Rose-Hulman Ventures
Boosting Indiana's innovation economy

by Kathy Mayer

(September 2003) - After four years of nesting startup technology businesses–delivering incubator space, new product development, business assistance and capital–Rose-Hulman Ventures has hatched new plans. The goal of the Terre Haute-based nonprofit employing 27 is to boost Indiana’s innovation economy.

"The whole concept of an innovation economy in Indiana is beginning to be something that people are excited about and have come to accept as a positive step forward," president James Eifert says as he navigates a new, two-pronged strategy. His goal is to form partnerships around the state to expand RHV’s reach and impact, and to recruit new companies to Indiana.

With $24.9 million in 2002 from Lilly Endowment, which followed a 1999 founding grant of $30 million, Eifert has the resources. In exchange for assistance, he’ll negotiate flexible return-on-investment options that include corporate equity, enhanced fees for services, royalty share and intellectual-property equity.

The first new thrust, driven by RHV’s mandate and need to provide educational opportunities for students at host Rose-Hulman Institute of Technology, is an expansion. But it’s not the traditional bricks-and-mortar kind.

"We’re partnering with other entities around Indiana–incubators, universities, economic-development corporations and venture capitalists," Eifert says. "We’ll each have investments in the same companies so Rose-Hulman Ventures will have less to do for our client companies in terms of breadth of services and can focus on technical services."

A perfect example, he says, is a recent agreement to assist West Lafayette’s Griffin Analytical Technologies, a company housed in a Purdue Research Park incubator that licensed Purdue technology to develop a miniaturized mass spectrometer for the analytical-instrumentation market.

"Purdue invested in Griffin, and what we’re investing in them is in-kind technical assistance," Eifert says of RHV’s $500,000 in support. "We’re doing that kind of thing around the state, as well as continuing our operation here as we have been in the past."

His second new area of focus, bringing companies from around the country and world to Indiana, took several staff members to China this summer. "We’ll be recruiting companies, particularly those needing engineering assistance with product design and prototyping–companies that would benefit from the relatively low cost of living in Indiana," Eifert says.

The recruiting idea came after success working with LE Inc., which brought its power generation/fuel-cell headquarters to Indianapolis from San Jose, Calif., so it could tap RHV’s assistance. "We need to have a company with an Indiana presence in order for us to invest," Eifert explains. "That’s one of the conditions of the Lilly grant."

Now, he says, "We’re going to be aggressively looking for companies around the country and around the world."

On the international side, that also includes offering companies a North American base. That, he says, is a two-way street. "Some of our clients would benefit from access to markets in Asia or Europe."

These new pursuits come on the heels of a good performance record. In just four years, RHV has posted some healthy successes since establishing its 35,000-square-foot incubator and product-development labs in 180-acre Aleph Park, about four miles from Rose-Hulman Institute of Technology.

By year-end 2002, it had helped 35 companies–some as incubators, some with other assistance, and 31 are still operating. The startups have created more than 600 new jobs, with an average annual salary of $44,000.

"These are very early-stage companies, so not all of them are making money, but at least they’re working at it, growing and moving forward," Eifert says.

Ten have moved on from incubator to larger facilities. The first to graduate was NoInk Communications. Now in Indianapolis and employing about a dozen, the software company’s products help offsite employees be more productive through automated forms and access to real-time information.

Seven companies, together employing about 30, currently operate in the incubator. The newest are Painted Metals, Stamper Medical Products and Wireless Infield. The others are Lab2Plant Inc., a software developer; Ministry for Clergy Families, developing a technology-based family-support system; MusicRebellion, selling music over the Internet; and Sentelligence, developing systems for industrial and commercial trucking markets that replace scheduled-maintenance and emergency-breakdown practices.

The remaining companies are scattered around the state.

Leading new ventures to success isn’t assured, Eifert realizes, but he believes he has a unique combination for helping new technologies and companies begin and become viable.

"We don’t know of anybody who has the same combination of things we do. There are others who invest money, who offer incubator space. But I can’t name any with direct technical assistance as an investment, too," he says. "Most people look at this and say, ‘Gee, I wish we could do that.’ Lilly Endowment’s assistance is what enables us to do this."