Madison Entrepreneur Center (MEC) Old Kleuter Warehouse June 14th, 2013

Basement Table of Contents and

Overview Page 3 Madisons Entrepreneurial Community: Ready for Growth Page 4-10

Project Details Page 11-12 The MEC Project Team Page 13-14 Timeline Page 15 Site Selection & Facility Details Page 16-23 Partners Page 24-28

Basement Overview and

Strong economies increasingly depend on vibrant entrepreneurial and startup communities. No longer limited to the entrepreneurial capitals of San Francisco, Boston, and New York, smaller cities like Austin and Portland are successfully building entrepreneurial ecosystems by bringing together the critical components that local entrepreneurs need to build and grow their businesses, create jobs and stimulate the regional economy. With its world-class university, strong private/public support, and a growing number of entrepreneurs in high-growth industries, Madison, Wisconsin, has the resources needed to become a regional entrepreneurial hub located along the budding capital corridor between Minneapolis and Chicago. The Madison Entrepreneur Center, Inc. (MEC), seeks to become the heart of Madisons entrepreneurial ecosystem. The MEC will provide startups with affordable, flexible office and co-working space and create a centralized location for entrepreneurial resources (funding, legal resources, etc.), accelerator support, peer and mentoring resources, education and training, and community building activities. MECs facility will include: Subsidized co-working space with short-term leases and flexibility for early-stage companies Quality, at-market office space for high-growth companies A permanent home for Sector67 (http://www.sector67.org), Madisons successful makerspace/ prototyping center for next-generation manufacturing technologies gener8tor (http://www.gener8tor.com), a startup accelerator that provides community, capital, expertise, mentorship and network through a 12-week intensive curriculum A healthcare IT incubator to support the growing number of healthcare IT startups spun off from Epic Systems or started by former Epic employees Space for other entrepreneurial resources, such as funders, investors, law firms, and other professional service providers Community and auditorium space for Capital Entrepreneurs (http://www.capitalentrepreneurs. com/) and other entrepreneurial activities and events MEC will integrate Madisons existing entrepreneurial community into a vibrant, interconnected ecosystem that will spur startup development and better connect local entrepreneurs to larger regional resources.

Basement Madisons Entrepreneurial Comand Ready for Growth munity:

A new breed of startups is emerging in Madison and around the region. These startups focus on innovation and next-generation technologies in high-growth industries, such as technology, software development, biotech, advanced manufacturing and healthcare IT. A majority of these startups are high-risk, high-growth companies that differ from traditional businesses in how they operate and what they need to succeed. Most require significantly less capital to get off the ground (thousands of dollars, not millions) and have shorter product development cycles (months, not years). They often cant accurately predict where their company will be in the future. In one year, they could employ hundreds of people or be out of business. The entrepreneurs leading these startups also differ from traditional companies in that they prefer collaboration over competition. They share resources and advice, and as a result, they seek to build community alongside their companies. Although many of these high-risk, high-growth startups do not succeed, those that do become important economic engines for job creation and growth. Madisons startup companies have seen significant growth and momentum in the last few years, resulting in hundreds of new jobs. For example, prominent technology startups in Madison include:

Prominent Soft-tech Startup Companies Located in Madison

Name Shoutlet Networked Insights PerBlue Asthmapolis StudyBlue Nordic Consulting EatStreet Founded 2004 2006 2008 2009 2009 2009 2010 Funding 24.2M 29M 800k 5M 14.9M 2.7M Employees 120 60 30 20 18 200 20

The Madison area is a fertile place for business startups. Even during the economic recession, the number of small businesses in Dane County with fewer than 50 employees grew by 6.5% , while across the state businesses in this category decreased by 1.1%. Innovation, and support for innovation, are factors contributing to the growth of start-ups in the area. Patents awarded to businesses in Dane County between 2006 and 2010, a total of 1,400, accounted for 21% of the patents awarded in Wisconsin.

Madisons Entrepreneurial Basement Community: Ready for Growth and

Madison already has many of the components of other like-sized communities, such as Austin, Portland and Boulder, which have all experienced startup renaissances in recent years: an educated and talented workforce a world-class university and technical system driving innovative research a high-quality of life and exceptional public amenities, which are important for recruiting and retaining highly skilled employees Madison also enjoys unique benefits from its close proximity to Epic Systems, which recruits top graduates from around the nation to work in Madison. Epic employees (current and past) possess specialized skills that when coupled with our strong hospital system, make Madison a prime location for a healthcare IT cluster. In recent years, Madisons entrepreneurial activity has matured into a more active community, including the founding of three MEC partners: Sector67, Capital Entrepreneurs and gener8tor. Sector67 is a community workspace/makerspace/prototyping center founded in 2010. Rated as one of the top-5 makerspaces in the country, Sector67 provides members with the education, resources and support to work with next generation technologies, including welders, injection molders, mills and 3D printers. In less than three years, Sector67 has become a nexus for entrepreneurial and artistic creativity, creating multiple entries and winners of business plan competitions and accelerating dozens of startups and small businesses. (http://www.sector67.org) Capital Entrepreneurs is a community group of Madison area entrepreneurs. Founded in 2009, Capital Entrepreneurs has become a cornerstone of the Madison entrepreneurial community with over 200 member entrepreneurs representing 100 startup companies. Capital Entrepreneurs contributes significantly to improving and growing the Madison tech and entrepreneurial communities. They are involved in organizing events such as the Forward Technology Festival, Startup Weekend, and Build Madison, as well as various tech conferences and meetups. (http://www.capitalentrepreneurs.com) gener8tor is an accelerator located in Madison and Milwaukee that invests its community, capital, expertise, mentorship and network in early-stage startups. gener8tor provides services and support throughout the lifecycle of a new company through a 12-week intensive curriculum. To date, gener8tors thirteen companies have gone on to raise over $5 million dollars in private funding and have created over 70 jobs. (http://www. gener8tor.com)

Realizing the Potential of Our Entreprenurial Community

Despite Madisons advantages and recent startup successes, the potential for Madison and the surrounding area is much greater. Some estimate that the Madison region captures only 25% of the possible angel and venture deals available, and leaders within the venture community indicate that Madison could be the next city to experience a startup boom. So what is Madison missing? What do our entrepreneurs need to succeed? For innovation-based startups, success often depends on getting the most done with limited financial resources. As with any business, this can be done by reducing costs as well as improving efficiencies. Entrepreneurs identify the following as important components to success: quality, flexible and affordable office space connected to amenities and community resources access to funding and support access to experienced service providers and reducing costs of such services strong peer and mentor networks Beyond an individual entrepreneurs needs, Brad Feld, author of Startup Communities: Building an Entrepreneurial Ecosystem in Your City and co-founder of TechStars, says that a successful entrepreneurial ecosystem must: be led by entrepreneurs in a network-like manner have long-term commitment to building the community be inclusive hold activities and events that enrich the startup community In his book, Triumph of the City, Harvard economist, Edward Glaeser, states that to thrive, cities must attract smart people and enable them to work collectively.

Realizing the Potential of Our Entreprenurial Community

Bringing these components of entrepreneurial success together in a centralized location has proven a successful model in numerous cities and regions around the country: 1871 - Chicago
http://www.1871.com/

Located in the historic Merchandise Mart, 1871 opened in May 2012 as a 50,000 ft2 central address for entrepreneurs in Chicago. 1871 provides Chicago startups with affordable workspace and access to mentors, programming, educational resources, potential investors and a community of like-minded entrepreneurs. Today, 1871 is home to more than a hundred technology-focused startups. In one year, 1871 has supported 225 startups that created 800 jobs and that are estimated to create an additional 1,342 new jobs in the next 12 months. To date, 1871 has raised nearly $30 million in capital and added $13 million in revenue to the local economy.[ii]

[ii] Kim, Judith, A New 1871: Chicagos Digital Startup Community Booms, Northwestern Business Review, 11 May 2013 (available at http://northwesternbusinessreview. org/the-next-1871-chicagos-digital-startup-community-booms/).

Realizing the Potential of Our Entreprenurial Community

MassChallenge Boston
http://masschallenge.org/

MassChallenge hosts an annual global accelerator program and startup competition in which startups receive free office space, mentoring; access to investors; marketing and media support; organized training; and networking events. Winners of the competition share a $1M prize and over $10M in on-going support. Since its founding in 2010, MassChallenge startups have created 2,912 jobs, raised over $360 million in capital, and generated over $96 million in revenue.[iii]

[iii] See masschallenge.org/accelerator/results.

Realizing the Potential of Our Entreprenurial Community

Downtown Project - Las Vegas
http://downtownproject.com/

The Downtown Project aims to create a dense urban core with at least 100 people per acre and ample ground-level spaces to gather. Downtown Project seeks to provide community and co-working space for the technology, fashion, photography, art and music fields.[iv] The Downtown Project started in January 2012 with a five-year $350 million private investment fund, of which $50 million is dedicated for small business and $50 million for technology startups. To date, Downtown Project has created 454 jobs to date and invested in 23 tech startups and 10 small business.

[iv] See http://downtownproject.com/

Realizing the Potential of Our Entreprenurial Community

General Assembly - New York City
https://generalassemb.ly/ Density Creates Serendipity To thrive, cities must attract smart people and enable them to work collaboratively. Harvard economist, Edward Glaeser, argues that community development is more about connected communities than anything else in his book, Triumph of the City.

Located in the historic Flatiron District, General Assembly, opened in January 2011, as a co-working space for design and technology entrepreneurs. Complete with classrooms, break-out spaces, library, top-notch media facility, a kitchen and more, General Assembly promotes the collaborative exchange of ideas; offers regular educational programming open to the public; and provides affordable workspace. Learning from these models, MEC seeks to create a centralized headquarters where Madisons entrepreneurs can work, collaborate, learn and contribute back to the broader entrepreneurial community. If successful, MEC will help startups raise more capital, create hundreds of jobs, and add millions in revenue to the local economy.

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Project Details
As the heart of Madisons entrepreneurial ecosystem, MEC will provide a centralized location for entrepreneurial resources (funding, legal resources, etc.), accelerator support, peer and mentoring resources, education and training, community building activities; and affordable, flexible office and co-work space. Sector67 Sector67Madisons successful makerspace/prototyping center for next-generation manufacturing technologieswill be the facilitys anchor tenant. In less than three years since opening, Sector67 has outgrown its current space. As the MECs anchor tenant and due to its building requirement, Sector67 will lease the entire basement floor (approximately 13,500 ft2) of the MEC facility. Sector67s space will include an atrium open to view from the main floor. gener8tor gener8toran accelerator program located in Madison and Milwaukee that invests its community, capital, expertise, mentorship and network in early-stage startups through a 12-week intensive curriculumwill lease approximately 2,800 ft2 of office space on the 2nd floor. Auditorium / Event Space According to Brad Feld, co-founder of TechStars, a successful entrepreneurial ecosystem needs activities that enrich and educate the startup community. Activities cross-pollinate and encourage collaboration and problem solving. Currently, Madison area entrepreneurs lack a central location for holding large community activities. Local entrepreneurs indicate not only the need for, but also the desire to host such activities. To meet this need, MEC will include approximately 3,000 ft2 of auditorium/flex space to be used for community activities, presentations, education and training, competitions, and networking events sponsored by both MEC and others. Community Space The heart of a creative community is the open, public spacesthe coffee shop, bar, caf, even bathrooms and vending machineswhere people bump into each other, make spontaneous connections and collaborate to solve problems. For this reason, the main floor of MEC includes approximately 5,300 ft2 for a caf

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Project Details
Subsidized Office Space One of the critical needs and significant costs for young startups is flexible office space. Startups often need short-term leases that allow them to adapt to their fast paced development as well as the ability to expand without incurring the costs and lost time of moving locations. Lack of credit and guarantees can make traditional commercial leases difficult for young startups. MECs facility will include approximately 4,500 ft2 of subsidized office space, consisting of offices ranging from 250 to 750 ft2, as well as an additional 600 ft2 of co-working space. MEC anticipates offering 6-12 month leases at $12-15/ft2. MEC is also working with the Madison Chamber of Commerce to explore the Chambers willingness to provide guarantees for the leases. At-Market Office Space MECs facility will provide approximately 28,600 ft2 of at-market office space that will allow growing startups to expand with minimal inconvenience. Established companies looking for a community setting could also rent the space. Designed with maximum flexibility, office suites will range from 1,000-5,000+ ft2 with 1-5 year leases at $15-26 ft2. Healthcare Tech Incubator With its close proximity to Epic Systems and the world-class UW hospital, Madison has a growing number of startup companies in healthcare technology. MEC proposes to provide healthcare tech startups a central location to work, share resources and collaborate. The healthcare tech incubator will consist of approximately 5,300 ft2 of office and co-working space. Satellite Offices The MEC facility will also offer approximately 2,800 ft2 consisting of seven satellite offices for funders, investors, law firms, and other professional service providers. Proximity between entrepreneurs, funders and professionals fosters stronger networks and breeds mutually beneficial collaborations.

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The MEC Project Team

This project is being championed by a team of leaders from the entrepreneurial, tech, and civic communities. The team has followed an open an inclusive model when shaping the project and has welcomed input and involvement from various individuals and entities from throughout the community along the way. Collaboration and support across the board is key to making this project come together. Chris Meyer Chris is the founder and director of Sector67. He is a recent graduate of UW-Madison. While a student he competed in many student invention and business plan competitions, winning over $30,000. After graduating, he founded Sector67, a hacker/makerspace in Madison.

Scott Resnick Scott is the COO of Hardin Design and Development. The company specializes in mobile and web applications for Fortune 500 companies such as Mercedes-Benz, Coleman Camper and FedEx. He primarily oversees over new business development, account management, and portfolio investments. Scott is also a member of the Madison City Council.

Forrest Woolworth Forrest is a co-founder and the director of Capital Entrepreneurs, a group dedicated to fostering entrepreneurship in the Madison area with over 200 member entrepreneurs. He is also an original team member and COO of PerBlue, a mobile and social gaming startup in Madison. He previously worked for Cisco Systems and GE Healthcare, and graduated with a double major in Computer Engineering and Computer Science from the University of Wisconsin.

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The MEC Project Team

Troy Vossellor Troy is the co-founder of gener8tor (www.gener8tor.com), a startup accelerator that invests its community, capital, network, mentorship and expertise in early-stage startups. Troy earned his BA, MBA and JD from the University of Wisconsin. As an undergraduate, Troy founded the apparel company Sconnie Nation (www.sconnie.com). Sconnie Nation markets a line of clothing that focuses on celebrating the Wisconsin lifestyle. Troy is also an experienced business attorney, having worked as an Assistant Clinical Professor for the UW Law Schools Law & Entrepreneurship Clinic (www.uwle.org), a program providing free legal services to startup businesses and entrepreneurs. Other members of the project team: George Austin (project manager), Terry Sivesind, Pam Christenson, Eric Englund, Anne Smith, Chandra Miller Fienen and Rob Gottschalk.

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Timeline
Fall 2012 MEC Leadership Team formed

Winter/Spring 2013 Initial site evaluation completed Proposals received from top three sites Kleuter Building selected as MECs preferred site Project facilitator added to the MEC Team

Summer/Fall 2013 MOU redevelopment of Kleuter Building executed Developer selected Project funding sought Project plans completed Municipal approvals received

Winter 2013 Construction commences

Fall 2014 Construction completed and MEC opens

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Site Selection & Facility Details

Site Selection MECs leadership team identified and reviewed 22 possible structures in various conditions, sizes, and locations throughout Madison, Wisconsin. The team evaluated the sites based on availability, affordability, compatibility with the requirements of Sector67 (the projects anchor tenant), and willingness of developer to partner. After this preliminary evaluation, the team asked three properties to submit a detailed proposal and ranked each proposal using with the following criteria: surroundings (proximity to coffee shops, green space and bike paths), cost, timing, risk, ownership and community reaction. In March, the team identified the Kleuter Building at 925 East Washington as its preferred site. Owned by Archipelago Village, LLC, the site is a 42,900 ft2 1930s Craftsman-style, 5-story warehouse.1 The cornerstone of the East Washington industrial district, the site is currently vacant and was last used as a warehouse for Mautz Paint eleven years ago. According to the City of Madison and the Madison Trust for Historic Preservation,2 the site is a potential city landmark and redevelopment site. The current structure is antiquated and requires substantial investment for a new roof, HVAC, windows and elevator shaft. However, the concrete structure is well intact, provides a completely open floor plan, and has an authentic look and feel. Consultation with Tri-North indicated it is less expensive to add an addition to the building rather than to make the repairs internally or demolish and rebuild. The new addition will add approximately 6,000 ft2 to each floor[cmf2] and include a new elevator and bathrooms. Current plans call for the building to become LEED Gold certified and contain the HVAC System requirements of Sector67. Following an April 2012 survey on space requirements of Capital Entrepreneurs companies, office spaces were designed along preferable rates, square footage and lease terms.

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Site Selection & Facility Details

Facility Details The existing 5-story building will remain and has approximately 10,000 ft2 per floor (~8,000 ft2 usable). The addition will consist of a new 5-story building adjacent to and integrated with the existing structure. The addition will have an additional ~5,000 ft2 per floor[cmf4] . The addition will include a 2,300 ft2 core containing an elevator, stairs, bathrooms, lobby in the basement/first floor, and shared conference room on floors 2-5.

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Site Selection & Facility Details - Basement

Space Overview:
8,192 sq ft existing + 5,376 sq ft new Entire space to be used by Sector67 Notes: Existing space was the base ment of the building and has low ceilings New space will extend to the 1st floor with approximately 20 ft ceilings

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Site Selection & Facility Details - First Floor

Space Overview:
Main entrance with restrooms and elevators Coffee Shop/Caf/Bar with co-working space (5,300 ft2) Satellite office space for ~7 possible VCs, Angel Groups, UW resources, supporting businesses, etc (2,800ft2) Atrium space of Sector67 (3,000 ft2)

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Site Selection & Facility Details - Second Floor

Space overview:
Auditorium / flex space (3,000 ft2) gener8tor office space (2,800 ft2) Subsidized startup office space (offices ranging in size from 250-750 ft2) and 600 ft2 of additional co-working space[cmf1] (5,120 ft2) Office spaces: $12-15 / ft2 Six-month to one-year leases

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Site Selection & Facility Details - Third Floor

Space overview:
Health Care Tech Incubator (5,300 sq ft) Office space suites ranging in size from 1,000 2,500 sq ft (6,000 sq ft total) Office spaces: $15-17 / sq ft One to two year leases

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Site Selection & Facility Details - Fourth Floor

Space overview:
Office space suites ranging in size from 2,500 5,000 sq ft (11,000 sq ft total) $17-22 / sq ft Two year leases

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Site Selection & Facility Details - Fifth Floor

Space overview:
Office space suites ranging 5,000+ sq ft in size (11,300 sq ft total) $22-26 / sq ft Three to five year leases

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Partners

Sector67 Inc was founded in September of 2010 as a non-profit center for prototyping, technology, and advanced manufacturing - also known as a community workspace or hackerspace. In 2010, there were less than 300 of these workspaces around the world, there are now well over 1000. Sector67 was formed to provide a workspace to anyone looking to create or learn about next generation tools or technology; be it art, software, hardware, or electronics. The people who have used this workspace over the past three years can be generally categorized as hobbyists/tinkerers, entrepreneurs/consultants, or students of all ages. Sector67 has helped over 50 local businesses form or advance their products, hosted over 200 members, over 400 classes, and over 100,000 website visits in the last 3 years. By the numbers, weve been successful, but beyond the numbers one of our member projects have been featured on the cover and inside two national magazines, on the Martha Stewart Show, and in a global hardware accelerator program. Competing in local technology and business plan competitions, our member projects have won over $50,000 with our support. All of this has been possible with an annual budget under $50,000. Sector67 provides specific resources which are otherwise difficult or expensive to generally access. We provide over 6,000 square feet of shared workspace, divided into metal working space, wood working space, automotive space, a machine shop, 3D printing area, conference room, computer lab, class room, kitchen, and shared office space. Our list of available equipment ranges from welding robots, injection molders, 3D printers, laser cutters, and CNC equipment, to a pottery wheel, knitting machine, vinyl cutter, and a giant LEGO table. By hosting a variety of equipment that attracts individuals of a diverse background, Sector67 provides a neutral third space that promotes interactivity which spurs ideation and creativity.

Contact: Chris Meyer Director Sector67 team@sector67.org

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Partners

State-shaped frying pan created at Sector67 was featured on the Martha Stewart Show

Sector67 was featured on the cover of Make and Wired

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Partners

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Partners

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Partners

Capital Entrepreneurs is a community group and peer group for Madison area entrepreneurs. Capital Entrepreneurs was started in 2009 and has quickly grown to become a cornerstone of the Madison entrepreneurial community. The entrepreneur only group has grown to over 200 members representing around 100 startup companies since its founding. Capital Entrepreneurs members are leaders in the broader community and contribute significantly to improving and growing the Madison tech and entrepreneurial communities. They organize events such as the Forward Technology Festival, Startup Weekend, Build Madison, various tech conferences and meetups, and more. Members run startups in a wide range of industries including gaming, music, healthcare, clothing, food, and more. While there is a wide range of demographics and industries represented, our members tend to be mostly younger (20s and 30s) and a majority of their businesses are in the IT startup space. The role of Capital Entrepreneurs is to foster and support entrepreneurs, and the Startup Central Project fills an important role in the community. This project is one of the most significant ventures of its kind in the country and will take the Madison entrepreneurial community to the next level. 2012 Capital Entrepreneurs Startup Scene Recap: http://www.capitalentrepreneurs.com/2012-recap-the-madison-startup-scene/ Web: http://capitalentrepreneurs.com Twitter: @CEntrepreneurs Contact: Forrest Woolworth

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