The Mid-West Energy Research Consortium has been busy over the past three-and-a-half years. The organization has expanded its membership from eight to 86, completed its first seed accelerator class and launched the Energy Innovation Center in the former Eaton Corp. building in the 30th Street Industrial Corridor on Milwaukee’s northwest side.
The organization is dedicated to advancing energy research and innovation through guided open innovation, market research and academic research. Its vision is to make the Midwest the leader of Energy, Power & Control. M-WERC is seeking solutions in energy generation, transmission, distribution, storage, automation, power conversion and energy efficiency/conservation.
One of the avenues M-WERC is using to advance that mission is its Energy Innovation Center, which was launched in 2014. Modeled on successful cluster workspaces like the Global Water Center in Milwaukee’s Walker’s Point neighborhood, the EIC would be a central Energy, Power & Control gathering space aimed at conducting joint research, advancing innovative technologies, commercializing products and nurturing startups. In fact, M-WERC has partnered with the Global Water Center on an “energy-water nexus” project to roadmap the future of the industry clusters as they intersect in manufacturing and regional growth.
But the EIC has not taken off as quickly as expected. As it stands, just six permanent tenants and one startup are based at the 70,000-square-foot center, which encompasses portions of five floors of the massive 200,000-square-foot Century City Tower at 4201 N. 27th St. The ultimate goal is to fill the space with 60 tenants, including startups, industry associations, academic researchers, private researchers and government energy initiatives, among others.
The total investment in the Energy Innovation Center was initially estimated at $9 million, though M-WERC executive director Alan Perlstein said that figure could now be closer to $5 million.
Originally planned for a June 2016 completion, just one floor of the EIC has been built out. But Perlstein points to the potential of its completely remodeled seventh floor offices, which include group work areas and startup pods meant to foster innovation and collaboration.
“What we want to do is have a space that has a function, that meets a need and that is supported by both industry and academia, and we’re working hard to go put together that collaborative approach and we want that in place before we spend a lot of funds,” Perlstein said.
Among the current tenants is the Manufacturing Diversity Institute, which aims to ensure underserved Milwaukee communities succeed in manufacturing careers and businesses. The nonprofit moved in to the EIC in July 2013 to be close to inner city entrepreneurs and the nearby Century City 1 development, said executive director Keenan Grenell.
“No region or city can be prosperous if it’s underserved or left out of the innovation equation,” Grenell said. “We’ve got to be able to serve our underserved innovators and entrepreneurs who work with people in that region.”
The EIC has shown a commitment to including underserved neighborhoods in Milwaukee’s mission to become an entrepreneurial hotspot, he said. While it has been slow to fill, Grenell says he is not concerned.
“I think the big challenge is to keep a consistent flow of activities going on up there,” he said. “I think it’s a work in progress. I host an annual event there, but I’m probably going to have to do more.”
Business law firm Whyte Hirschboeck Dudek S.C. also has an office in the EIC, where it rotates several attorneys in to walk the floor and aid startups while the center’s WERCBench Labs incubator is in session, said shareholder Ted Barthel. Questions often cover patents and trademarks, employee benefits, setting up a corporation and getting financing, he said.
“There’s a lot of synergies between M-WERC and what we do,” Barthel said. “We help some startups, but we also give a lot of free mentoring, free advice to the startups to help get their feet on the ground.”
He said it’s not unexpected that a cluster center like the EIC would take a little longer to develop.
“Of course we would like to get clients, but we would also like to see the region as a whole develop as well,” Barthel said.
M-WERC has been selective in which companies it has brought on board at the Energy Innovation Center to assure it meets its prescribed goals and remains a sustainable model for innovation, Perlstein said.
“At our peak, we had 45 employees in the building from different companies and we had 10 startups, plus we had four business service providers that are in the building, but we are slower in developing the building because, frankly, we want to have major anchor tenants, which we are still in the process of locating,” he said.
An anchor tenant could be a company such as Rockwell Automation, ABB Group or Johnson Controls Inc., Perlstein said.
The Energy Innovation Center was awarded $850,000 in grant funding from the Wisconsin Economic Development Corp. as seed capital in 2014. Phase one funding of $50,000 required M-WERC to secure matching funds of at least $100,000, complete a business plan for the center, and secure a lease option for the center that included laboratory space.
WEDC also in 2014 offered a phase two grant of $800,500, of which just $222,780 has been disbursed. M-WERC must secure $4.4 million in matching funds—of which it has raised about $220,000—to draw down the total of that grant. According to the WEDC, the award also contains several development milestones and benchmarks M-WERC must meet throughout the process, including the development of roadmaps and business plans for energy innovation, as well as buildout and construction milestones. And by June 30, 2017, M-WERC is to have secured the location of at least 22 organizations in the Energy Innovation Center and incubator.
One challenge for the EIC has been its location. Located in a low income neighborhood on Milwaukee’s northwest side, the cluster space is far from the startup-centric downtown, Third Ward and Walker’s Point neighborhoods that attract creative types for both work and play.
But some of the redevelopment efforts in the 30th Street Industrial Corridor have been promising. For example, EIC tenant General Capital Group and the City of Milwaukee recently partnered to construct the Century City 1 spec industrial buildings around the corner, at 31st Street and Capitol Drive.
“I think the work that (M-WERC is) doing in trying to look at city revitalization at the same time is very important work,” said Julia Taylor, president of the Greater Milwaukee Committee, which has been working to connect the organization with industry and academic partners. “It does take time; we need to have patience. And it takes continued investment.”
The Menomonee Valley redevelopment took many years to come to fruition, and even the Global Water Center was about 10 years in the making, Taylor said.
“I always call the Menomonee Valley the 30-year overnight success story,” she said.
And Perlstein doesn’t see the neighborhood as an impediment.
“It’s kind of like the Menomonee Valley. It didn’t happen overnight. People were committed for the long haul…and after 20 years, they’re still building in the valley,” he said. “(Walker’s Point) is an up- and-coming place, so it’s easy to recruit, but 15 or 20 years ago, people would have said that was a challenge.”
There are a few success stories coming out of the EIC. Two of the startups that participated in the first seed accelerator class—Kentriko LLC and Tosa Labs LLC—have already been purchased by larger firms, Perlstein said. Kentriko created personalized curriculums for free online learning. Tosa Labs developed a platform to help reduce machine downtime in manufacturing plants.
Five of the other seven startups that graduated from the first class are currently in the second stage of the program, which focuses on positioning themselves for a capital raise. They are: Cadens LLC, which develops hydropower turbine technology; Loreto Innovation, which has created a water contaminant measuring drone; Seiva Technologies, which has developed a neuromuscular response wearable; Thermodata Corp., which has created temperature monitoring technology for perishables; and Digital Iris LLC, which develops virtual and augmented reality problem-solving tools. Seiva currently works out of the seventh floor space at the EIC.
“Our goal is to amplify the ability of the startups to be successful as a going concern,” Perlstein said. “How do they position themselves to demonstrate value to partners and investors?”
Each startup received a $10,000 grant at the beginning of the class and a $10,000 grant after the completion of the program. The second WERCbench Labs class will begin in the fall, and will include between five and 15 startups, he said.
While the EIC has been slow to start, M-WERC has been advancing its other initiatives by completing industry roadmapping to look ahead at the potential of different energy industries in five years.
It has also developed a laboratory network for its academic research efforts, partnering with Argonne National Laboratory, the University of Wisconsin-Madison, UW-Milwaukee, Milwaukee School of Engineering and others. M-WERC has invested $3 million in research with its members over the past three-and-a-half years, Perlstein said.
“This space can be part of that (network of labs) if it’s valued,” he said.
