How One Regional Partnership Is Fueling Innovation

by Jul 29, 2022

Crossposted from the Herald-Times, this is The Mill’s regular column, written by Pat East, Executive Director.

Here at The Mill, we talk a lot about the entrepreneurial ecosystem—the interconnected system of people and organizations that spark innovation and nurture new startups. A healthy ecosystem creates jobs and grows our economy. Today I’ll share a behind-the-scenes look at one of the drivers of our ecosystem’s growth in recent years: Velocities. 

Velocities is a $2.5 million partnership between The Mill, the Columbus Area of Chamber of Commerce and Elevate Ventures, the state’s venture capital arm. Three years ago, we formed this partnership to leverage additional resources to feed our ecosystem and stimulate entrepreneurial activity. The results have been phenomenal, and last month, The Mill’s board unanimously voted to renew the partnership for another three years.

Velocities is successful first and foremost because it’s a regional partnership to which each partner makes a significant contribution. We all have skin in the game, and we’re working toward a shared future that’s bigger than our individual communities. In this $2.5 million partnership, The Mill contributes $500,000, the Columbus Area of Chamber of Commerce contributes $500,000, and Elevate Ventures contributes $1.5 million.

That $2.5 million is then invested right back into the region, through community-based entrepreneurial initiatives to spark and nurture new startups, an expert entrepreneur-in-residence to mentor founders through business growth, and investments in actual companies in the Velocities region that spans Bloomington and Columbus.

Velocities has its own board of directors to provide oversight and decision-making. They allocate about $650,000 for programs that support business formation, startup accelerators, and talent recruitment. Velocities funds support The Mill’s Crossroads Pitch Competition, for example, the gBETA startup pre-accelerator program, and Propeller, Columbus’s new innovation center and makerspace. We also hired a startup ecosystem manager, Dan Nash, to run entrepreneurial trainings and events.

It’s worth noting that originally, the partnership had set aside $500,000 for those programs. Halfway through our first three-year sprint, however, Elevate Ventures voluntarily increased their commitment from $500,000 to $650,000 after finding additional funds—an exceptional act of generosity from a partner, and one for which we are still grateful.

Another $500,000 is earmarked to employ an entrepreneur-in-residence (EIR) for the region through Elevate. Our Velocities EIR, Cy Megnin, grew up in Bloomington and spent 20 years founding and working in startups in Seattle, Silicon Valley, and Austin. He acts a full-time mentor to startups, helping founders figure out how to build their companies.

On the investment side, $200,000 is earmarked for the Community Ideation Fund. This fund makes “proof of concept” investments of $5,000 to $20,000 to help founders take the first steps to develop an idea. An investment committee of venture capital, startup, and business experts vets candidates, and I’m happy to say they’ve had no trouble in finding promising regional business ideas to support with small but essential proof-of-concept investments.

Startups that are further along in development, but still very early-stage, may be eligible for funds from the $800,000 earmarked for Community Focused Investments. Entrepreneur-in-residence Cy Megnin makes recommendations for pre-seed and seed investments of $25,000-$100,000, which are ultimately determined by an investment committee at Elevate Ventures. In another example of their outstanding partnership, however, Elevate has tripled that budget. Over the past three years, they’ve invested $2.4 million into our region’s startups. This is made possible due to extraordinary work from Cy to help startup founders figure out their business models and make a strong case for investment.

Cy’s support work with founders reaps benefits beyond the partnership investment. For example, companies who are awarded a Phase 1 SBIR grant from the federal government automatically receive a dollar-for-dollar match from Elevate, up to $50,000. Those who are awarded Phase 2 grants automatically receive investment from Elevate. Elevate also invests $20,000 to $80,000 in startups who win their Nexus Pitch Competition. Their 21 Fund fuels later stage companies with investments of $250,000 to $500,000. Startups who work with the Velocities entrepreneur-in-residence increase their chances at securing all of these additional monies.

Finally, some $350,000 of partnership dollars are used for resource deployment, marketing, running events, administration, and so on. We are able to leverage Elevate’s powerful systems and human resources to power the back end of Velocities’ programming.

Essentially, for The Mill’s $500,000 contribution to the partnership, we get a much higher return than the $2.5 million promised on paper. And the partnership has performed well. We’re investing in companies who are growing and hiring employees, and we’re building a startup ecosystem from Monroe County to Bartholomew County of dreamers and doers.

So what’s next for Velocities? What do we want to achieve going forward? What else should we be doing to launch and accelerate companies? We’re in the beginning stages of answering those questions for the next three years. My intuition says our next area of focus might involve strengthening the operations side of our startups. We’ve proven we can deploy capital to help early-stage startups. We need to become great at building those companies at scale. And of course, we want to widen the funnel at all stages, from increasing business starts, to early-stage growth, to scale, and to successful exit or sale.

Congratulations to Cy, Dan, and everyone at Velocities for helping us get to this point. Thank you to The Mill’s board of directors for unanimously approving the partnership renewal, and thank you to our partners in Columbus for renewing their commitment. Finally, huge thanks to Elevate Ventures. They epitomize being a great partner. Cheers to three more years of great results!