Addison Independent www.addisonindependent.com
March 30, 2006

College program spawns small businesses in county
By Hariette Brainard

MIDDLEBURY A small but growing program at Middlebury College is matching local entrepreneurs with students and investors to fuel the growth of small and medium-sized businesses in Addison County and surrounding Vermont communities.
The goal of the Middlebury Solutions Group (MSG) is to create strategies and business plans for emerging enterprises that can be presented to investors, facilitate start up and eventually contribute to the growth of jobs, incomes and tax revues in Vermont.

"MSG is a low-rent alternative for these companies," said Middlebury economics professor Michael Claudon, who directs the program. "Most of the founders of these companies are strapped for every penny. We provide free, extremely intelligent students to coach them and to tear their businesses apart and put them back together, and give them the chance to be successful. We do not provide strategic plans of advertising campaigns, but we do give them great exposure in these enterprise forums."

The MSG program principally is a one-semester class that incorporates two one-day forums, called the MSG Entrepreneur's Forum, in which the entrepreneurs who have developed their business plans with the students get to present them to peers, institutional and angel investors, and venture consultants. The MSG program serves to identify promising projects or new ideas and develop them to a point where a Vermont based venture-funding company or angel investor will have a real interest in providing the funding towards developing a viable enterprise.
The program started in 2002 and has been developed under the umbrella of DigitalBridges2.0., an earlier program launched during the dot-com boom as an annual, student-organized symposium focused on the intersection of business, technology and society.

Students involved in DigitalBridges2.0 study the impact of the so-called "new economy" and examples of the fundamental changes that have occurred in our society. This provides them with meaningful, real-world experience, extending their learning beyond the classroom while growing and maintaining virtual and physical networks, relationships and collaboration between students, alumni, and parents, Claudon said.
The MSG process takes a slightly different tack. It begins with presentations by local early-stage ventures to a new MSG class at the start of the spring or fall semester. There might be six or more presentations, however, only three to four ventures are selected to continue the process, with teams of students -- usually four -- assigned to each remaining venture.

Due to a tight, one-semester schedule there tends to be a large time commitment from both the students and the businesses selected.
Weybridge resident Pieter Schiller, a retired partner of Advanced Technology Ventures and a Middlebury graduate, has been involved in both DigitalBridges and MSG. Having spent a great deal of time with the students, alumni and the companies involved, Schiller has seen the time and intensity that the students devote to the MSG projects.
"Achieving its company-building goals requires MSG client teams to actively involve themselves in a regular and increasingly demanding dialogue throughout the project," he said.

VENTURE COACHES
Undergraduate "venture coaches" provide company building services, such as competitive market analysis, product research, and power point and web presentations. Of primary importance is creating an outline for the direction the company will take. There is a good chance that the students and the principles involved in starting the business will differ on this point.

"The job of the consultant, which is the Internet-savvy college student, is to find where the weaknesses/shortcomings are in his (the client's) product or his business plan. This then provokes the entrepreneur to rethink the business plan," said Charlie Kireker, the managing director of Middlebury-based Fresh Tracks Capital and a mentor with the MSG program. "There is a give and take between the entrepreneur and the students.
The client needs to trust the students to examine the weaknesses and refine them," Kireker continued. "The final package that will emerge must be something that both the market and the investors want."

Following weeks of consulting services and discussions the client will emerge with a detailed plan for presentation to a group of fellow MSG clients (both past and present), as well as institutional and angel (unknown to the client) investors, and venture consultants in what is called an "MSG Entrepreneur's Forum."
Since its inception in the spring of 2002, 29 start-up companies have worked with the MSG program; 17 of these are running successful businesses today.
What type of candidates might be selected to make presentations at the MSG program? Kireker said "they pick the MSG companies from a selection of pretty young, early-stage companies, continuing from the start of the company through to the early maturity level. They need to be able to sustain themselves with outside investors, have a certain level of ambition, know the size of their market, and (demonstrate) the ability of the front man to generate capital."

An important characteristic that investors who come to the MSG are looking for is sustainability.

"MSG investors tend to be in two categories, either friends and family, or angels (investors who are not known to the individuals,) Kireker explained."The investor situation for a business depends a great deal on the individual entrepreneur themselves, in other words how much networking they have done, how good they are at developing relationships within the community, such as with their distributors and customers -- this is a good indication of their ability to raise money."
MEET THE CLIENTS
The undergraduates clearly benefit from this real-life experience, but how much does this program actually help the Vermont-based entrepreneur? The 17 MSG success stories include the Middlebury-based Vermont Organic Fiber Co., which recently expanded its management team with a new chief operating officer and will be hiring a new associate in the near future; and Eesa, a rapidly growing snowboarding- inspired clothing company based in Waterbury.

Matthew Mole founded Vermont Organic Fiber in Burlington in 2000 and moved it to Middlebury in June 2004. The company sources and manages the production of high-quality, certified-organic wool, yarns, fabric and batting.
Mole started his business following a University of Vermont project he was involved with. After studying the rise of organic cotton in the industrial hemp market, he saw an opportunity to develop the market for organic wool.

He was introduced to Michael Claudon during his stint at UVM, when Claudon had his own sheep farm. Mole went to see an MSG presentation and became interested in becoming a client. He wanted to mitigate the effects of his company's seasonality and increase its profit margins and cash flow by developing new products and new markets.
Vermont Organic Fiber did a great deal of business with Patagonia, a major outdoor apparel maker, but Mole was inclined to develop a line of high-quality knitting yarns that he could retail directly to the consumer. The MSG student group that Mole worked with felt that the company should focus less on retail and more on developing the wholesale market further. This disagreement prompted a lot of discussion. In the end, Mole stuck to his original idea of developing a product for retail, but he found the exercise useful.
"The students provided a fresh perspective, and the process of looking at yourself and your product is a good one, as it causes you to step back and respond to their questions, and forces you to articulate what your goals and plans are," Mole said.

He felt this was particularly beneficial and overall believes the MSG experience, although time-consuming, was positive.

"It is a good process for everyone," Mole said. "This is a situation that always requires more time than you anticipated."

Eesa also benefited from the fresh perspective of MSG student consultants.
With a background at Burlington snowboarding company Burton, Eesa founder and president Stephen Cleary was already well-versed in the snowboarding culture, as well as the marketing and manufacturing of new lines when his company became an MSG client last spring.

"We had a positive experience especially due to a Middlebury student from Eastern Europe who put her heart and soul into the project," Cleary said. "She was extremely passionate about the company and her involvement with it."

Like Mole at Vermont Organic Fiber, Cleary had to wrestle with his own preconceived ideas on the direction of his company when a student pushed hard to take it in a different direction. In Cleary's case MSG students were pressing Eesa to go into a line of apparel only for women. Discussions resulted in the development of similar men's and women's lines, with different cuts and colors.

In both cases, Vermont Organic Fibers and Eesa, the process of working with MSG forced the owners to clearly define and articulate the path they wanted the companies to follow.

Eesa launched its new "Lifestyle Performance" line this past January in Las Vegas and has so far seen some success with it. Cleary has remained in contact with the MSG program, he returns to talk with students as well as to speak at the semester forums. Cleary credits the MSG students with "providing a fresh eye that pushed me to look at things differently and try new things, as I was not always able to do because I was so entrenched in the project."

BEYOND THE CURRICULUM

Like DigitalBridges2.0, the MSG has been developed with the understanding that Middlebury College students who have chosen a liberal arts education will benefit from an early application of the knowledge they have gained. Claudon has developed the program with the local community in mind, as well.
Some who have seen the MSG program up close say it will enhance both economic and business development in the surrounding area, and should help promote more entrepreneurial initiatives in the future.
"I'm impressed with how much work the students have put into the project as evidenced by the Enterprise Forums, and how Claudon has made it all fit together," Schiller said. "Claudon is doing a fabulous service to the community by linking all these groups together. He is helping Vermont grow as well as giving the students a real world element to their education without hurting the liberal arts mission."