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If you’re an innovator with an idea or product that can stimulate Maine’s economy and create jobs in the state, then you might want to reach out to the Maine Technology Institute. Since 1999, MTI has been offering grants, loans, equity investments and services to help support Maine’s innovation economy and entrepreneurship.
Amy Leshure of MTI spends some time with us today to explain just how that process works and the impact the program is having on the State of Maine.
Rich: Our guest today joined MTI the Maine Technology Institute in April of 2019. She brings extensive experience in financial analysis and risk management. Previously she worked in private equity banking at RBS Citizens in Boston, MA before moving to Maine and spending the past seven years in commercial lending and small business financial management. An avid supporter of Maine based businesses. She aims to connect local entrepreneurs with the resources they need for success. We are very excited to be talking with Amy Leshure. Amy, welcome to the show.
Amy: Thanks for having me. Rich.
Yury: We are excited. Amy, can you tell us a little bit about your path to MTI? How did you find yourself there?
Amy: Being in commercial banking had kind of gotten me to the point where I realized I really enjoyed helping companies. So going from working in Boston in private equity, you see what you’re doing but you don’t really see what you’re doing as an end result. And so moving into commercial banking with a community bank in Maine, you got to hear people’s stories. So you saw the family who put another garage, for example, on their auto repair shop, and then you saw them increase business and then you saw that get handed down to the son or the daughter for example. And the stories became alive and you became part of your community.
And MTI does similar to a bank but it’s more early stage. So banks don’t really help out when you have an idea. Often they want to see revenue, they want to see positive cash flow. MTI comes in before you’re even there, before you may even have a product that’s been made.
Yury: Yeah, that’s fantastic. That’s the origin story for a lot of people, right?
Rich: Yeah. Speaking of origins, I was curious to know what is the origin of MTI? You kind of touched on this, but why was it formed and what do you feel its role is in the main business ecosystem?
Amy: Sure. So in 1999, the Maine state legislature was trying to address how Maine came in, I believe it was 49th at that time in R and D investments. They created the Maine Technology Institute at that time, they also created the main venture fund at that time, which is still operating now. And they gave us the responsibility for putting funds into innovation or the innovation ecosystem. It’s proven that wherever R and D is happening, it spurs the local economy.
Yury: Well, last year, MTI celebrated his 20th anniversary. Where are you heavily involved in any of their initiatives at the time? Because you started in April, so did you really have a lot of time to, you know, play with the notion of the celebration?
Amy: The celebration was really, it was very uplifting. It was nice to bring in a lot of the older players. A lot of what had happened that was worked through that evening and kind of reminisced about and celebrated all obviously happened before I came on board. So, but it was nice to just see so many faces that you had heard, “Oh, I remember hearing about that entrepreneur who is so successful and has now employed so many Maine people and high quality jobs. And it was because of early MTI backing.” “Oh, okay. I can put that face with that name. And here comes Angus King who was Governor at the time when we were started”
So it was a really wonderful experience to make connections and to learn. Obviously I didn’t have too much of a hand in planning it, but all the way around we all left just feeling really supported, warm, loved the interconnectedness of the entrepreneur ecosystem of Maine. It’s small, not that small, but it’s small.
Yury: Well talking about small ecosystem and the ways that we can grow it. We know that some first time applicants for grants had found the process a little bit challenging. What changes have been made to the funding process?
Amy: A lot of changes. So historically, you would have a deadline that you would have to apply to. So let’s do an example. I have an innovation idea and a rough prototype for a biodegradable plastic bottle, for example. I know I have to apply for funding. I want to get my prototype manufactured. I’ve got a contract for $5,000. I know the MTI does one-to-one matches. So I would put in $2,500 and I’m asking MTI to put in $2,500 or something of that sort. And my due date is March 1st.
It’s the beginning of January. I get everything together, I submit. March 1st isn’t when they make a decision, March 1st is when they begin the evaluation. This is the old process. And you know, I may not have had my application together in a way that was to my best interest. I may not have had the guidance I needed. And it would get in front of a committee, which was people who were in that particular technology sector that you would fall into that were outside of MTI.
They’re called our technology board.
At any rate. So by the time they would go through my papers, hopefully I have everything enough presented that they can make a good decision. And then maybe by April or May I would hear five months later. Well, I’ve gone in another direction at this point because it’s five months. So it was a little bit clumsy.
The new system now is a rolling basis. You can apply whenever it’s convenient to you. And what happens, so I’m an investment officer with MTI and I’m kind of like your midwife through the process. I help you get everything you need together. I help you understand what you need to present, where you might want to go with your project. We’re now project based funding, so it must have a start date, a scope of work and an end date. Just can’t be a general, I have an idea, can you give me some money so I can run with it?
And so I have my idea for my biodegradable water bottle. I’m going to apply next week. I’ve got all of my things in order. I can expect a decision depending on how much I’m asking for, and the level of due diligence, which goes up with the amount of that you’re asking. But I can expect a decision within four to six weeks generally.
So not only did I have that one to one contact with my IO who walked me through the process and helped me fill out my application. I also have a quick turnaround, so it gives me the freedom to pivot my project or to understand in real time where I’m gonna put this money. Yeah, it’s much more fluid and helpful now.
Rich: You had mentioned that MTI was originally funded or founded because we were 49th, when it comes to R and. D.
Amy: I mean there were many other aspects to it.
Rich: Sure, sure. So is the funding specifically for R and D or is it, cause I know it used to be really specific because I know that I worked with a number of businesses that were up for MTI grants and they were like, well, I need help with the website or some email marketing, but they’re not going to pay for that. So has that changed? Is it a little bit more open or is it still specific towards the R and D component?
Amy: Really the first step of the process is, are you doing something innovative in a new way? Once you kind of jump over that hurdle it’s, will you be creating quality jobs inside of the state of Maine, and will this funding or this project help you grow and accelerate your revenues? And then thirdly, will you be attracting or leveraging addition to capital? It’d be great if you would bring additional capital into the state of Maine from outside the state.
Rich: Oh, interesting. Okay.
Amy: That being said, does it have to be extremely innovative and only in research development? No, no. We help you prototype something. We help you commercialize something, if there’s a point in the process where you’ve gone through. So MTI is kind of trajectory is we help you get your prototype or your idea off the ground with grants.
When you’ve exhausted our grant system, you can then move to a loan vehicle or an equity investment. When you get into that realm of loan vehicles and equity investments, it can be much larger projects. A project to scale might include hiring a sales rep or creating an educational video, which might be considered marketing, but you’re trying to explain that your innovative project. So things get bigger. You can make a compelling ask for different elements that might not sound like a traditional R and D ask, but it satisfies a lot of what we’re trying to do is get you to scale, get your product out there, create high paying jobs.
Rich: And is that more the latter part? Is that more when you get to the loan process that that stuff’s happening?
Amy: So optimally, yes. And optimally, you’ve already gone through the grant making process to grow yourself towards commercialization. Not everybody knows about MTI. Some people have already self-funded their prototype and they’re already manufacturing it and they’re like, “I just need a new website.” And MTI can’t do that. So we hope we have to be responsible, these are taxpayer dollars. So if we’re going to make an investment into a business, we need to see results for the Maine economy and maybe updating a website isn’t the best, most compelling use of funds at that time. Would you be interested in maybe making a project to do some market research, to maybe explore some other options where your product might go?
Yury: Well, talking about investments, can you talk a little bit about the viral assessment that you guys conduct in order to choose where do you want to put your money?
Rich: Oh, well, you can’t see this at all, but she just opened up a sheet of paper that says “appendix one viral” right on it.
Amy: So viral has such negative connotations, but really what it is it’s an acronym and it’s for what venture capitalists used as a common language. So, a business who’s selling a compostable water bottle, for example, there’s a certain point where they’ve gotten to commercialization and you’re a village capital company one, you’re a village capital company two. And if you can have some sort of common language, which I’m going to talk about here in a minute, your conversation and what you’re needing to find out happens a lot quicker. And so what a viral category is, is there’s nine of them and there’s a number of levels. It’s not a judgment, it’s a tool. So if you’re a level one, it’s not any worse than being a level five. It’s a very effective tool to know where you are in the growth of your business.
Categories that venture capitalists will often talk about are team, problem in vision, your value proposition, your product, how about your market, and tell us about your business model, and how are you scaling or growing. And of course, venture capitalists want you to exit. MTI isn’t terribly preoccupied with your exit, usually for most applicants.
So in any one of these categories that I just named, you can move up the viral scale, is what we say. We say “viralling up”. I just did air quotes. So for example, let’s talk about team. If you are at a one category for team in the viral speak, you would have a strong founding team of at least two people with differentiated skill sets.
Moving up the viral scale let’s talk about like what’s a six on team. The team has proven sales, product development, managementability to support a growing team for scale. So those are two very different characteristics of teams. And you know, all of the steps in between one and six should get you to…
Rich: Is this viral matrix something that is universal, or is this something specific to MTI?
Amy: It’s universal in the venture capital world, and it’s a tool we use to help people applying, kind of understand where they are in, in their business and where they need to go. A really great ask is a scope of work that takes you from a one on a viral scale to a two.
So for example, let’s try product. So here’s my biodegradable water bottle. I have a rough prototype. I get it manufactured at a certain date. So March 1st it goes to the manufacturer, they’re doing a small run for me. It comes back, I like the second prototype. So I’ve moved from viral category for product, to one where I had the ability to develop a low fidelity prototype, to two. Team has a basic low fidelity prototype that solves the problem. That’s a winner in the MTI world.
So we’ve used taxpayer dollars to move you up the viral scale, which using as a tool, it gets you closer to commercialization for success. We don’t need you to exit, but we do want you to succeed.
Rich: Is this a viral scale available on the MTI website?
Rich: We’ll try and make sure that we have a link on the show notes. You asked that last question and it was such a good question, but then I had follow-up. So why don’t you go right now, Yury.
Yury: Are there any certain types of businesses you’re best positioned to help?
Amy: So there’s seven target sectors that fall within the MTI purview. And there’s wiggle room within that. Those seven sectors are biotech, composites, environmental tech, forest products, information tech or IT, Marine tech or aquaculture, and precision manufacturer.
Now, I just recently made a great award and I will tell you why. And it was to cheese. Is there anything innovative about cheese?
Rich: I’m about to find out.
Amy: We’ve been making it for thousands of years and it’s to Amy Rowbottom, and she’s at Crooked Face Creamery. And what happened with her was that she came from a dairy farming family in the middle of Maine, a little bit North of Skowhegan. And what you can earn per gallon for milk these days, makes dairy farming unsustainable in most cases. So she knew her future could not be in dairy farming. She began to make cheese at home and she did some market research and she found that there was a niche for two particular products that she found herself particularly good at making, smoked Gouda and a smoked ricotta.
Now if you’re a craft cheese maker in Maine, you tend to have these large five gallon buckets, that’s what you do is these small batches, and it’s somewhat cumbersome and it limits you in scaling your operation. She pays I think upwards to over a dollar more per gallon for her milk from local farmers that they could get on the market if they were to sell their milk.
Why is this important to MTI? Well, she had an innovation where she was working with the town of Skowhegan. Skowhegan also was hoping to increase agritourism, so they helped her get into the basement of the old prison. She worked with Bill Whittier from the Maine Manufacturing to design a way to bring milk into the prison through delivery, through a piping mechanism and to store large amounts so she could scale her business.
So she had an innovation for a small producer being able to bring in raw material for use. That was her innovation. But the nice thing about it is that it also helped her scale, it supported local dairy farmers in around Skowhegan, and it also supported the town of Skowhegan and they’re a forward movement to bring in tourists. So that kind of is a way where it’s not so black and white as far as R and D and innovation. It hit a lot of the MTI targets of having economic impact.
Yury: You know, it’s a great story and it’s just an awesome reminder that innovation comes in different shapes and forms and it doesn’t have to be cut and dry R and D that we’re all accustomed to.
But you know, speaking about this particular story and the examples I’m sure you have a lot more than you know, to share with us. How do you assess these companies that, the categories that you just mentioned there, do they go through the same viral process?
Amy: So before, let’s say anyone who thinks they may have an innovation, I always encourage them just to reach out. Because even if we can’t help them, if we deem them not a fit, we know probably someone who can. So it’s not a waste of their time. It’s not a waste of our time.
Yury: So if I have an application that I want to submit, it’s not going to go into a black hole and you’re still going to follow-up?
Amy: You will get a person within eight to 10 days to follow up with you, probably with an hour long intake.
Yury: That is awesome.
Amy: Yeah. Anyway, so I want to just speak to your viral question. So you’ve gone online, let’s say you have an idea or you’ve started tinkering around with and you think you have something you’d like to move forward with. You’ve gone onto our website and you filled out an intake form. We contact you and we set up a time for – usually at this point it’s phone calls – just to kind of get… When you do a face to face, it’s hard to keep it under an hour. And we have a very large volume right now, so we’re just kind of concentrating on that first contact to be a phone call. Tell me about yourself, tell me about your product, tell me about what you’re trying to do, do you have a project that we think would be a fit, that kind of thing.
But before we set up the phone call, we ask you to do a viral assessment. And it is not a judgment. What it is is it’s a tool to tell you and us where might be the best place to put your money. So if we look at the viral assessment and let’s say we come across the board at threes, but in market, maybe you have a one because you’re not quite sure if people in their 20s or people in their 60s would do better with your product. So you may want to start with a customer research project ask, before moving on with anything. You don’t want to spend a large amount of money or time creating a prototype and a project to find that nobody wants it.
Yury: Yeah, totally. It’s a waste.
Rich: So what tips can you give Maine business owners who come to MTI for help? How can they best position themselves, their companies for a successful grant application?
Amy: That’s a great question. And so taking that viral assessment gets you prepared to talk to us and make the best use out of our phone calls.
Rich: So that might be the first step for somebody. Perfect.
Amy: Absolutely. So what that’s gonna do is prepare you to talk about team. Do you have a team? Because MTI does not fund a team of one. It’s been proven that one person often won’t move forward unless they’re responsible to someone else. That of course doesn’t apply across the board, but often we need that there’s more than one person. And that could be a SCORE mentor. For example, you want a SCORE mentor and that’s a team of two.
Amy: You would need to talk to us about what your innovation is and how it’s going to solve a problem in a new and creative way. Are you prepared to talk about that? Have you done any looking into the market and where you might want to niche yourself? Do you know what kind of business model you want? Do you want an LLC? Do you want a C Corp? Do you want to just stay a sole prop? That kind of thing.
Yury: So after we completed the assessment, we finished the interview, we qualify for a grant, what happens next? Is there a follow-up process? Am I accountable in certain ways for the money that I received to push my initiative forward?
Amy: Absolutely. So during your application process you would have laid out a scope of work for your project. I’m going to get a small run of my B prototype for my bottle. It will start March 1st. They should be done with their prototyping by maybe April 1st and that will be the end of my project. So you have to put some sort of final report together for us.
Aso there’s an annual impact survey for the next three years you will be required to fill out and it just kind of talks about, how much other matching funds did you bring into Maine or put into your project? Did you create any new employees because of MTI funding, or how many employees do you have to date in the state of Maine? And that’s just kind of how we are able to get data to show that our money’s doing and making a difference in Maine.
So any larger amounts of dollars you’ll be needing to report to us quarterly. That is not the everyday grant. It’s that someone who’s been through the grant system or who’s getting a loan vehicle and that’s something altogether different. But for most people they’ll find they have to do a final report and then there’ll be doing their annual impact survey. It might be very tempting to not bother with a final report. Your final report is also a letter testifying that’s where you did spend your funds in any time. You could be “audited” by us to make sure that’s where you did spend your funds. But we can’t give you another round of funding until you do that final report.
Yury: Makes sense.
Rich: Gotta get your homework done.
Rich: This has been great, Amy. Before we let you go, we want to hear from you. If you could make one change and change one thing to improve the business ecosystem in the state of Maine, what would it be?
Amy: I think where a lot of companies hit a bit of a ceiling is in scaling in Maine. A lot of companies remain small and that’s a very comfortable place to be. And how do we grow our products? Distribution can be, how can we get in front of more people outside the state, and show them that they need our products. I don’t know. I don’t have a solution. I don’t have a solution for this, but I see this an awful lot. We put in supportive funding in a business. We see them get a prototype, we see them start to commercialize, they’re getting revenue, and then we check in and they’re just making even every year. They’re not really growing.
That could be where we have another arm of what we can do for folks and we have entrepreneurs and residents – we called them ERs – and they often come with a set of their own skills that are very specific. But we pay them, so they’re free to you. We pay them to go in and help you scale or develop a sales business plan or maybe look for a different kind of a manufacturer. Maybe even go and help you understand the equity investing in how you might want to move and get another round of investments because you actually need to get some salespeople on your team. So maybe that’s where MTI could be a solution. I’d be nice if there are other folks in the ecosystem that could be part of the solution, but I do see that as a bit of a ceiling that happens for Maine businesses. We’re often this little peninsula and I think Mainers are used to kind of culturally making do, and not pushing.
Rich: So maybe to find a way like you’ve done with your ERs to develop that next level, to get people to be able to scale up, certainly would make a difference. Yeah.
Yury: Awesome. Well, Amy, you know, for everyone who wants to learn more about MTI or maybe connect with you for future coaching, mentoring, whatnot, where can they find you?
Amy: Yeah, they can shoot me an email. It’s aleshure – A L E S H U R E- at, this is a big one, maineechnology.org, which is also the website. They can go check out and find the viral assessment, absolutely. Go through the website. We just had it updated recently with a lot of information, so if it seems as though I didn’t cover any of the questions that are coming up, just scroll to the website and it walks you through also what you can expect in the application process and what will be asked of you.
Rich: Fantastic. Amy, thanks so much for stopping by today.
Amy: Thanks so much for haven’t me in.
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