Flagship

This past week I spent quite a bit of time on my Flagship board duties, both Flagship Enterprise Center and its relatively new corporate subordinate, Flagship Enterprise Capital.  For purposes of both brevity and clarity, we will refer to these not-for-profit corporations herein as Center and Capital, respectively.  Those of you not familiar with the Flagship entities and programs may want to see www.flagshipenterprise.org for a bit of history as well as current news.  [Full disclosure, I am on both boards of directors, serving on the audit committee and appointed by the Center board to chair the more recently launched Capital board.]

Perhaps one of the more successful and long running public-private partnerships, the entity that became Flagship Enterprise Center, Inc., was first incorporated in the State of Indiana in 2002 and headquartered in Anderson in 2005 at their newly constructed facility along I-69 at exit 22 (now exit 222). By expanding from that single facility, the initial partners—the City of Anderson and Anderson University—have established this high tech incubator, organization and its facilities as one that not only meets but exceeds its original promise envisioned at the time of incorporation.

This mission, or purpose, currently has as its core long-term economic development, the topic of my previous blog post. Underlying economic development, perhaps further defining what that means in this context, is creating, growing and attracting jobs.  Sound familiar?  Going a bit further into what Center is all about, the activities of encouraging the entrepreneurial and business spirit play a key role.  Execution goals and metrics to measure success fall within four broad categories:

• Real Estate
• Capital and Training
• Partnerships
• Finance

REAL ESTATE

The first foray into real estate was, as mentioned above, along the I-69 corridor when Center opened its first major facility. At 2701 Enterprise Drive in Anderson, IN, that location served for many years as Center corporate headquarters, incubation facility and centerpiece of the Certified Tech Park for such early startups as high tech energy storage firm Go Electric (http://goelectricinc.com/, now housed at Flagship East; more on that later) and digital marketing firm Element212 (https://element212.com/), among many others. The location also served as a springboard to welcome global firms such as Nestle USA (https://www.nestleusa.com/) and Greenville Technologies, headquartered in Japan (https://www.mtnaoh.com/MorirokuNetwork/GreenvilleTechnologyInc/Anderson.aspx), both firms needing temporary office space while they built manufacturing facilities near the Flagship Park.

Part of the time I spent last week was on a tour of Center-owned and Center-affiliated properties, demonstrating the fulfillment of the real estate goals. This tour included Center tenants and Center affiliates, both domestic and global:

• Flagship East http://www.flagshipenterprise.org/flagship-east/), opened in January 2017, home to
  • Purdue Polytechnic Anderson (https://polytechnic.purdue.edu/anderson)
  • The Wylam Center, flexible space housing Go Electric and several other business tenants
• Tecnoplast (http://www.tecnoplastusa.com/)
• Royal Interpack (http://royalinterpackusa.com/)
• KNA, North America headquarters for Keihin (https://www.keihin-na.com/)
• Affiliates NTN (http://www.ntnamericas.com/en/) and NTK (http://www.ntkaxle.com/locations/)

CAPITAL AND TRAINING

The second goal of providing access to capital is a crucial one in Indiana. Entrepreneurs and those supporting them cite availability of capital as perhaps the single biggest challenge to both launch and growth. The gap that Center saw was smaller startups and scale-ups were not going to get the attention of VCs, nor were many of them quite established or ready to borrow from commercial banks. Hence, the advent in 2010 of the SBA microlending program, eventually branded as Bankable powered by Flagship (http://www.flagshipenterprise.org/get-a-loan/).

Now with its authorized portfolio of programs, the Bankable team can lend from $500 to $250,000. More importantly, the people behind the programs recognize some key factors about the clients and prospects they serve. Success is driven by more than just access to capital, and that is why training (or technical assistance) is such a vital part of the lending programs. In fact, there are tools and processes in place to evaluate loan prospects and let them know their chances of approval prior to application. If likely to have their loan application rejected, they can adjust some of the loan variables to improve their chances before even applying.

That pre-application screening, along with the expert business and technical assistance provided to the loan clients, is why the Bankable loan portfolio has experienced such remarkable success:

• From zero to over 600 loans approaching $20 million in total lending since 2010
• Perennially one of the top SBA lenders in the state and nationally
• 90% of loans made from partner commercial bank referral
• Loan default rate remains below 2%

Capital, recently authorized as a CDFI lender (https://www.cdfifund.gov/Pages/default.aspx), is starting small but growing rapidly to serve low income and other underserved markets in the four counties where it is currently authorized (Delaware, Hamilton, Madison and Marion). Plans are currently underway to explore options for expansion.

PARTNERSHIPS

The original partners along with the staff they hired and the early board members they appointed were visionary in that they knew they could accomplish more if over time they took three important steps:

• Find additional strategic partners to support and help to pursue the mission
• Secure additional sources of funding to advance the ability to pursue the mission
• Boldly identify 21^st century best practices to pursue the mission

If you go to the home page of the Flagship Enterprise Center web site, you will see the statement quoted below. It demonstrates how far those two original strategic partners have extended their reach and what has enabled their success.

“The Flagship Enterprise Center (FEC) is a regional incubator and advanced stage business center supported by the City of Anderson, Anderson University, Purdue University, IVY Tech Community College, the U.S. Small Business Administration (SBA), the Indiana Economic Development Corporation (IEDC), the U.S. Department of Commerce Economic Development Administration (EDA), and many others.”

It’s those last few words, “and many others,” that provide a window to the coming decades. Recent discussions with other municipalities, commercial lenders, prospective clients, government agencies, companies, and higher education institutions looking to emulate the success of Flagship may lead to more partnerships and even greater opportunities for success.

FINANCE

When managing a not-for-profit entity, whether as a board member or paid staff, there is a constant challenge to maintain what I call the balance between money and mission. In general, one can focus overly on the mission and lose sight of business concepts, quickly to go out of business. Some in the not-for-profit world lack business and finance expertise. With all good intentions, there can be a struggle with this unless they either hire such expertise or have strong board representation. Conversely, if too caught up with the “money” side of things, fund-raising or other financial aspects of the operation, to the detriment of the mission, those on the outside begin to lose faith in the organization and its leaders.

A quick review of the Flagship’s first three goal categories and accomplishments above, not to mention a few clients’ own words at http://www.flagshipenterprise.org/comments-from-our-clients/, this information speaks to the mission side. Longevity and expansion of both hard assets via real estate and expansion of microlending since 2010 all speak to strong fiscal management over the years.

Affiliation with both Flagship boards has been one of the most rewarding experiences of my life. I look forward to what the coming years bring and will always be grateful for the opportunity afforded me to be a part of this team.

Thank you for reading. Looking forward to your comments. The next entry will be “gateway” and a special “guest” appearance. Two “G’s” for the price of one! Watch for it!

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