Addressed financial topics in discussions with venture capitalists & investors

ES 395 43

ES 395 44

Appendix G: In-depth Interviews

Business Incubator Questionnaire for Entrepreneurs Please briefly introduce yourself and the business that you started.

Are you familiar with the idea of business incubation?

Business incubator accelerates the successful development of entrepreneurial companies via an array of business support services, offered both in the incubator and through a network of contacts. Would you have been interested in utilizing a business incubator at the University of Michigan and for what assistance?

Please write down the top 3 challenges/uncertainties you experienced when starting your business. What potential business incubator resources could have helped you overcome these challenges?

If these resources had been readily available, which would you have most likely used and why?

How interested are you in office space? Expert counseling? Interacting with other entrepreneurs? Networking with potential investors?

How much time do you feel you would need in a business incubator before you could make it on your own?

Would you potentially rather pay an hourly fee, royalty, or equity stake? [5 min]

Where would you have liked to have learned about a business incubator? An ad in the Michigan Daily, flyers, word-of-mouth, on-location, e-mail, posters, orientation?

Please tell me what you think about the following potential names for the business incubator: Genesis, iMpower, mTHincERS, etc.

Please copy and paste three pictures/images from the internet that describe the process of starting your business and write down a quick explanation of why you chose each specific image.

-My name is Jerry Kozak. I started an online t-shirt retail site featuring internally designed college humor t-shirts. The idea was to fill the market niche caused by the fact that there were very funny college shirts online addressing global themes, and incredibly lackluster local humor shirts. We designed funny local shirts. We also employed a crafty marketing technique on facebook, finding groups with several hundred members devoted to something we could make a t-shirt for (like Chuck Norris, Steve Irwin, etc.) We then offered the administrator a free t-shirt in exchange for messaging his/her entire group, which received a much, much higher read-rate than spam, as the lack of spam on facebook means that people usually read all messages. Our return on a typical endeavor of this sort yielded about five shirts per hundred people at a cost of about $5 to cover the free admin shirt.

ES 395 45

-No

-Not at the time, as we were only making a half-hearted business venture to get experience and into the business school. If I were to try to do this for real, though, and make a career out of it , absolutely.

-Copyright and libel were major concerns, particularly after being forced to return profits to Chuck Norris by his attorney after they found out we had been selling shirts with his image. Access to legal advice without having to pay lawyer fees would have been stellar.

Production faculties were also a huge concern and headache, as we were using hobby-grade equipment and running the process out of our rooms. We really wanted to outsource the production, but did not know where to look. This was the number one factor contributing to our decision to stop the business-the production took so much time we were doing poorly in school and losing our social lives. Networking in this area to find a supplier would have saved the business.

Financing for capital equipment was also an inhibitor. As college students, we did not have credit to get a conventional loan for major equipment, and access to financing resources who were willing to look at the strength of our business plan rather than running the numbers through a calculator could have meant an influx of cash for production that we would not have access to otherwise.

-I really needed a supplier to outsource production to. Hell, if I could find that, I would restart the business today. We were great at selling and marketing, it was just the production that sapped the life out of us.

-Office space would be superfluous, but a physical retail location would be huge, and if that were available, finding a financial backer would be essential. So, in a word, all of the above.

-We could make it on our own right off the bat if we had the time (no school) and drive, but having resources like that at our disposal would mean the difference between crawling for a few years and taking off running.

-A royalty would be ideal. We couldn’t afford an hourly fee, but royalties or an equity stake would work really well.

-Word of mouth.

-I hate “iWords” a lot, and mTHincERS is off-putting and convoluted. If the premise of an incubator is to help the new entrepreneur navigate the jungles of new business, I don’t think a word like mTHincERS conveys an image of clarity at all.

Genesis makes me think of Mortal Kombat on Sega Genesis, which was awesome, but entirely different from what I want for my business. However, the concept of a cool word to describe the spawning process is baller (Genesis just carries too much connotation with it to me). Something like Taproot to emphasize the role that the incubator plays in a business, that is, providing the resources it needs to grow.

With that said, Genesis is very good, and if you found in surveys that most people do not conjure up images of the band or video game console, it is a very fitting, descriptive, stylish name.

ES 395 46

1. Starting a business is terrifying. Especially when you get bills and do not have money saved, investors to infuse cash, or another job.

2. Seeing your sales pile up on your dashboard is a total “Holy Shit!” moment. It is very exciting and tremendously rewarding

3. My favorite stock photo site tells me that this is what “confused” looks like. I am not sure, it looks more like someone who just shit themselves in the middle their grandkid’s recital. Either way, the point is that the entire process gets confusing at times, and in my case in particular, there was always an over-arching sense of confusion stemming from the fact that I think we knew that we were not going to put our all into the enterprise, we just didn’t have the time, and the future of it was always ambiguous. Even had this not been the case, I think there is always confusion for a young company regarding the future and where to go next.

ES 395 47

-I’m a 23 year old senior at the University of Michigan, Ann Arbor. I started Elysium Contracting, a full service residential and commercial painting company that performs maintenance and alterations for clients in Washtenaw County. In 2007, Elysium grossed $258,000 and employed 22 workers.

-I understand the concept but have never read about it extensively or had experience with it.

-Yes; to direct me on areas I needed to research before embarking on certain ventures or expanding. Also, on help with general business budgeting, hidden overhead costs I may have overlooked [tax rates, etc], and support in developing a business plan, and having that plan scrutinized by a professional. I could have benefited from creating a much more detailed plan, and even when I went to the Chamber of Commerce for free small business counseling the idea never came up.

1. Employer taxes on wages – every employee has a different tax rate! It took much more paperwork than I thought determining how much to budget for, and made financial planning very difficult.

2. Market analysis – I wish I knew of a better way to judge which customers had a greater need and greater ability to pay. I could assume property values would be one indicator but had no idea which area of research to begin for the trades industry.

3. Competitive analysis – I wish I had a stronger understanding of my competition and ways I could uniquely appear superior to them

-The second, market analysis. As I had no formal business education I had never even heard of PEST, SWOT, matrices or the Porter model, all of which are useful resources.

-Only if it’s available during all regular business hours and weekends, accessible to the general public, and at a lower cost than the general market for leasing office space.

-It depends on who’s the “expert.” Are they better than SCORE or SPARK? How much does it cost, is it customized, and is there follow-up?

-Depends on who they are, but yes. I go to SPARK and Chamber events regularly.

-Not so much at this point, perhaps in the future very interested.

-I’ve already made it on my own; an incubator would only help improve the process. However, if and when I develop a new concept I would consider using an incubator only if I considered it superior to any potential business mentors I had access to.

-Hourly. I wouldn’t even consider royalty or equity unless there was an objective, 3rd

-Any credible source; all those avenues could work if done well.

party free educational seminar on the benefits and detriments of each.

-Genesis is great. How about iGenesis? mGenesis? mTHincERS is way too bizarre and looks stupid and amateur.

− Started business by himself. Didn’t want to share profits, stopped when school began Notes from Justin Vincent Interview − Direct to consumer model, didn’t manufacture products, bought wholesale − Came up with idea in late July − Wanted to make easy money − 5 hours a week for one to two months

ES 395 48

− Justin saw two large markets. International students who were unable to bring big products to campus and high end neighborhoods that had big demand for consumer products

− Minimal initial costs, mostly limited to getting a $10.00 DBA in his city − Accountants and Lawyers assisted pro bono to help him establish the business − Early failure in understanding legal and accounting needs to grow business − Lacked enough time in summer to get off the ground − Another mistake: diving in too early, not knowing entire process − Would not prefer workshops at incubator, crash course more helpful − Diverse network vital for successful incubator, contacts key in getting established − Independent study would be helpful, popular with students − Incubator must help with strategic issues − Dialogue needed with entrepreneurs, speakers alone don’t provide it − Informal places best to meet – ie: library, coffee shop − Incubator would spread best through word of mouth, Daily article would help − Incubator must have credibility − Important for incubator to be affiliated with university to have credibility − Many entrepreneurs thinking more than just about college − Some view starting a business as part time job − Assistance with equity may have helped getting started − Wasn’t sure of early capital needs

i "Michigan Unemployment Hit 7.6% in December." MLive.Com. 17 Jan. 2008. The Associated Press. 15 Apr. 2008 <http://www.mlive.com/business/index.ssf/2008/01/michigan_unemployment_hit_76_p.html>. ii "Ann Arbor Population and Demographics." Area Connect. 2008. 2000 US Census. 15 Apr. 2008 <http://annarbor.areaconnect.com/statistics.htm>.

iii “100 best places to live and launch - 1. Bellevue, Wash. (1) - FORTUNE Small Business,” http://money.cnn.com/galleries/2008/fsb/0803/gallery.best_places_to_launch.fsb/. iv Coleman, Mary Sue. “Five Years Forward - An Address to the University of Michigan Community.” 11/15/2007. v “100 Best Places to Live and Launch.” Fortune Small Business. 19 March 2008.

http://money.cnn.com/galleries/2008/fsb/0803/gallery.best_places_to_launch.fsb/index.html vi Aguilar, Louis. “Worse Yet To Come for Michigan Economy.” The Detroit News. 13 June 2007. vii Steve Hamp Meeting. viii Audretsch, David B. and Roy Thurik. “Linking Entrepreneurship to Growth.” OECD Directorate for Science, Technology, and Industry. 9 May 2005. ix Interview with Justin Vincent. 6 March 2008. x Interview with David Landau. 9 March 2008. xi Interview with Gerry Kozak. 10 March 2008. xii “Ann Arbor Observer 2008 Media Guide.” <http://www.arborweb.com>. xiii “Detroit Free Press Ad Rates.” <http://placead.advertise123.com/adstar_nexus.asp?pubid=506&refid=506>. xiv “The Michigan Daily Advertising Booklet.” <http://www.michigandaily.com/advertise>.

ES 395 49

xv Len Middleton Biography. <http://execed.bus.umich.edu/Faculty/FacultyBio.aspx?id=000392010> xvi Jeffrey Schox Biography. <http://www.schoxplc.com> xvii Marc Weiser Biography. <http://www.wpvc.com/team_partners.htm> xviii Stephen Forrest Biography. <http://www.physics.lsa.umich.edu/department/directory/bio.asp?ID=1109> xix Andy Lawlor Biography. <http://execed.bus.umich.edu/Faculty/FacultyBio.aspx?id=000119740> xx Denise Ilitch. <http://www.clarkhill.com/people/attorneys/denise_ilitch> xxi Bruce Wasserstein Biography. <http://www.lazard.com/AboutLazard/Firm_Mgmt.aspx#first> xxii Larry Brilliant Biopgrahy. <http://www.google.com/corporate/execs.html> xxiii Cynthia Wilbanks Biography. <http://www.umich.edu/~govrel/wilbanks.html> xxiv Gauri Nanda Biography. <http://alumni.media.mit.edu/~nanda/index2.html> xxv Tom Porter Biography. <http://www.bus.umich.edu/FacultyBios/FacultyBio.asp?id=000194623> xxvi Steven Hamp Joins McKinley Board. <http://www.mckinley.com/about-mckinley/news/2007/steven-k-hamp-joins-mckinley-board-of-directors/> xxvii Doug Rothwell Biography. <http://www.detroitrenaissance.com/about-us/staff/doug-rothwell> xxviii Michael Finney Biography. <http://www.annarborspark.org/> xxix Stanford Ovshinsky Biography. <http://www.ovonic.com>