Ryan, thanks for speaking with us today. We're currently in the Zeal Center for Entrepreneurship in Sioux Falls. Can you explain what the building is?
Absolutely. We are a true incubator for start-up small business. We are classified in our industry as an ecosystem because we have resources here in the building. The original building, or the original name was the South Dakota Technology Business Center. I believe the building was completed in 2004, and was geared specifically for technology start-up companies here in the region. Ultimately, the attempt was to bring resources around that entrepreneur in terms of equity, financing, what we call entrepreneurs in residence, or mentors.
Then also within the building we have the GOED, the Governor's Office of Economic Development, as well as the SBA, Small Business Association, Small Business Development Center, and the various arms of that, and then also a couple of other organizations that are really geared for those resources. Our idea is that the entrepreneur is this is a one-stop shop. They can come in, get help with their business plan, get help with their pro-forma, and then get some support through the SBA as well, and then some of the other programming that the GOED has.
When I came in here this morning, I was kind of surprised by the amount of traffic that you have up and down the hallways.
Yeah, we did a rebrand launch in April of last year and since then have focused on really being available to the community. We want to support other ventures in the community but also be somewhat of a hub for specific targeted entrepreneurs. Entrepreneurs that need help with getting programming up and running and additionally potentially even just a small office, a door to close.
What we've done is really opened up a couple of different opportunities. We have some memberships as well as co-working where really more for that transient business person who comes and goes. We have 24-hour access to the building and then our everyday tenants. Activity you see out here is the end result of a lot of the community marketing and trying to draw different groups together.
When I was walking by here to this office I saw the shower rooms so I figured it must be a 24-hour, just a busy place.
Yeah, free coffee. We have a small, moderate work out room, the shower. A lot of entrepreneurs, they're cranking around the clock.
I wanted to talk about the significance of the Zeal Center and it's importance to the state. What significance has this place had to business creation in South Dakota?
That's a great question. The mission and concept really is to provide assistance to entrepreneurs who are starting organizations that either create new revenue or bring new revenue to the state, and also additionally goals would be to add employment and other areas of business.
The mission there has kind of evolved over the past 14 years but also as we've rebranded and so we really want to make sure that we support companies anywhere from that early stage to later stage. Some of the earlier companies, I believe when I was out here early, early on as a tenant, one of the original tenants was Mr. McDonald with DocuTAP.
We also had Meta Payment Systems sort of evolve out of here, and various other organizations. We have a whole list of organizations that we call graduates, so have gone through a process and either exited or gone out obviously because of expansion and adding employees just didn't fit our building. We've had a lot of successes and we're very fortunate in that those organizations have stayed around this area, specifically within the state of South Dakota.
Ryan, one of the things I wanted to talk to you about is your guys' accelerator program. Could you explain what that is?
We're very excited. This year is kind of a new process for us with the accelerator program. Zeal, or the South Dakota Technology Business Center, has done six previous accelerators.
What we did is we evaluated what the accelerator program has looked like in the past. We've had the community rally around Zeal and specifically the accelerator program since our launch. First National Bank was one of them, First National Bank of Sioux Falls, to step up and say, "Hey, we really believe in what you're doing. We're sort of intrinsically invested in that new entrepreneur." They came in with a considerable sponsorship just for the accelerator program, and that kicked off our ability to change the program.
Historically, it was always very, very early stage companies, anywhere from bar napkin idea to a couple of people who maybe put an entity together and needed some direction. We pivoted with this specifically with 2017's program and took companies that were later stage and with the investment of First National Bank, we were able to say, "Hey, we've got the ability to now invest actual dollars into these companies." The vehicle we've chose to do that through is a convertible note, which gives the entrepreneur a little bit more control versus just saying, "Here's some dollars for equity."
Then, also we were approached by Lawrence & Schiller, they came forward and said, "Hey, we want to participate. We would like to offer, designate one team for each of your participants and provide with marketing collaboration." They did some market research, they're providing additional marketing material, and content, and strategy. All of that was basically volunteered or donated by Lawrence & Schiller.
Then also, additionally, we have Eide Bailly. They came to participate as well, and have been a great resource both through some investment dollars and then also just lending Mr. Keith Severson's time, he's been a great mentor for some of our groups.
The other one was Woods Fuller. From the legal business perspective, they also were a sponsor of the program. With those resources, what we did is, we identified, well, the original, the model was we have four open slots and so that can be one entrepreneur or a team. Basically we have fashioned some content and working sessions around how to build a strategic plan.
And then, ultimately what they'll do is put together a presentation. The end goal for all of that, those entrepreneurs, is to pitch to potential equity representatives in the community and hopefully gain either some equity financing or at least, at the very minimum, some feedback from all of those resources and help them tweak and finalize what that strategic plan is going to look like. I'm very excited. The process was interesting.
We opened it up I believe in the beginning of April for registration and we had multiple companies apply. What we did is, put a panel together that included those sponsors for the program and then what we call entrepreneurs in residence or mentors in the building to help. Basically, they had a voting process and they went through a whole system of evaluating each opportunity and narrowed it down to I believe seven finalists. They did their final presentation and another group of those professional partners also heard those final pitches and made final decision for that we have right now.
And then, once those four were excepted, what happens?
We kicked off a five session long program. Sessions went every two weeks. In the off weeks, what Zeal did, was attempt to connect them with additional resources. Either business people or professionals in the community that wanted to help volunteer their time to help guide them in areas of sales and marking, operations, budget and finance, and then they would bring those changes and those suggestions to the next meeting and we would just build on that.
The format we had, was a guest speaker. Somebody from the community that came in and gave their story. We had some great guest speakers. Just a great lineup of people who were willing to share, not only their successes, but also their failures. We kicked out every session off with that and then we go into a working session. Then we go over the content.
There was a curriculum that we used. For the last portion of each working session, we paired them with either a potential client, so they could hone their pitch, or another entrepreneur or mentor that would help them hone and finalize their strategies. Lawrence & Schiller also worked with them in between weeks and during our sessions as well to help them with the marketing component.
After the final pitch, then, are they just turned loose or is there a working relationship afterwards?
Absolutely. Each participant will have a co-working membership through the end of the year with Zeal. Through that co-working membership, we have offered to continue to meet with them and connect them with our entrepreneurs and residents, and then help them with things like strategy, and budget and finance, ongoing promotion.
Primarily, giving them a place to come, and interact, and collaborate so they'll be able to take part in all of Zeal's activities, our monthly, we call it, In After Hours, which we host off-site. We typically have a sponsor come in and do a sort of a current events or current information presentation and then there's a mixer or a social component afterwards.
They'll also be able to be engaged in, we have a site, which is a panel that we put together and host for industry experts or subject matter experts to come in and ... I think the next topic is cyber security. We'll have open to the community, but our ancillary participants will also be able to be involved in that. Any resources that we have available to our incubation tenants, they will have the access to as well through the end of this year.
Afterwards, we certainly want to keep in touch. What we will do is set up meetings and ongoing communication, and hopefully some of the relationships that they've made through the program will also continue afterwards as well.
I'm sure there's a lot of networking and lot of connections made.
Yeah. That seems to be one of the biggest, I think, benefits of being out here, is you're just able to connect with so many different people on different levels. Anywhere from your high executives to your startup or your longstanding family business and the individual or the family is just wanting to give back. We've got a great community.
As John Myer put it, there's not very many people that aren't just a phone call away here in this area that would be willing to have at least one cup of coffee. Our goal is just to make those introductions and let that collaboration happen on its own.
You see a lot of startups come through here, what are some of the biggest mistakes that people make when they're trying to start up a company, an organization?
Mistakes, I think, are very unique but very much the same sometimes. I think one of the biggest things is people's expectations of how long it's truly going to take to get to break even or profitability. Sometimes we get early, early stage entrepreneurs who come in the door and they're ready. I think their product or service is solid, but how to go out and actually execute, I see a lot of entrepreneurs need help in doing that.
The stereotype is true, an entrepreneur is so passionate and so driven about what they want to do or their product or service, that sometimes they get narrowly focused on how to get that product to the best stage that it can be. Ultimately, then you need to go out and prove that the marketplace is ready for it.
We try to provide resources that help them along the way, legal, banking, financing, marketing. That seems to be one obstacle that is a common denominator. Another one is truly understanding what an entrepreneur is good at. In the early stages, I realize in having been down the road myself, you're a one-person shop or a two-person shop and you really need to focus on getting everything done. Emptying the garbage, going through your emails, and then, by the way, going out and selling and generating revenue.
I think also, one of the benefits and some of the more successful entrepreneurs I've seen, they recognize early on what some of their own individual deficits might be. It's at that point they have to either decide to bring people on who can support them and do that or try to figure out how to do it on a lesser scale or a different scale, out on their own. That's sometimes the challenge because we typically, as entrepreneurs, are protective of our project. We don't want to let anybody else in.
Knowing that you can't ultimately, especially during growth or strategic growth, it's very difficult to do that with just yourself or your partner. You need to provide the opportunity to have resources around you that will help you be successful. Those two things I think are some of the biggest obstacles or pitfalls. The easy one to point to is always money. Money will solve most of your problems, but not all of it. Or, in some instances, just create more if you don't have the traction and the structure that you need to carry it through.
All right. Well, that's all the time we have for today. I want to thank you for speaking with us and sharing everything you have. You have any final thoughts?
The only final thought that I would have is if you haven't visited us, absolutely, just walk in the door, come out and visit. We always have coffee and we always have popcorn.