tNanova Inc.The right team is as important as money

Since it was first profiled in 2008, biomedical device firm Nanova Inc., formed by two University of Missouri professors with help

from the MO SBTDC, recently signed an agreement with the WuJin Economic Development District, Chinese venture capital firm SummitView Capital and other Chinese investors to produce bioabsorbable bone screws, coronary stents and new dental health products based upon the company’s core nanomaterial technology. About $6 million will be invested directly in Nanova.

That’s the happy ending – so far. But it took some time to get to that point.

Dr. Hao Li’s journey to entrepreneurship began 10,000 miles away at Xi’an Jiatong University, one of the top engineering schools in China. He came to the U.S. to earn his doctorate at Stevens Institute of Technology in New Jersey and pursue post-doctoral work at Brown University in Rhode Island. His journey then brought him to the faculty of the University of Missouri in Columbia in 2005.

Shortly thereafter, Li incorporated Nanova with the help of colleagues Dr. Quingsong Yu, MU assistant professor of mechanical engineering; Dr. Meng Chen, an electrical engineer with 10 years of experience in medical devices; and Dr. Kenneth Lambert, an orthopedist, with a long-term goal of helping researchers develop and commercialize better medical devices in the orthopedic, dental and cardiovascular areas.

Dr. Jim Gann, director of technology business development with the MU SBTDC, has advised Li and Yu since Nanova was founded in 2006. Gann and a team of MO SBTDC technology business

development specialists including Denise Fields of the University of Missouri-Kansas City (UMKC) SBTDC and Bill Stuby of the MO SBTDC’s companion program, the Missouri Procurement Technical Assistance Centers, helped the scientists with business planning and development. This included conducting intensive market research, obtaining federal Small Business Innovation Research and National Institutes of Health funding and facilitating introductions to key stakeholders in Columbia and in Missouri.

Li estimated that Nanova, with MO SBTDC help, has already received $10 million in product research and development funding before consummating the recent agreement.

“We received multiple investment offers,” said Li, “and we declined quite a few.” Li and his partners were waiting for investors who could move the firm’s products to commercialization. The new investors hope to bring Nanova’s products to market in China and the United States.

The Nanova researchers are continuing development on bioabsorbable nanofibers for reconstructive use in the human body and a plasma brush that may revolutionize

dentistry. The nanofibers are 3,000 times stronger than calcium carbonate, says Li, and stronger than stainless steel and the carbon fiber used to manufacture some components of commercial and military airplanes. The plasma brush uses chemical reactions to disinfect and clean cavities, then uses fluorescent light and electrodes to form a “cool flame” that delivers and bonds dental sealer. Collaborative research on the brush included scientists from the UMKC School of Dentistry and the University of Tennessee-Memphis. Clinical trials with the brush have already been conducted. It will be ready for FDA clearance in a year or so, said Li.

The Chinese venture capitalists will invest an estimated $7 million in joint ventures, $4 million directly in the firm’s Columbia operations in the next two years. Most of the firm’s domestic manufacturing and sales will be conducted in Columbia.

Li said he was very grateful to the MO SBTDC and all of Nanova’s other partners for their investment, business acumen and enthusiasm. “For success in business in the long term, the right team is at least as important as money,” he said.

The odds of a new small business surviving more than five years are less than 50 percent. It helps to have a trusted advisor or coach to help you through the process. Entrepreneurs who engage with programs like the MO SBTDC have a stronger likelihood of beating those challenging odds.

July 2013

The statistics aren’t very encouraging. The U.S. Small Business Administration estimates that nearly 70 percent of

new businesses survive two years; about half will make it to the five-year mark. Those numbers only underscore the determination and expertise of owners

whose companies make it to 10 or 20 years – or longer. No one ever said business ownership would be easy. But nearly all entrepreneurs will tell you that it is harder than they ever imagined.

The reasons a business might fail are complex and varied. It’s not always as simple, for example, as being under-capitalized, although that can spell disaster. One of the most common reasons is a failure to clearly identify a market for the product or service you offer or an inability to effectively respond to the needs and desires of that audience.

Another common cause is a failure to plan for success. Believe it or not, too much success too soon can send a young company into a negative spiral. As Dwight Eisenhower said, “Plans are worthless, but planning is everything.” The most valuable part of a plan is the thinking that goes into creating it.

Many businesses simply die from neglect or poor management. Few of us are born natural business people. In the vast majority of cases, an entrepreneur is an innovator who has found a new way of offering a service or making something. Rarely does that talent combine innately with management skills.

However, there are ways to enhance your chances for success. In the stories that follow, you’ll meet three Missouri companies that have survived.

The owners’ reasons for starting their enterprises vary. One wanted to help others by inventing tools to aid in more effective medical and dental treatment. Another wanted to be in control of his own destiny after experiencing a layoff. And still a third was simply pursuing a passion.

But they all have one ingredient in common. They all sought assistance from the Missouri Small Business & Technology Development Centers (MO SBTDC). We’ve profiled them before, but we thought it would be interesting to ask the question: “Where are they now?”

Patric ChocolateFrom bean to bar…and beyond

The MOSBTDC first profiled Alan “Patric” McClure, founder of Columbia’s Patric Chocolate, in 2007, just after he started the business. He had just begun to sell his ultra-premium chocolate bars, and the future looked

very bright. That prediction proved accurate. When the MO SBTDC profiled him again in early 2012, the firm had a quarter million dollar in sales, and its reputation for fine chocolate had spread throughout the U.S. By mid-2013, yearly sales had increased to $300,000, and the firm’s reputation was global. Here’s an update.

Where are they now?

TRANSFORMATION is published by the Missouri Small Business & Technology Development Centers, with assistance from the U.S. Small Business Administration, University of Missouri Extension, Missouri Southern State University and the Joplin Area Chamber of Commerce. All opinions, conclusions or recommendations expressed are those of the author(s) and do not necessarily reflect the views of the SBA. Questions and comments may be directed to Mary Paulsell, Director of Communications, MO SBTDC, at 573/882-1353 or paulsellm@missouri.edu.

The MO SBTDC is funded in part through a cooperative agreement with the U.S. Small Business Administration.

MO SBTDC assistance helps position firms for long-term success

In his laboratory at the University of Missouri, Hao Li and his business partners are using nano-technology to develop cutting edge medical and dental devices.

The tweet sent shock waves through the chocolate-loving community.

Alan “Patric” McClure, owner of Columbia’s award-winning Patric Chocolate, founded in early 2006, advised by the MO SBTDC since the business’ beginning and profiled in 2007 and 2012, wrote, “It’s official. We’re stopping chocolate production for good and starting to do beef jerky and pickles instead.”

Microbatch chocolate fans worldwide gasped in dismay – until one chocoholic noticed the date: April 1. April Fools. Good thing it was only a joke, because Patric has gained the reputation of being one of the best chocolate makers in the world.

The tweet’s offbeat humor is typical of McClure, who doesn’t have a background you’d associate with a chocolate maker. He didn’t grow up in Europe; prefers punk rock to classical music; wasn’t born into wealth and privilege; and didn’t major in chemistry, agriculture or business. His major at MU was religious studies. He did meet and marry a Frenchwoman while studying religion, and they lived for a year in France where McClure re-discovered excellent chocolate. He remembers his father bringing back French chocolate from a trip to Europe.

“I never had a lot of French brands, and when I was able to try them in France it really opened my eyes,” McClure says. “I was experiencing flavors I never tasted, trying to figure out why they were there. After doing more research, I realized it was the quality of the cacao beans the chocolatiers were buying.”

Returning to the states, McClure realized there were no good reference works on craft chocolate and had to track down books from the 19th and early 20th centuries. He also realized the equipment needed to make extremely high-quality, small batches of chocolate just didn’t exist. So he essentially created his own, working with a Georgia manufacturer of cocoa grinders, pre-grinders and roasters.

“I worked backward,” McClure explains. “I started with chocolates I liked then figured out why I liked them and what

equipment I needed to get the qualities I wanted.”

Now McClure’s expertise helps sell this machine. “When people hear these are the same machines Patric Chocolate uses, they want to buy them,” the manufacturer’s president was quoted as saying in an industry publication. “They want to achieve that same high level of quality. But no one is as good as Patric Chocolate.”

This is not the sort of chocolate you find in supermarkets or in big gift boxes. That’s chocolate candy. This is chocolate made from scratch, beginning with cacao beans from plantations in places like Madagascar, Belize and Peru – places that McClure has personally visited -- then meticulously processed the cacao into such premium bars as the Signature 70% Blend, containing only cocoa beans, cane sugar and cocoa butter; a 75% blend made from Madagascar cocoa beans; limited edition or novelty bars such as Mizzou Crunch or a spicy red coconut curry bar; hypercaffeinated Mocha and Cappuccino OMG bars, made with Kaldi’s Coffee espresso 700 blend; and the best-selling PBJ OMG bar, made with natural peanut butter.

This relentless inventiveness, obsessive attention to detail and mixing and matching flavors from comfort and exotic foods alike has garnered accolades from MSNBC (for the Kaldi’s Coffee bars) and such publications as The New Yorker, Los Angeles Times and Forbes. It has also boosted sales.

In 2007, Patric had $12,000 in sales. That figure climbed to $250,000 in 2011 and reached about $300,000 in 2012.

In 2009, McClure was also elected chair of the newly formed Craft Chocolate Makers of America, and in January of this year, won three coveted Good Food Awards for a 67% cacao and a 75% cacao Madagascar bar and the In-NIB-itable bar, made of 70% Madagascar cocoa with nibs,

or flecks of unprocessed cocoa beans. This brings Patric’s total to five awards over the past three years alone.

The MO SBTDC became involved in this amazing story early on, when McClure was learning his craft and becoming adept at making chocolate but admitted he had a lot to learn about business. So he contacted MO SBTDC counselor Virginia Wilson. Together, they refined his business plan and financial projections, and she helped him determine the level of financial resources he needed to start a production facility, obtain equipment and procure a steady flow of premium cacao. She continues to advise and review his plans as the business evolves and expands.

For example, McClure says he’s outgrown a 1,800-square foot chocolate factory in Columbia and is working on plans to expand to a space as large as 4,000 square feet, but that nothing concrete has been decided yet.

“At the moment, there is a lot more work to be done in terms of offering high-quality chocolate and chocolate products to our fans throughout the U.S.,” says McClure. And he keeps searching for new flavors. Patric chocolate is available in stores in Columbia, St. Louis and Kansas City and online at patric-chocolate.com.

Simms Building Group, Inc.Riding out the storm

Simms Building Group, Inc., of St. Louis was first introduced to readers of MO SBTDC success stories in 2011. But the firm’s story

started long before that. In 2003, construction engineer

Floyd Simms was working as a project director for a St. Louis-area construction management company. In the middle of the project — an airport-related parking facility at Cypress Avenue and I-70 — his employer ceased operation.

“They told us on a Tuesday, and by Friday the doors were closed,” recalls Simms. “It was right then that I decided if the doors were ever going to close again on a company where I worked, I was the one who would close them.”

The path that took Simms to business ownership was one of successful progression. After earning a bachelor’s degree in civil engineering from the University of Missouri’s College of Engineering, Simms spent six years in bridge and highway construction with the Illinois Department of Transportation. He later returned to St. Louis where he worked for the city as a project manager at Lambert Airport. That three-year experience led him to a design position with Parsons-Brinkerhoff construction, at which he designed and built the runway extension for Lambert Field. He was working on the Cypress Avenue parking facility when he began to think seriously about starting his own company.

He incorporated on Nov. 4, 2003, forming the Simms Building Group, Inc. He was a one-man band for a while, but soon hired his first employee, an administrative assistant to keep the operation organized.

Soon Simms Building Group landed its first job as general contractor on the Cahill House senior living complex in north St. Louis. While

that job was underway, Simms kept searching for more projects.

“In the construction industry, you have to be looking at least 12 months ahead for work,” he says. “It’s the nature of the business.”

The construction jobs kept coming. The St. Louis Housing Authority needed a two-story office building. Eagle Bank & Trust Co. wanted its new bank facility to include virtual teller stations. Simms built office,

laboratory and maintenance structures for Center Oil’s ethanol plant. The company also worked on school remodeling projects, such as Jana Elementary School in Florissant.

But by 2008, the flow of jobs started to slow. Simms knew he needed some outside help to get the company through the downturn.

Kevin Wilson, director of the St. Louis SBTDC; Carolyn Jones, director of the Missouri Procurement Technical Assistance Center-St. Louis; and other St. Louis area business counselors stepped in to help. Even though Simms had considered shutting the doors, Wilson helped him

view his firm from a new perspective and suggested he enroll in FastTrac courses.

Wilson and Simms explored HUBZone (Historically Underutilized Business Zone) certification, low-interest Urban Enterprise Loan (UEL) eligibility and other funding programs. The UEL is designed to stimulate economic development and create jobs in urban communities.

Wilson helped Simms apply to the UEL program, and the UEL granted the Simms Building Group a loan in April 2012.

Simms wrote to Wilson, “Wanted to let you know that we closed today on the UEL! I also wanted to express my sincere gratitude for your helping me through this process. This UEL is the start of Simms being able to rebuild. These funds will help bridge us through upcoming work that can turn the company around in less than a year. Thanks again.”

As a direct result, in 2012, the Simms Building Group added five jobs when most construction firms were laying people off. Revenues rose nearly $4 million, to $12 million.

Simms and Wilson continue to consult, exploring organizational change, coaching skills, implementing new technology, developing new strategies and services and implementing other potential changes.

“I’m just glad I’m able to help,” says Wilson. “His [Simms’] company is now trending in a positive way and looks a lot better than last year. I feel confident they will grow as St. Louis’ economy grows.”

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In 2007, Patric had $12,000 in sales. That

figure climbed to $250,000 in 2011 and reached about

$300,000 in 2012.

“I decided if the doors were ever going to close

again on a company where I worked, I was the one who would close them.”

Floyd Simms was able to keep his construction company in business, even during a recession, thanks in part to the help provided by the MO SBTDC.