Organization Focus: The Enterprise Institute
Where can an entrepreneur go for guidance when their product is selling like hotcakes but they can’t keep up with demand? Or when they can’t make necessary hires because of cashflow issues? Or when the only way to bring their product to market is to build a multi-million dollar processing facility, and they don’t yet have millions of dollars lying around? Enter the South Dakota Enterprise Institute.
The Enterprise Institute exists to serve high-growth companies and those who want to invest in high-growth companies. It sustains itself by providing specific fee-based services in this niche and with the help of some donations and grants. While they work closely with the Small Business Development Center (SBDC) and other government services, the Enterprise Institute is an independent non-profit. “We were created because of a gap and to specialize in that high-growth-company development consulting,” says Tom Eitreim, who is the program director for the Enterprise Institute. So if you’re working to start or grow a scalable business that may require risk capital, the Enterprise Institute is able to help you walk through that process.
For High-Growth Companies
You should contact the Enterprise Institute if you realize that your business or business idea has the potential to grow into a very large business (reaching seven figures or more), but that you’re going to need to look beyond your business’s current resources to get it there. You’ll talk with Tom Eitreim or with Tim Weelborg, the executive director, about your business and the types of financing available. You might discover that a bank loan is actually a better fit for your business. They might refer you to the SBDC for more general business planning if your business isn’t as scalable as necessary or isn’t ready for investment. “We have a really good working relationship with the SBDC, and often a referral to them later becomes a referral back to us when the company is ready and can see what their needs are,” explains Tom.
Those companies that are ready for growth and who do decide that it’s time to seek investment can take advantage of the Enterprise Institute’s primary service offering for entrepreneurs: an equity review. During the equity review process, the Enterprise Institute helps the entrepreneur to prepare their business plan and other documents with all the details that will be of interest to potential investors. The fee for this service starts at $500, but entrepreneurs can choose to add more consultation for an additional fee. The Enterprise Institute can even help startups practice their pitch before they go in front of potential investors.
The pitch-preparation process may also include deeper market analysis or a preliminary patent search, and the Enterprise Institute has access to data and software to help with this research. Fees for research services start at $300 and can help entrepreneurs to form more accurate projections or make a more compelling pitch.
The other side of the coin at the Enterprise Institute is administration of angel funds. An angel fund is a pool of money set aside by a group of accredited investors for investment in startup companies. The angel funds that the Enterprise Institute administers have the opportunity to invest in the same high-growth businesses that the Enterprise Institute is helping to prepare for investment. Not all businesses that work with the Enterprise Institute get funding from these angel funds, and these angel funds also invest in businesses that are not clients of the Enterprise Institute, but there is often some overlap. “We created the funds in response to a need, because a lot of our clients needed the capital, but it wasn’t organized in angel funds. There were people that would write checks, as individuals, but we like this model,” Tom says, explaining that angel funds can streamline the fundraising process for businesses while helping investors to diversify their investments across many startups.
Since the angel funds that the Enterprise Institute administers are member managed, the Enterprise Institute can stay out of the middle of the deals themselves, letting investors and entrepreneurs make their own decisions. The Enterprise Institute simply acts as support staff for the angel funds that choose to work with them. In this role, they manage the paperwork, file the taxes, and get ongoing reports from the companies that the angel funds invest in. “We make sure that the train is running,” Tom says.
For the Business Ecosystem as a Whole
The Enterprise Institute gets a broad perspective on business that few other entities have. By working with both entrepreneurs and investors, the Enterprise Institute is able to help both groups better than if they only worked with one part of the equation. They can help investors understand the needs of startups, and they can help startups understand what investors are looking for. Their work is to prepare these two groups to meet.
Other work that the Enterprise Institute does, such as hosting Innovation Expo conferences in Sioux Falls and Rapid City or judging at statewide business plan competitions, falls in line with this objective of getting the right people to meet each other. “What I’ve learned from working with businesses across the state,” Tom says, “is that, as we’re a smaller state, it’s good for people to meet people from other cities, talk shop, and interact.” Regarding Sioux Falls specifically, he adds, “Sioux Falls has a lot to be proud of. There’s a lot of people that want to help entrepreneurs and see them succeed.”
The Enterprise Institute has been staying busy, working with dozens of startup clients and administering nine angel funds. “We’ve seen a steady increase in clients as entrepreneurship begins to be seen as a viable career path and the ecosystem continues to build,” Tom says. “We see a good amount of deal flow.” When his friends wonder what he really does in his work, Tom can pull up a client’s website or point to a storefront and say, “See that business? When they needed to raise funding, we helped them. They were able to raise money from investors that we assembled.”
If your startup is ready to grow and might need to raise risk capital, contact the Enterprise Institute. Their main office is in Brookings, but Tom is here in Sioux Falls most of the week. His office is at 2329 North Career Ave, in the same building as Zeal and the SBDC, where he’s ready to help growing businesses make decisions and find the resources they need.