October 26, 2022
From time to time, the IVCA newsletter will be highlighting entrepreneurial development around the Midwest, to provide information about investment opportunities both inside and outside the box of Chicagoland. To begin this series, a profile of the Peoria NEXT Innovation Center, through its Director, Michael Stubbs.
IVCA: What is a brief background summary on the development of the Peoria NEXT Innovation Center?
Michael Stubbs: In the early 2000’s, a collaborative organization that grew to be comprised of public and private educational institutions, a federal laboratory, a corporate research/development facility, several hospitals, as well as business and civic leadership. That cooperation became known as Peoria NEXT.
As its name implies, the intention of Peoria NEXT was to influence the future of its community. In August 2007, the center opened its doors as the physical manifestation of this idea of collaboration centered on intellectual capital. The building offers the only commercially leasable wet lab incubator space in the region that is available to rent regardless of university affiliation, and fosters an environment of discovery, innovation, and commercialization of regionally generated intellectual assets.
IVCA: How do companies or businesses from within Peoria NEXT create potential for funding, and what has been some recent examples of that funding?
Stubbs: The current and prior tenants at Peoria NEXT Innovation Center have collectively raised more than $419 million in equity and grant funding, including more than $39 million in federal grants. This has resulted in nationally acclaimed innovations that are changing the world in apparel, healthcare, sustainable facilities, construction, bio-analysis, and bio-manufacturing.
Scalable Peoria NEXT startups seeking investment generally start with local funding, usually from Central Illinois Angels (a Peoria NEXT tenant), and some continue to raise funds from Venture Capital firms worldwide.
IVCA: What are some examples?
There are just two recent examples of significant funding that recent Peoria NEXT graduates have raised …
In April 2022, Natural Fiber Welding closed its Series B investment round and raised $85 million in funding to scale production of high-performance, all-natural, circular materials products coming to market with a wide array of global brand partners. The investors backing NFW include: Evolution VC Partners, Tattarang,Lewis & Clark AgriFood, Collaborative Fund, AiiM Partners, Engine No.1, Raga Partners, Tidal Impact, Scrum Ventures, Gaingels, BMW i Ventures, Ralph Lauren, Advantage Capital, and Central Illinois Angels.
In December 2021, Intellihot, the clean technology company creating innovative, next-generation solutions to transform the built environment, raised $50 million in growth financing led by investors Aegon Asset Management and the Avenue Sustainable Solutions Fund. Similar to NFW, Intellihot received early investment from the Central Illinois Angels.
IVCA: You tout a collaborative environment within Peoria NEXT … how has this environment helped with developing companies and businesses, and what are some examples of that collaboration?
Stubbs: The Peoria NEXT Innovation Center fosters the welcoming environment entrepreneurs need to find the resources to grow and scale in Central Illinois. This collaborative environment extends beyond the walls of the innovation center. The Peoria NEXT Innovation Center’s active participation in the Illinois University Incubator Network offers opportunities to expand collaboration with other incubators throughout Illinois, including assistance with SBIR and STTR grant submissions.
Another example of collaboration is exhibited through the relationship between Peoria NEXT and the National Center for Agriculture Utilization Research (NCAUR). The NCAUR is one of the largest agriculture research centers in the United States and is affectionately known locally as the AgLab. The NCAUR houses 90+ PHD researchers in a building that is known as the location that mass manufacturing of penicillin was invented.
Multiple companies, including Midwest Bioprocessing Center, have collaborated with the NCAUR on commercializing innovations with assistance from its scientists through Cooperative Research and Development Agreements (CRADA). For example, Midwest Bioprocessing Center has commercialized patented enzyme-based production technology for its iActive line of products, which was originally invented at the NCAUR.
IVCA: What has been the most notable developments in the evolution of the Turner Center for Entrepreneurship at Bradley University, and how does that coincide with Peoria NEXT?
Stubbs: The Turner Center for Entrepreneurship at Bradley University assists people who want to own their own businesses through a variety of programs for students and community members.
Three organizations provide services under the Turner Center umbrella … The Illinois Small Business Development Center (SBDC), which provides free business counseling and low-cost training programs for existing and startup businesses in Central Illinois – including technology commercialization consulting. The Illinois SBDC International Trade Center, which helps Illinois companies navigate the international marketplace. And The Illinois Procurement Technical Assistance Center (PTAC), which helps companies that sell goods and services to federal, state, and local agencies. These organizations have assisted several Peoria NEXT tenants through no cost consulting to start, grow, and scale.
For example, Dr. Luke Haverhals chose the Turner Center at Bradley University as his first step when searching for assistance in transforming his natural materials invention into a business. The Turner Center offered technology commercialization assistance, a seven-week accelerator, and general business advice during NFW’s infancy. This organization then grew in its early years by utilizing the wet lab facilities at Peoria NEXT prior to graduating out into the Peoria community. The Turner Center continues to assist NFW as it scales, including, but not limited to, valuable advising on international trade matters.
IVCA: In consulting companies throughout the years in your capacity as Director of Peoria NEXT, what has become a common thread in your observation of what they are lacking, even as they come to the incubator with different needs based on their service or product?
Stubbs: The common element that is perceived to be lacking is access to capital. While some Central Illinois startups, including Natural Fiber Welding, Endotronix, and Intellihot, have been able to raise significant capital, the effort and time that startups need to commit to raise early-round funding is daunting.
The Central Illinois Angels is one of the only local investment entities, and Peoria is not home to any Venture Capital organizations. While companies like Caterpillar and OSF Healthcare have corporate VC entities in Peoria, the inability for a startup to receive a warm introduction to an established, non-corporate VC organization is inhibiting. No matter how many coffee shops, conventions, or innovation-based meetups entrepreneurs attend, the probability of running into even a relative of someone who works at a VC firm is very low.
IVCA: How can the firms with capital, such as in the IVCA membership, get involved with Peoria NEXT and their associative companies?
Stubbs: Peoria NEXT Innovation Center has high-quality, leasable wet lab space that is readily available and substantially cheaper than other labs throughout the state. Any members who have invested in startups that are looking for 800-2,400 square feet of wet lab space should introduce them to Peoria NEXT. We will roll out the red carpet.
The innovation occurring in Central Illinois is the best kept secret in the state. In addition to the Peoria NEXT tenants that are highlighted above, Central Illinois is also home to other significant exits and scaling startups including: Precision Planting, AutonomouStuff, Sorce Freshwater, Rheo Engineering, Bump Boxes, Enduvo, ColorForge, and many more.
If you receive an email, call, or hand-written letter from an entrepreneur in Central Illinois, please consider investing in that company. I know that deal flow is not an issue for Venture Capital firms, so it is hard for companies in Central Illinois to break through the noise to receive proper consideration.
But please take a call from a Central Illinois founder – that founder is working in an environment with limited distractions and is innovating at a burn rate that is a small fraction of the burn rate of a big-city startup. Investments in underrepresented communities that are working on AgTech, Sustainability, and Biomanufacturing need to happen, so that we have a more livable and equitable future.
IVCA: We asked Michael Stubbs to provide some success stories from Peoria NEXT. Click the name for their website or information.
Stubbs: More than 50 tenants have called Peoria NEXT home over the past 15 years. The following are eight admirable examples …
Natural Fiber Welding:
Natural Fiber Welding (NFW) was founded by Luke M. Haverhals, PhD, and is setting the global standard for a sustainable supply chain. NFW is a new manufacturing paradigm that enables sustainable production of materials from agricultural fibers for a wide variety of applications. Its products, including Clarus®, Mirum®, Tunera®, and Pliant®, are removing plastics from the apparel and leather industries.
The company is focused on the commercialization of several highly disruptive applications within several large and strategic markets. Dr. Haverhals and NFW’s CTO Aaron Amstutz are the recipients of the 2022 Inventors of the Year Award from the Intellectual Property Owners Education Foundation. As a result, NFW joins a small and exclusive class of IPOEF Inventor of the Year award recipients that includes CRISPR-CAS9 inventors and developers of the mRNA technology used in COVID-19 vaccines. NFW’s partners include Ralph Lauren, allbirds, BMW, Patagonia, Chaco, Richemont, and many others.
Endotronix developed minimally invasive wireless monitoring devices that transmit from within a patient’s body. Endotronix’s CordellaTM PA Sensor has been implanted in more than 300 patients worldwide as part of its ongoing clinical trial. These devices which use a combination of radiofrequency identification (RFID) and microelectromechanical (MEMS) technology monitor a patient’s cardiovascular health from within their heart and blood vessels.
The system allows for real-time monitoring of patient health not only in the medical care facility but also at home, reducing treatment costs associated with prolonged hospital stays. There is the potential for this technology to benefit over 60 million people in the United States who have risk factors for developing cardiovascular disease.
Intellihot developed a state-of-the-art demand tankless water heater that uses conventional materials and advanced electronics. This green water heater extracts nearly 98% of energy, provides unlimited hot water and occupies very little space. Intellihot’s commercial tankless water heater customers include Hilton, Marriott, Hyatt, Benihana, and Levi’s Stadium, home of the NFL’s San Francisco 49ers.
BrightWater Medical was founded by Dr. Robert Smouse, Professor of Radiology and Surgery, University of Illinois College of Medicine. The company was born out of ELGCO, a medical incubator operated by Dr. Smouse at the Peoria NEXT Innovation Center.
BrightWater’s primary product, the ConvertX®, is a single device used to replace a series of devices and procedures used to treat severe obstructions of the ureter. The system is designed to be implanted once and converted from a nephro-ureteral catheter to a nephro-ureteral stent without requiring sedation or local anesthesia. BrightWater was purchased by Merit Medical in June 2019 for $50 million.
VirtuSense offers the leading fall prevention device in the United States. VirtuSense offerings prevent falls before they happen by leveraging Artificial Intelligence (AI). Their innovation accelerates predictive insights allowing physicians, caregivers, and families to be proactive and patient-centric with AI and innovative sensors.
Predictive AI can make healthcare simple, affordable, and accessible without compromising the quality of care. VirtuSense’s AI sensors detect movements and anomalies based on millions of hours of normative data to alert healthcare providers 30-65 seconds before a bed/chair exit occurs. Simply, VirtuSense reduces injury-resulting falls at hospitals and nursing homes by more than 90%.
Veloxity Labs is a new BioA CRO treating disease one sample at a time. The Labs offer bioanalytical services for both small and large molecules. When they partner, you can count on energy, flexibility, action and results. The state-of-the-art VELO™ (Veloxity Electronic Laboratory Operations) system provides for an automated and traceable workflow from first client contact through analysis and reporting of the highest quality data. VELO™ accelerates the turnaround times and eliminates errors in a manual workflow.
Midwest Bioprocessing Center:
Midwest Bioprocessing Center is dedicated to bringing important new bioprocess technologies to market for human health and nutrition. The company combines proprietary molecular biology, biocatalysis and fermentation technologies to produce important new industrial compounds.
MBC offers a growing catalog of products for sale and carries out custom synthesis for customers in pharmaceutical cosmetics, and nutritional industries. Recently, Midwest Bioprocessing Center was awarded more than $2 million in federal funding to continue their development of commercial products.
Reign Construction Inc.Reign Construction Inc. was established in 2016 at Peoria NEXT Innovation Center. The company services government and private sector entities throughout Illinois. In addition, Reign Construction is a female minority-owned company and was founded by Bridget Booker … she is the first Black Woman Journeyman Iron worker who’s held a Foreman’s position in her union, and is a respected leader in the industry.
Bridget, through Reign Construction Inc., is transforming the definition of what it means to lead a construction company, and has successfully advocated to change the maternity leave policy of iron workers across the United States.
Part Four of the IVCA Diversity Program Series will be an in-person luncheon entitled “Strategies for Survival: Cultivating Mentors and Allies for Success” on November 18, 2022. Click here to register.