Paul Silva, Co-Founder and Executive Director of Valley Venture Mentors, recently told Innovation Destination Harford about the organization’s plans to launch a new accelerator program designed to enhance the region’s manufacturing sector.
IDH: Tell us about the manufacturing accelerator program.
SILVA: The manufacturing accelerator’s mission is to help local advanced manufacturing firms increase the numbers and types of revenue streams they have available to them by connecting them to original equipment manufacturers (OEMs) and other large manufacturers that need precision work but have been struggling to find companies that can do it.
IDH: Why did VVM create the program?
SILVA: Many small- to mid-size manufacturers are multi-generation businesses and most get the lion share of their income from defense work. So they know where to go to get that business, but that’s what they’ve been doing for 30, 50, or 100 years. And they’ve only got 10 to 50 employees, so they don’t have the capacity to be out there marketing themselves in other places.
The world is changing. All kinds of companies need precision manufacturing and have nothing to do with weapons systems. They’re trying to find businesses that can do this incredibly precise work. And the companies exist. They’re right here where we live.
The problem is the executives of those companies are too busy running their shops and going to the usual tradeshows where they meet the usual people from the defense contractors. There’s nothing wrong with that; that’s what they’ve had time to do and they know how to do that. They don’t know how to find the OEMs and the OEMs are spending way too much money trying to find the right manufacturers. They basically have to hire someone to find them, which is too expensive. They end up consistently settling for second- or third-best solutions—a company that’s too far away, or a company that can’t quite do the level of precision they need.
IDH: How does the program work?
SILVA: VVM is taking the philosophy we’ve developed for helping startups—and what is a startup? A startup has an idea for a way to make money and then it has to very rapidly figure out what’s wrong with that idea by talking to customers. That’s our philosophy. We didn’t invent it, it’s from the Lean LaunchPad philosophy. We use it, lots of people use it.
We’re taking that same structure that’s worked so efficiently for the startups in our startup accelerator and using it on local, small manufacturing companies. We’re asking them to think about creating a startup within their company. Let the company do what it’s always done, but take their senior leadership and send them to us on the weekends to participate in a program that will help them create a new company with all these great assets. They’ve got all the CNC machines and highly trained employees—all that stuff they can leverage that a normal startup doesn’t have.
We’re going to have them do customer development, because on the other side of the table we’re going to put a bunch of OEMs, we’re going to have them come to the companies and present the challenges they’re having. We’re going to help the companies and the OEMs learn each other’s language.
The program will be similar to a Startup Weekend experience. We’ll give manufacturing companies a little LaunchPad experience to help them realize: My machine can solve that problem but I had no idea that railroad cars needed these kinds of things. Or: I had no idea that all these different people needed these different things. Then they can talk to the customers, develop the ideas, and prototype everything through our curriculum.
Similar to our startup accelerator, the curriculum includes a competition. With the startup accelerator, there are startups and investors, which are judges. The difference with the manufacturing accelerator is that the two bodies are existing manufacturers and the OEMs are the judges.
Hopefully at the end of the program, the manufacturers have realized that they go to one place and there’s a bunch of opportunities put in front of them. It’s an environment that’s designed to let them rapidly and inexpensively access those opportunities but with a cohort of other people like them.
Some may think of them as competitors, but they’re not. They’re competing with companies in China, and Detroit, they’re not competing with the person who is two cities away. We want to encourage them to collaborate. That’s what the OEMs want. They don’t want to have to have part A come from Taiwan, part B come from England, and part C come from Florida, that’s a complicated supply chain.
When it to comes to precision manufacturing, we have that here in Western New England. It’s just that the companies aren’t talking to each other. So we thought: Let’s bring them all to one place, we’ll let both groups discover each other and realize connections they couldn’t have cost effectively found on their own.
IDH: When will you be launching the manufacturing accelerator program?
SILVA: VVM is currently recruiting companies. The accelerator will run in the fall.
IDH: How is the program being funded?
SILVA: The $320,000 one-year pilot program is mainly being funded by MassDevelopment, which has given us $200,000, the National Machine Tooling Association (NMTA), the Economic Development Council of Western Massachusetts, and other partners.
We anticipate that the manufacturing accelerator program will run for multiple years. The same thing essentially happened with our startup accelerator. We did a three-year pilot, which was nice. After year one we had enough results that we were able to, with confidence, raise more money and scale it up. So that’s our goal here.
IDH: How many companies will participate in the program?
SILVA: We’ve already got enough money to start with six or eight manufacturing companies, test out the ideas, and work out the wrinkles—because we have to practice what we preach. Just because we’re good at helping startups doesn’t mean that all the skills will translate to a group of people that are running 30-year-old companies.
We’re going to have to learn what’s different and adapt the curriculum and the processes to make sure we’re really helping. So we’re hoping to have a half-dozen or so manufacturers this year and then scale it up as the years go on.
IDH: When you first started explaining the program, you used the word “local.” Can you define local? Is the program only available to manufacturing companies in the Springfield area?
SILVA: No. Right now our pilot funding is from the Commonwealth, which means that the beneficiaries have to be located in the four counties in Western Massachusetts. It is our sincere hope that we will be able to bring on additional funders and partners. I know it will happen. The question is: Will it happen in three months or next year?
So initially we have funding for companies from Massachusetts. As funding becomes available—and as we get more support from our friends in Connecticut—our intention is to extend the manufacturing accelerator program to Western New England.
IDH: Let’s talk about the importance of manufacturing in New England.
SILVA: I think it’s really important to realize that precision manufacturing is one of Western New England’s real, global, competitive advantages. Other places in the world do manufacturing, which is commoditized, far better than we do. But people from around the world come to Western New England for precision manufacturing because we are the best at it.
Yet, when you sit down and work with the manufacturing companies, what you realize is that these are generally, overwhelmingly small companies. I mean, they’re big to me—I’m used to working with startups, which are sometimes five people, and these companies are about 50 people. However, compared to an OEM, they’re tiny.
Because these companies are small, their business is capital-intense. If your company buys the wrong machine, you just blew $1 million. You could kill your company by doing that. So these manufacturing companies are understandably very cautious.
Western New England has this worldwide competitive advantage, it will not last if we do not inject modern levels of innovation into it. It will be something that we used to do great and it will go away. And it’s our opportunity to lose. We’re already world class. We can help these companies. We can find a cost-effective way for them to embrace innovation—that’s a challenge, right?
It’s not that they don’t want to be innovative, in many ways they’re extremely innovative. Look at their techniques and the kinds of machine and programming they use. If you watch how they optimize things on their shop floors, it’s truly staggering. But that’s their world. And then as soon as they step outside the world—like all of us—they struggle. We can help them unleash their potential, get access to some of these skillsets, and form some of these relationships.
That’s really exciting for me. I love working with startups. It’s my main passion, but they are babies, they can go anywhere. It’s unlikely we’re going to launch a Facebook out of here. We’re going to launch hundreds of great companies and they’re going to create employment prosperity. But this is a sector that is already strong. It’s already really good but it could be doing five times what it’s doing now. How awesome is that?
To learn more about Valley Venture Mentors, visit www.valleyventurementors.org.