Adirondack Business Creators Phase 1 Project

Transcription

Adirondack Business Creators
Phase 1
Project Team Report
July 2013
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Executive Summary
The goal of Phase I of the Adirondack Business Creators initiative (ABC) is to determine if sufficient deal
flow and business concept opportunities exist within the Adirondack Region to successfully leverage a
pilot venture fund of approximately $10 - $12M. A team comprised of both ABC Advisory Council
members and external consultants have explored this question during these past two calendar quarters.
The project involved further participation, mostly through interviews, of over 100 domain experts within
and external to the Region. These individuals provided numerous inputs for the project team’s analysis,
and in some cases represented direct investment opportunities. In addition to these interviews, the
project team’s efforts were organized into a sequence of activities and milestones, including the
following:
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Establishment of business concept and investment opportunity screening criteria
Establishment of common templates for analyzing and presenting concepts and investments
Top-down sector analysis to identify gaps and opportunities among the Region’s assets,
markets, and industry clusters
Bottom-up analysis of identified business concepts, along with existing and/or prospective new
venture startups
Design and construction of a prospective investment fund outline, suitable for both presentation
to prospective limited partners and development of a formal private placement memorandum
Consolidation of analyses, conclusions, and recommendations into this report
Formal presentation of analyses and recommendations to ABC Advisory Council membership
From these efforts the project team has arrived at an affirmative conclusion to the project’s goal, and
recommends the formation of ABC Fund. Moreover, these recommendations include proposed initial
investments of $5.1M in the following business concepts and investment opportunities:
Business Concepts
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Adirondack Branded Marketplace
Craft Brewing Contract Incubator
Energy Savings Company
Tour Operator
Investment Opportunities
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Adk Packworks
Wholeshare.com
The following report describes these targeted portfolio investments in detail, and the process from
which these conclusions and recommendations were derived. We welcome your feedback.
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Table of Contents
Executive Summary
2
Team Members
4
Engagement Process
4
Investment Fund Structure and Outline
8
Top-down Sector Analysis / Conclusions
11
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Assets
11
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Markets
17
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Industry Clusters
20
Bottom-up Business Concept Analysis / Recommendations
23
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Tour Operator
42
Prospective Venture Opportunities / Recommendations
54
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Adk Packworks
55
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Wholeshare.com
56
Deferred and/or Culled Opportunities and Concepts
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59
TA-Europe
Conclusions and Recommendations
63
Appendix A – Slide Deck: Investment Fund Outline
65
Appendix B – Listing of project interviewees
72
Appendix C – Listing of reference information files
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Avail on Request
Team Members
Project Team:
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Mr. Mark Cornett – Project co-leader
Ms. Melinda Little – Project co-leader
Mr. Akash Gupta – Clarkson University MBA intern
Ms. Jessica McAlear – Clarkson University MBA intern
Steering committee:
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Mr. Lee Keet
Ms. Cali Brooks
Mr. Jim Herman
Mr. David Mason
Ms. Adele Connors
Mr. Mark Dzwonczyk
Mr. Dan Leff
Steering committee members were utilized throughout the engagement for consultation and advice.
Additionally, the project team and steering committee met twice during the engagement to review the
team’s progress and gain approval of specific design and process elements.
Engagement Process
The essence of this engagement centered on determining if sufficient deal flow opportunity exists within
the Region to support a small venture fund, and subsequently support the economic outcomes
associated with new venture activity. Expected deliverables include a) a short list of recommended
investments (concepts and/or existing ventures), and b) a fund raising document should ABC decide to
move forward to establish the venture fund.
The engagement process consisted of three phases, as illustrated below. The majority of effort that
comprised the Inputs Phase involved interviews with domain experts, entrepreneurs, and Region
advocates. The total number of interviewees exceeded 100 in number, and provided the project team
with numerous ideas, information, and referrals. A list of these individuals is provided in the appendix.
An important element to this phase was the project team’s focus on both a “top-down” and “bottomup” investigation of prospective concepts and opportunities. The top-down approach considered various
sectors (e.g., regional assets, markets, and industry clusters), and was utilized to identify potential
business concept opportunities by looking for “gaps” within a given sector that suggested a new venture
opportunity. The results of this high level, overview effort are presented in the Sector Analysis section of
this report. The bottom-up effort sought to identify specific concepts and opportunities, beyond those
previously identified by the ABC Advisory Council.
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To accomplish the Analysis Phase the project team developed and acquired several tools to facilitate a
consistent approach to screening and vetting both business concepts and existing venture opportunities.
These included a) a set of screening criteria, b) the “Business Model Canvas” template developed by
Alexander Osterwalder (www.businessmodelgeneration.com), and c) a common formatted economic
analysis template. The ranked screening criteria are shown here:
1. Economics – Does the business enjoy a strong economic model and IRR?
2. Market – Does the business exploit a growth market opportunity and/or a trend?
3. Competitive Advantage – Does the business have a competitive / differential advantage over
existing or prospective competition and alternatives? Does it have a strong value proposition(s)?
4. Regulation – Does the business enjoy a light regulatory burden, especially with regard to the
APA?
5. Scalability – Does the business have an inherent ability to be scaled throughout/beyond the
Region?
6. Model – Is there a similar business model of, and/or competition to, the proposed venture?
7. Exit – Does the business have a likely /obvious exit strategy? What would be the expected exit
valuation?
8. Regional Leverage – Does the business leverage a unique aspect of the Park through its location
therein (e.g., assets, existing markets, industry clusters)? Is there a disadvantage to locating the
business in the Park?
9. ABC Theme/Domain Expertise – Does the venture benefit from the domain expertise among
council members, and if so, with whom?
10. Capital Requirements – Are the venture’s capital requirements compatible with the objectives
and capabilities of the prospective ABC Fund?
11. Time-to-Market – How quickly can the venture become operational?
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12. Year Round – Is the business a year-round operation?
13. Regional Focus – Is the venture aligned with the regional strategy as described in such
documents as ADK Futures and Regional Economic Development Council?
14. Synergy – Does the venture benefit from other prospective ABC investments, local established
businesses, existing brand equities, etc.?
These criteria constitute the majority of each concept’s profile and summary overview. Below is the
Business Model Canvas template, followed by brief definitions of each element of the canvas.
Canvas Element Definitions:
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Customer Segments – Groups of customers an organization chooses to reach and serve
Value Propositions – The organization solves customer problems and/or satisfies customer
needs with value propositions
Channels – Communication, distribution and sales channels are used to deliver value
propositions to customers
Customer Relationships – These are established and maintained with each customer segment
Revenue Streams – These result from effective value propositions offered to customers
Key Resources – These are assets required to offer and deliver the canvas elements
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Key Activities – These are processes that utilize key resources to offer and deliver the canvas
elements
Key Partnerships – These are activities and resources that are sourced outside of the
organization
Cost Structure – These are the financial resources necessary to support and deliver canvas
elements
While the economic model template necessarily varies to some extent among concepts/opportunities
analyzed, the common template elements include the following:
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Pro forma income and balance sheet statements
Cost elements and capital requirements
Break-even analysis
Exit valuation and calculation of IRR
The use of these models is meant to provide the reader with a consistent format in which to efficiently
acquire the key information elements of the concept/opportunity. As such, each recommend concept
and opportunity is presented in three parts … a) narrative profile (against screening criteria), b) Business
Model Canvas, and c) quantitative/economic analysis.
This report represents the Outputs Phase of the project, and in addition to the previously mentioned
Sector Analysis, the report will present four recommended concepts and two recommended
opportunities (listed below). All six are fully presented in this report, using the tools/templates
described above.
Business Concepts
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Tour Operator
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Adk Packworks
Wholeshare.com
Additionally, a complete slide deck for use in presenting the ABC Fund concept to prospective limited
partner investors is presented herein and as a separate slide deck. Lastly, we have included a number of
additional concepts/opportunities that have either been deferred or culled from further consideration.
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Investment Fund Structure and Outline
Included here is an outline of the content that comprises the investment fund slide deck. The complete
deck in PowerPoint format is included in Appendix A.
Overview
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Mission of the fund is to stimulate economic and investment activity in the Adirondack Park
Fund is a Seed and Early Stage Venture Capital Fund targeting high-growth private companies
located in or proximate to the Park
Fund will utilize portfolio company Board participation to stimulate revenue growth and build
shareholder value
Fund will utilize two investment approaches …
o Conventional investment in existing business plans and existing ventures
o Development of target sector business concepts, followed by entrepreneur recruitment
Opportunity Factors – The Fund represents a strong investment opportunity, based on the following
factors:
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Adirondack Park has assets and markets that represent profitable business opportunities
Adirondack Park is an underserved capital market with little financial capital being invested in
seed and early stage companies
Domain expertise exists among ABC Advisory Council members that can effectively support a
variety of concepts and opportunities, allowing for a broader range of portfolio investments
than in typical venture funds
Fund Organizational Structure and Staffing – As the diagram below illustrates, the proposed investment
fund would be managed by several professionals, under the oversight of an investment committee
comprised of three ABC Advisory Board members.
Advisory Board
Advisory Board
Advisory Board
Managing
Partner
Analyst
Analyst
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Responsibilities of organizational members are described as follows:
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Investment Committee / Advisory Board
o Investment committee would be staffed by three members of the ABC Advisory Council
o Committee would retain investment decision authority over recommendations made by
Managing Partner
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Managing Partner
o Reports to Investment Committee/Advisory Board
o Responsibilities:
§ Investment recruiting, due diligence, deal structure, etc.
§ Entrepreneur recruitment for target sector business concepts, assistance with
business plan development and execution
§ Monitoring of existing portfolio companies
§ Stimulate deal flow via outreach activities across Park and Region
o Incented via salary, benefits, and share of carried interest
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Analysts (2)
o Report to Managing Partner
o Responsibilities – Assist Managing Partner with:
§ Due diligence of existing business plans
§ Development of target sector business plans
§ Monitoring of existing portfolio companies
§ Incented via salary, benefits, and share of carried interest
Target Investment Criteria – The Fund would utilize the following criteria for screening prospective
investment opportunities:
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Target investments to include seed and early stage ventures
Investment size to range from $200K to $1,000K with a 2:1 reserve
Security instruments would be preferred stock
Geographic focus would be within and proximate to the Park
Fund will seek target returns of 20% (gross annualized)
Investment Process
For conventional investment opportunities, the following investment process would be utilized by Fund
management:
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Deal sourcing and screening
Preliminary due diligence
Investment decision
Post-closing monitoring
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The investment process associated with Target Sector Business Concepts would include the following
steps:
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Sector analysis (done)
Business concept development (done)
Recruitment of entrepreneurial management
Business plan development
Funding and plan execution
Summary of Offering Terms – The following comprises the main elements of the Fund’s Offering Terms:
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Fund Type: Committed Fund
Fund Structure and Size
o Management LLC owned by principal funding sources
o Size: $12M
o Minimum commitment: $250K for individuals, $500K for institutional investors
Term: 10 years, plus up to one 2-year extension
Diversification and Reserve
o Maximum of 25% of Fund assets invested in any single portfolio company
o Investment Reserve: 2X initial investment per portfolio company
Interest and Fees
o Carried Interest: 20% apportioned among professional staff
o Management Fee: 4%
o Hurdle Rate: 5%
ABC-specific Risk Factors / Challenges – As part of any disclosure of investment risks specific and unique
to this Fund, the following should be cited:
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Lack of geographic diversification
Lack of investment diversity due to fund size
Difficulty recruiting qualified Managing Partner
Difficulty establishing sufficient deal flow
Difficulty recruiting qualified entrepreneurs for business concept opportunities
As previously mentioned a prepared investment fund slide deck is provided in Appendix A of this report.
Should the Advisory Committee decide to establish a fund, a formal private placement memorandum
should be prepared, incorporating the above elements.
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Top-down Sector Analysis
Our “top-down” analysis attempts to identify investment and business development opportunities
within “Sectors” of the Park’s economy, infrastructure and environment. In doing so, we sought
elements of each that represent unique advantages that stem from locating within or proximate to the
Park. This effort is meant to answer the question, “Why should ABC invest here, rather than regions with
existing and greater deal flow opportunities.”
For the purposes of this project we defined “Sector” as any of the following:
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Assets – These include tangible and intangible assets perceived by the project team as providing
the Region with potentially unique entrepreneurial and business development advantages.
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Markets – These include existing or prospective markets within the Park that are underserved
and otherwise offer opportunity for new business models to emerge and grow.
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Clusters – These include existing concentrations of industry related organizations that represent
startup opportunities, primarily in the areas of supply chain or related services and functions.
Also note that we will refer to both the “Park” and the “Region” throughout our analyses. By Park we
are referring to the territory within the Blue Line that represents the formal boundary of the Adirondack
Park, whereas by Region we are referring to the 13 counties that comprise what is often referred to as
the North Country. Below is a summary overview of each Sector [Concepts] as they pertain to our
recommendations of individual business concepts and investment opportunities, along with further
research opportunities.
Assets
The project team considered the most significant and substantive assets for which the Park is historically
known. In doing so, it is believed that resulting business concepts would have a differentiating
advantage over similar businesses outside the Park. Moreover, such business concepts would also have
an intrinsic link to the Park, thus making these business concepts more “sustainably resident” within the
Park. That is, if/when an ABC Fund investment underwent a future change of control, the business
would be more likely to remain “resident” within the Park.
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Environment [Tourism] – Like many of the world’s top tourist destinations, the Park is unique in its
structure, composition and natural beauty. However, the Park does not enjoy the same level of
awareness experienced by many of these top vacation destinations, nor is it easy for prospective visitors
to research and plan a vacation to the Park, given the disparate sources of relevant information. We
believe the Park’s vacation environment is an underutilized and poorly marketed asset, especially to
high net worth, international vacationers.
While the Park annually welcomes an estimated 7-10 million visitors, we believe significant opportunity
exists for expanding the Park’s ability to attract vacationers from further distances and of greater
financial means than the current composition of visitors. We envision two related business concepts, a
tour operator business and also a network of high end, luxurious camp grounds (a.k.a. “glamping” … see
below). In addition to the natural beauty of the Park, these concepts would also leverage the existence
of numerous existing attractions, locations, and services within the Park. Current glamp grounds already
exist as do potential sites for others. Independent operators of various outdoor activities, involving
everything from guided hikes to year-round dog sledding, already provide the ingredients for creating
customized, packaged tours. Destinations of educational and experiential interest also exist within the
Park, such as the Wild Center, Adirondack Museum, and Lake Placid’s Olympic venue. We believe these
and other existing assets can be more effectively marketed and delivered to a broader population of
prospective customers. The concept of a tour operator business is fully presented later in this report.
Environment [Glamping] – Glamping is a form of camping in which participants enjoy physical comforts
typically associated with more luxurious types of vacations. The concept we are recommending the ABC
Fund further investigate later in this report is that of establishing a glamorous campsite located in a
prime Adirondack location, ideally one that sits on numerous acres with dense tree cover, a stream, and
direct access to a lake. Glamorous tents would be strategically located, built on solid tent platforms, and
furnished with modern conveniences. Guests would be pampered throughout their stay, allowed to
relax as they take in their beautiful surroundings, and invited to gourmet meals prepared on site.
One such site exists in the Adirondack Park at Camp Orenda in Johnsburg, NY (www.camporenda.com)
where owner David Webb seeks to give guests an “authentic Adirondack back country experience.”
Webb launched Camp Orenda officially in 2012 and has well exceeded his sales projections. However he
is quick to point out he had a huge advantage being able to develop land already owned. In addition to
the possibility of using Camp Orenda as a lodging resource for the Adk Tour Operator Venture, Webb is
interested in expanding the business and could be a key resource for further glamping development in
other key locations within the Park.
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Another potential partner for the ABC glamping concept is Paul Schwartzberg, new owner of The
Barkeater in Keene, NY. With 192 acres of forest, fields, ponds, frontage on two streams, a network of
well-maintained trails, and proximity to Champlain Valley and the Tri-Lakes, The Barkeater could
potentially be an ideal location for an ABC glamping site. Schwartzberg’s current plan is to develop the
property in two phases, with Phase I including renovation of the Barkeater Inn (currently underway),
and the establishment of a glamping site on what used to be the site of an Outward Bound operation.
The site includes two buildings that will be renovated to provide bathrooms and other amenities.
Schwartzberg is seeking investment partners to fully realize his vision for Phase I and undertake a more
ambitious Phase II project – the establishment of a new upscale lodge with increased dining and event
facilities, a pool, tennis court, etc. With the property already owned, The Barkeater offers an investment
opportunity that is in line with the scale of the proposed ABC Fund.
As another gateway to the Adirondacks, we believe Hamilton County also represents a logical choice for
the establishment of a glamping venture but have not identified any potential partners for the ABC Fund
in this region.
Environment [Film Industry] – Like most states, New York offers the film industry financial incentives
and support services to encourage production of films, shows, commercials and documentaries within
the state. Such productions can result in substantial economic inflows into the site, area or region in
which the production occurs, hence the state’s willingness to provide financial incentives to the film
industry. Promoting by NYS is primarily done through the NYS Governors Office of Motion Picture and
Television Development, (www.nylovesfilm.com). Incentives can involve credits of up to 35% of
production costs incurred “on location.”
The project team’s very limited investigation of this opportunity within the Park has yielded what
appears to be a lack of coordinated effort to pursue projects for production within the Park. Moreover,
the Park appears to be absent of any commercial entity employing a business model for recruiting
opportunities directly from film production companies. While we are confident the Park offers many
opportunities for the film industry to source incredible outdoor scenes and vistas, we lack sufficient
understanding if a sustainable business model exists for developing this opportunity. Should the ABC
fund be established we would suggest further investigation regarding the use of this asset in film
production.
Water [Beverage Industry] – While the Park’s abundant capacity of clean, “constitutionally protected”
water sources is/can be utilized in a variety of ways, we have focused on its use in the beverage
industry. The Park’s waterways are of course a key attribute of its environment for tourism, along with
power generation, food production, and other commercial uses. We have chosen to focus on the
beverage industry because we believe this asset has been greatly underutilized for that purpose.
In segmenting the beverage industry by alcoholic versus non-alcoholic, we believe the former offers
greater opportunity for the ABC project at this time, primarily from an investment requirement
standpoint, and opportunity for sufficient return on investment. In considering non-alcoholic beverages
(bottled water, juices, carbonated soft drinks) the existing markets are large, highly saturated, and
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possess commodity-like economics. These attributes infer the requirement of very high scale operations
and facilities, thus pushing the investment opportunity beyond ABC’s threshold. Although contract
production services for these products exist, the scale advantages enjoyed by the owners of these
resources put the startup entity at a significant cost disadvantage. As one industry executive conveyed
to us, “Unless you own the spring or aquifer and have sited your own $20M bottling plant at that
location, you’re highly unlikely to be price competitive with most leading brands.”
Within the alcoholic segment we see much greater opportunity for investment potential that aligns with
ABC’s selection criteria, specifically in the craft brewing industry. The abundance of its primary
ingredient, its proximity to consumer markets, and the growth and expansion of craft-scale brewers
makes the Park a highly attractive location for a variety of craft brewing business models such as
microbreweries, contract brewing, and partner brewing. Related craft brewing opportunities in hard
cider and micro distilleries can also benefit from the Park’s water resources. In addition to several
specific investment opportunities, we are proposing a craft brewing concept (contract brewing
incubator) that we feel can establish a long-term beach head for this industry within the Park.
Lumber/Biomass [Wood Pellet Heating Solutions] – Lumber has been a major export of the Park for
many years, but has not benefited from investment to more vertically integrate the industry within the
Park’s boundaries. As such, most exports are of unprocessed raw lumber to Quebec where such
investment has been made and therefore affords that region substantial economic advantage. Selling
logs is a commodity sale and as such yields the lowest valued added return to this sector within the
Park. To replicate the investment made in nearby regions such as Quebec is well beyond the scope of
ABC. Other biomass products such as wood chips are also sold as commodity raw materials to the paper
industry, and to lesser extent the commercial heating system market. Biomass does offer a costeffective supply to potential energy production facilities, but again these opportunities are beyond the
investment capacity of ABC.
The Region has, however, seen some lumber/biomass related investment to modestly increase the value
of these resources, most specifically in the form of wood fuel pellet production plants. The most
proximate facility is Curran Renewables in Massena, NY. Additional facilities located in the northeast
during a recent “industry ramp up” has caused an oversupply situation in this market and resulting
depressed prices and investment return. However, as will be discussed under the Markets section
below, a potential demand for pellet-based heating systems exists throughout the Park and among its
home owner residents. What appears to be lacking are a) cost-effective and convenient wood pellet
heating system solutions, and b) a cost-effective distribution system for bulk pellet delivery and storage.
While solutions to these challenges range from being conceptualized by entrepreneurs to existing in
other markets, the Park has lacked sufficient attention from providers of such solutions.
It is our belief that opportunity could exist for investment in startup and/or existing entities that are able
to solve these problems. Examples include the following, separately or in combination:
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Local manufacturing of cost-effective wood pellet heating systems
Financing of heating systems
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Delivery service for pellet fuel from existing suppliers
Due to time constraints, none of these examples have been analyzed for investment potential as
individual business concepts. However, they have been included as inputs to a Market-based business
concept described later in this report, referred to as Energy Savings Company (ESCO).
Maple Forest [Syrup and related maple products] – According to Michael Farrell, Sugarmaker and
Director of Cornell University’s Uihlein Forest, maple is the fastest growing commodity in the US today.
The Adirondacks contain huge tracts of maple trees, particularly Hamilton County. The maple market is
not as volatile as in the past, and advances in production systems have lowered energy and other
operating costs, thereby making sugaring a more profitable business today than in the past. However,
much of the maple syrup that is produced here is sent to bottling plants in New Hampshire (e.g., Bascom
Maple Farms) and Vermont (e.g., Maple Grove Farms and Butternut Mountain Farms). These are very
large scale operations with the ability to offer good wholesale prices to NYS maple sugar farmers ($30 $32 per gallon).
The biggest challenge to the North Country’s ability to scale up maple production is the difficulty in
sourcing labor. During the maple sugaring season, the hours are long and the work taxing. A secondary
challenge is that much of the land that comprises the Park’s maple tree supply is under private
ownership, however there are tax breaks available in NY State to encourage these landowners to tap
their trees. Capital requirements for establishing a large scale sugaring operation can range from $500K
to $2M. Current retail prices for maple syrup range from $45 to $55 per gallon. Possible opportunities
within this sector include the following:
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Establishing a bottling and distribution plant within the Park – With a local outlet for their syrup,
regional farmers could perhaps enjoy stronger margins for their product, (assuming sufficient
scale of bottling operations). A small existing model exists in Watertown, NY … North Country
Farms (http://www.ncfarms.net).
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Harvesting, processing and selling of “tapped-out” maple trees – There are approximately
500,000 older trees being tapped in the ADK region that could alternatively be used for lumber,
providing an excellent supply of tapped logs. Trees can be tapped for 50-100 years (or more)
before they are tapped out, and can be sold for $5-6 per board foot. The “tap holes” in the
lumber can provide a unique aspect to furniture and other wood products.
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Producing and bottling a Maple Sap beverage – A group of NYC investors is working on a maple
sap beverage project and represents a potential investment opportunity later this year. Similar
products do exist, including The Vermont Sweetwater Bottling Company
(www.vtsweetwater.com), which produces carbonated maple seltzer and a carbonated soda
sweetened with maple.
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Adirondack Brand [Ecommerce Marketplace] – We believe the Adk brand is an underutilized and
underleveraged asset of the Park, and itself represents an opportunity for ABC for two reasons. First, it
provides an opportunity for synergy between the brand and startup businesses / concepts that can
leverage that association. Examples include craft brewing, tourism, and food. Second, it provides a
marketing and promotion platform to source and sell merchandise that reflects the meaning behind the
Adk brand via an online marketplace. This concept is fully presented later in this report.
Labor Force – Several sectors can potentially benefit from various attributes of the Park’s existing labor
force. Perceived attributes include the following:
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Below average wage/salary expectations
Above average receptivity to part-time, seasonal employment
Strong affiliation with an environmentally conscious, “quality of life” balance
Significant population of artisan crafts people
Large labor pools in education, health care and social services sectors
From these attributes, several business concepts were screened for further investigation, including the
following:
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Tour operator; camp ground operator
Energy savings retrofit contractor
Assisted living, senior citizen services
Adirondack branded and sourced merchandise
Various outsourcing businesses
Telecommuting-based businesses
Several of these concepts were favorably vetted against our screening criteria and are discussed further
in this report, including tour operator, energy savings retrofit, and Adk branded merchandise. Others are
discussed later in this section.
Food/Agriculture – According to the USDA, in 2007 there were approximately 1,500 farms within the
Blue Line and that number is growing, as evidenced by the eight farms which have just recently opened
their doors in or proximate to Essex, NY. Many of the more recently established farmers are part of a
growing national movement of young, energetic 20 to 30 year olds, choosing farming as a career,
(www.nytimes.com/2011/03/06/us/06farmers.html?_r=0). Perhaps the most recognized are Mark and
Kristin Kimball, owners of Essex Farm, who have shunned industrial and mechanized farming and are
primarily using draft horses to plow their fields. Additionally, they are emphasizing a diversified
approach to planning their crops which results in less yield per acre but is more sustainable over time.
Founded in 2004 and currently farming 600 acres, Essex Farm feeds approximately 250 people from 84
homes year round through their community supported agriculture program. This enterprise provides ten
full-time jobs with health insurance, and several of these employees have gone on to establish their own
farms.
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The energy of these young farmers, coupled with the general public’s growing interest in where their
food comes from, has helped generate an increasing number of Farmers Markets, Food Festivals, Farm
Open Houses and other events across the Region designed to showcase the burgeoning food and
agriculture industry and the growing number of chefs and restaurants who proudly tout their locally
sourced ingredients. Yet, in spite of this energy and growth, there are entire communities within the
Adirondack Park (e.g., Tupper Lake) that have no place within their community to buy fresh, locally
grown food. We believe what is holding this sector back from achieving its full potential is the lack of a
regional food hub to provide a centralized mechanism for aggregating and distributing locally grown
food, thus providing better access to communities and restaurants throughout the Park. This concept is
fully explored later in this report.
Markets
In this portion of our analysis we considered markets for products and services that currently exist
within the Park, but are perceived to be underserved or poorly served in some fashion. While these
examples are far from an exhaustive list, they do stem from both anecdotal and quantitative inputs.
Energy - Residential [Energy Savings Retrofit] – The Park’s colder climate, coupled with depressed
household income levels and high heating fuel costs, have created significant demand for solutions to
lower home heating costs, especially among older homes that are thermally inefficient. Due to the lack
of lower cost natural gas infrastructure throughout most of the Park, many residents (39%), heat their
homes with fuel oil which is a high cost fuel source. Home owners can reduce their heating costs by a)
retrofitting their homes with sealants, insulation, and newer doors/windows, and b) replacing or
supplementing their current heating system with a newer, more efficient system that utilizes a lower
cost fuel source.
A recent study of a similar environment (Vermont) indicates that reducing heating cost is a major
motivator for home owners, but the high cost of improving thermal efficiency of their homes, and/or
replacing their heating system to one utilizing a lower cost fuel source, is generally prohibitive without
some form of financing. As such, a business concept that assists home owners in understanding their
savings opportunity, offers alternatives for realizing those savings, and assistance in arranging financing
for their retrofit project, should enable this market potential to be realized. This report will recommend
an Energy Savings Company business concept to address this market opportunity.
Energy - Commercial [Alternate/Renewable Heating Systems] – The commercial heating market often
suffers from similar conditions as residential home owners. Driven by operating budget pressures and
~ 17 ~
lacking sufficient capital budgets, most commercial projects (as evidenced by information presented at
the recent Clean Energy Conference in Lake Placid), focus on alternate heating systems (biomass being
the most popular) and often involve government subsidies. Given the size of the commercial market
within the Park, and the need for financing subsidies, we have limited our energy savings focus to the
residential market.
Broadband Internet [Internet Service Provider] – The availability of affordable broadband Internet
access is not pervasive in the Park, thus representing a significant market opportunity. Unfortunately,
the economics of providing these services in such a rural region as the Park are not favorable.
Population density does not support the investment associated with the “last mile” infrastructure
necessary to deploy broadband access at affordable prices. Validation of this reality is the large amount
of American Recovery and Reinvestment Act funding that was targeted for broadband infrastructure for
rural areas. Nicholville Telephone, DANC, and ION are North Country organizations that received such
funding and are now managing broadband deployment through much of the North Country.
Senior Citizens [Continuing Care Retirement Community, Health Care Services, Family Services] –
According to the Adirondack Park Regional Assessment Project, the age of the Park’s population is
increasing several times faster than the national average, and will rival that of west Florida in coming
years. While this aging of the Park is due in large part to the decline of younger population groups
leaving the area, it also stems from an increase in the number of 50+ age residents. As such, the project
team considered several possible business concepts that focused on the needs of this demographic
profile.
·
Continuing Care Retirement Community(CCRC) – While these types of communities, which
offer a range of living arrangements from independent living to assisted living to skilled nursing
facilities, are gaining in popularity, the associated investment requirements far exceed the
expected investment resources of the ABC fund. However, investment in this sector within the
Park may offer larger future funds an investment opportunity, as is evidenced by the recently
opened CCRC in Willsboro, (Champlain Valley Senior Community,
www.champlainassistedliving.com.)
·
Home Health Care Services – While the general aging of the US population is driving continued
employment in the health care sector, the Affordable Care Act (ACA) is driving an increase in
out-patient and preventative care services. Moreover, the high costs of nursing homes and
other skilled nursing facilities are motivating senior citizens to seek in-home health care
alternatives. While these trends would suggest a strong offering of investment opportunities in
the ‘senior citizen health care’ sector, we are cautious about the dynamic and changing
landscape of the health care industry, given the implementation of several industry changing
aspects of the ACA set to occur over the coming years. Such changes are sure to offer
opportunities for new business concepts, however we do not yet understand what those
specific opportunities will involve, and would suggest further investigation should an ABC Fund
be established.
~ 18 ~
·
Family Services – This concept involved providing senior citizens within the Park, and their
families, a variety of services meant to provide increased convenience, safety, and security.
These services could involve shopping, transportation, meal preparation, money management,
and a host of other services that often are sources of difficulty and vulnerability for seniors.
Providing high quality, bonded services in these areas would not only enhance seniors’ life styles
and comfort levels, but would likely prolong the opportunity to live independently. The project
team chose to screen out this concept due to a perceived lack of acceptable economic return.
Outsourcing [Rapid Prototyping/Light Manufacturing] – While the US manufacturing sector has fallen
out of favor in recent times, new technologies and innovations that facilitate rapid prototyping and light
/ custom manufacturing may now represent favorable investment opportunities. The most prominent of
these innovations is that of additive manufacturing (AM), or commonly referred to as 3D printing. AM is
fundamentally changing the business of rapid prototyping and custom manufacturing. Manufacturers of
AM systems are experiencing tremendous growth and market acceptance, which is driving costs down
and facilitating even wider adoption. Numerous service bureaus and fabrication shops are setting up to
provide consumers and businesses alike a wide range of convenient, rapid, and cost-effective
prototyping and custom manufacturing services. While the capital investment requirements for
establishing an AM-based service bureau are well within the scope of a proposed ABC fund, several
challenges are apparent:
·
·
·
Ability to source AM engineers / operators within the Park
Limited market for these services within the North Country
Ability to differentiate services among a nationwide cohort of competitors
To this last point, in considering resources within and proximate to the Park that could provide such
differentiation, that of biomedical engineering is one possibility. Another is outdoor sporting gear. With
regard to the former, the availability of biomedical engineering expertise exists both at Clarkson
University and the University of Vermont. With regard to sporting gear, such a company could leverage
both the Adk brand / image, along with the opportunity to fully “field test” its products and services
across the Park’s challenging terrain.
The counter argument to this business concept stems from the continuing decline in cost of AM
systems, and their increasing ease of use. These two trends make in-house rapid prototyping more
affordable and realistic for many companies, leaving only the smallest customers (and small project
requirements) for independent service bureaus to fight over. We believe a more attractive business
model would involve a new product innovation that leverages AM technologies. For example, one
interviewee of the project team has considered an innovative fishing rod design that would incorporate
AM technology in its production. Should this innovation effort result in a viable future business plan, it
could represent an attractive ABC Fund investment.
Outsourcing [E-Waste / EDF] – Today all NYS commercial businesses are required to recycle electronic
devices when discarded from use, and starting in 2015 NYS residents/consumers will also be required to
recycle these products, collectively known as E-Waste. To facilitate appropriate reclaiming and recycling
~ 19 ~
of E-Waste components (e.g., precious metals, plastics), these devices are disassembled at electronic
disassembly facilities (EDF). EDF companies accept E-Waste as low or no cost inputs and earn revenue by
selling reusable components back to industries that use them as raw material inputs. Owners of E-Waste
benefit from avoiding landfill or other disposal option costs.
Within the North Country there does not appear to be an EDF at which E-Waste can be processed. As
such, most E-Waste in the North Country is collected through various means and locations, and then
transported outside of the Region for processing at an EDF. The two closest EDFs identified by our team
are in the Rochester area. Casella, the largest waste management firm serving this Region, currently has
no plans for establishing an EDF. As such, there may well be an opportunity for establishing an EDF
locally to capture the current and future E-Waste stream within the Region, and perhaps beyond.
Unfortunately the EDF concept was discovered only recently by our team and insufficient time was
available to further screen this concept. Should an ABC investment fund come into existence, it is our
recommendation that further research on this concept be performed.
Outsourcing [IT/Accounting Services] – It is often observed by small business owners throughout the
North Country that the region lacks sufficient labor force professionals in the functions of IT and
accounting. However, even with sufficient labor in these areas, many North Country businesses are not
large enough to justify hiring these professionals as full-time employees. It was therefore postulated by
the project team that a market for these services in an outsourced manner could exist in the North
Country. A brief survey was conducted to gauge that need and receptivity to an outsourced solution,
however the survey results were highly negative. Moreover, the team was not convinced that sufficient
IT expertise exists within the Park, to adequately provision related services.
Outsourcing [Health Care Tele-services] – One concept briefly considered by the project team involved
the establishment of a health care related call center. This concept stemmed from the observation of
certain labor force demographics, along with observations regarding a growing senior citizen market and
suspected opportunities arising from the implementation of the Affordable Care Act. This concept was
not pursued based on the perception of a poor economic model.
Industry Clusters
The third aspect of our sector analysis involved briefly investigating the various industry clusters that
reside in or proximate to the Park. In doing so we sought to identify opportunities to fill gaps that might
exist in the supply chain of those clusters.
~ 20 ~
Biotech [Saranac Lake] – The Saranac Lake biotech cluster is comprised of Trudeau Institute, Bionique
Labs, Active Motif, and Myriad RBM. Although the biotech industry continues to attract a significant
amount of investment by the venture capital community, commercializing biotech IP is typically a long,
expensive process with several stages of funding needed before the product is approved and taken to
market. Additionally, according to HBM Partners of Switzerland, it is taking longer for venture capital
investors to realize an exit strategy with typical exits now taking nine years as opposed to the five it took
in 2005 (www.biotech-now.org/business-and-investments/2013/04/venture-capital-trends#). Coupled
with the significant size of the investment typically required, this makes the commercialization of
biotech IP out of range of a prospective ABC Investment Fund.
For this reason, the ABC Team focused its research on identifying any supply chain gaps that currently
exist in this cluster. The only such gap identified was the need for a lab equipment service provider to
maintain and repair lab equipment. Although clearly an opportunity for an enterprising entrepreneur
with the right skill set, it is probably too small an opportunity for the ABC Fund to consider.
With Bionique’s planned expansion from a 9,500 sq ft facility to 20,000, and the Village of Saranac Lake’s
commitment to attract other biotech companies to join the cluster, the supply chain gaps are likely to
grow along with the opportunities for investment. It is important to note that although it is probably out
of range of this fund for the reasons cited above, Trudeau is about to file provisional patents on a
product that has huge market potential and might represent a possible future investment for the next
ABC Fund.
Semiconductor [Malta] – In 2009 Global Foundries (GF)was the first tenant to break ground on the first
of eight sites that comprise the Luther Forest Technology Campus, a nanotech manufacturing campus
located in Malta, NY. Today GF employs nearly 3,000 people at this $4.2B facility, one of the most
advanced semiconductor facilities in the world. What is highly attractive about this industry cluster is its
recent establishment and potential for future growth. Because it is a relatively new cluster, the local
supply chain to GF and future campus tenants is not yet mature, and with additional tenants occupying
the campus in the years to come, the local supply chain should also continue to grow.
As an example, Wendy Nicoson, director of supply chain management at GF cited two current “gaps”
among their local supply chain needs. One stemmed from their need for local cold storage of chemicals.
The other involved their requirement for daily cleaning of clean room uniforms. This highly specialized
service is not available within the region, and results in substantial shipping costs added to their current
vendor’s service fees. With additional investigation and future expansion of the campus and its tenants,
additional supply chain gaps will likely emerge and that could offer opportunities for new business
ventures to service them.
Transportation [Plattsburgh] – In 1995 Bombardier Corporation established what eventually became a
$25M manufacturing facility in Plattsburgh. Since then a robust cluster of transportation, aeronautics,
and advanced manufacturing has evolved to support Bombardier’s early investment, along with more
recent investments by Volvo subsidiary Nova Bus (2009) and Laurentian Aerospace (2013). While this
cluster is quite “mature,” there may exist opportunities for local startups to replace foreign suppliers
~ 21 ~
that have local operations in the Plattsburgh area. Reasons for this perception include the following
observations:
·
·
·
Desire for foreign manufacturers (e.g., Bombardier) to utilize domestic suppliers to better
position their products and solutions among their US customers (e.g., NYC MTA).
Local engineering and production allows for greater supply chain efficiency, as opposed to
receiving finished parts from distant sources.
Trends involving the transition from traditional manufacturing materials (e.g., metals) to more
modern, engineered materials (e.g., composites).
Unfortunately, the ABC project team allocated insufficient time to investigate potential opportunities
within the Plattsburgh area, with the exception of several seed and early stage opportunities discussed
later in this report.
Medical Instrumentation [Glens Falls/Queensbury] – Catheter Valley is the term referencing the Glens
Falls – Queensbury area that is home to a number of medical device and related companies that
combined employ several thousand people. The project team has not determined what, if any, supply
chain or other new venture opportunities might exist to support this cluster. However, there are a
significant number of companies that comprise this cluster, including the following:
·
·
·
·
·
AngioDynamics – Manufacturer of catheters and related products
C.R. Bard – Manufacturer of catheters and other medical devices
Covidien – Manufacturer of a wide range of medical devices and supplies
Delcath Systems – Specialty pharmaceutical and medical device company focused on Oncology
Navilyst – Manufacturer of catheters and related products
Should an ABC Fund be established, we would encourage further investigation into opportunities within
this cluster.
Education [SUNY, Clarkson, NCCC, Paul Smiths] – An exciting opportunity is soon to exist among the
educational communities within the North Country, stemming from Gov. Cuomo’s Tax-Free NY initiative.
Incentives for establishing business incubators among SUNY college campuses could potentially offer
ABC a range of investment opportunities in seed and early stage tenants of these facilities. In addition to
Clarkson’s Shipley Center for Innovation, which helped nurture Wholeshare.com (a recommended
investment opportunity discussed later in this report), NCCC has proposed establishing a business
incubator in Saranac Lake and Paul Smiths College is working on an initiative to establish a Food
Incubator at the Paul Smiths VIC. Moreover, under the aegis of the North Country Regional Economic
Development Council, a proposed regional “Innovation Hot Spot” initiative has the potential to further
harness existing intellectual capital across the North Country.
~ 22 ~
Recommended Business Concepts
The project team has identified, screened and substantially vetted four recommended business concept
opportunities. They include:
Adirondack Branded Marketplace – Ecommerce company showcasing products from Region
artisans and producers of Adirondack themed goods.
Craft Brewing Contract Incubator – Craft brewing facility to “incubate” startup craft brewing
companies across the Region.
Energy Savings Company – Energy savings solutions contractor of thermal retrofitting projects
for the Park’s residential sector.
Tour Operator – Provider of world class experiential vacation packages to upper middle to high
net worth individuals and families.
Screening profiles, business model canvases, and economic summaries for each concept are presented
on the following pages.
~ 23 ~
Concept: Adirondack Branded Marketplace
Abstract:
The concept is to economically leverage the Adirondack Brand by creating a vibrant ecommerce
Adirondack Marketplace that clearly communicates the Brand and leverages it across multiple product
categories, including all pertinent ABC portfolio companies. All products will be vetted against a wellarticulated set of criteria before they are showcased in the Marketplace, thus ensuring a consistency of
branding message and quality. A product source team will work to promote partnerships among
designers and artisans to create one-of-a-kind products to be sold exclusively in the Marketplace. To
further enhance the customer experience, a sense of community will be encouraged through storytelling
(seller profiles, end user testimonials, etc.), blogs, and other social media techniques.
Sellers will pay an annual licensing/membership fee based on their revenues, plus a per transaction fee
as sales occur. The Marketplace will also connect sellers with wholesale opportunities, an effort which
will be supported by exhibiting at ANCA’s Annual Buyers Day Show in Saratoga and the NY Now Buyers
Show at the Javits Center, each of which attracts 35,000 buyers. Additional Marketplace enhancements
may include offering a mechanism for customers to connect directly with sellers for commissioned work
and an “Inspiration Wall” that encourages customers to suggest new product ideas and solutions.
Criteria
1. Economics:
·
·
·
·
·
Revenue Streams: Licensing/membership fees, retail sales transaction fees, and wholesale
transaction fees
EBITDA: ($93,713) in Year 1 growing to $264,434 in Year 5
Compound annual growth by Year 5: 47.6%
175 Merchants in Year 1, growing to 2,500 in Year 5
IRR: 24%
2. Market:
A recent study by the Adirondack Regional Tourism Council found that once a person visits the
Adirondack Park, they want to return. The Council has built a list of 120,000 such people who have
“opted in” to receive a regular newsletter from the Council so as to stay connected with the Park.
This suggests that the 7-10 million people who annually visit the Park often build an emotional
attachment to the Adirondacks, and would be receptive to being part of the Adirondack
Marketplace community and making purchases of branded products they can associate with the
essence of their experiences here in the Park.
With its recent and continuing growth, ecommerce offers a platform for reaching these people once
they’ve left the Blue Line, and an opportunity to leverage the Adirondack Brand at a scale that has
never before been possible:
·
The number of U.S. online shoppers is expected to grow from 137 million in 2010 to 175 million
in 2016, according to eMarketer estimates. (Source: Statista)
~ 24 ~
·
Online shoppers in the United States will spend an estimated $327 billion in 2016, up 45% from $226
billion this year and 62% from $202 billion in 2011, and by 2016, e-retail will account for 9% of total retail
sales, up from 7% in both 2012 and 2011 (“U.S. Online Retail Forecast, 2011 to 2016,” a report by
Forrester analyst Sucharita Mulpuru.)
·
Although difficult to quantify, there are many anecdotal indications of the value of associating
“Adirondack” with a myriad of products and services. Here are just a few:
o
Online promo marketer Café Press, which uses the motto, “Find products that express the
things that you love,” offers over 1,600 different styles of “Adirondack” t-shirts, totes,
magnets, stickers, etc., such as the one shown here.
o
Based in Utica, NY, Adirondack Distilling Company – (www.adirondackdistilling.com) –
opened its doors in 2011 with a mission to provide customers with a “unique experience
that really is a taste of the Adirondacks.”
o
The iconic Adirondack Chair, which was first patented in 1905 by Westport resident and
carpenter Harry Bunnell, is now sold worldwide. According to Canadian manufacturer DFC
Woodworks, the market is expanding,
(www.prweb.com/releases/2012/7/prweb9703757.htm). After fighting its way back from a
sharp decline in sales in the beginning of the 2008 Recession the Company recently opened
a new, expanded facility and has been successful securing additional dealers in France,
Australia and beyond.
3. Competitive Advantage:
Although there has been and continues to be a great deal of conversation throughout the
Adirondack Park around the need to identify and leverage a cohesive “Adirondack Brand” with a
compelling logo and message, no entity has, to date, done so successfully. Branding efforts that
have been undertaken were by non-profit groups such as Adirondack Harvest, and generally have
been uncoordinated and inconsistent.
In spite of the popularity of Adirondack-identified products cited above, the word “Adirondack” is,
for the most part, used indiscriminately as evidenced by the 226 application records on the U.S.
Trademark website, for “Adirondack or Adk” branded products. Several successful applications are
simply the word “Adirondack” and cover products as unrelated as recreational vehicles, concrete
paving stones, wall guards and pet food.
We believe the opportunity exists to take a private sector approach for developing a focused brand
that expresses the essence of the Adirondack experience and builds value through a consistent
~ 25 ~
approach. Moreover, this effort should yield a strong economic model that will attract sellers and
customers, thereby building a vibrant online Adirondack Community.
4. Regulation:
None, other than filing corporate papers, and collecting and paying sales tax.
5. Scalability:
With regard to product offerings, there is a robust supply of potential sellers (craftspeople, specialty
food producers, etc.) within and proximate to the Park. Moreover, with broadband Internet
connectivity soon to be available throughout the Park, creating a virtual Marketplace in which these
sellers can participate will be feasible for the first time. Additional items will be sourced from
outside the Park and included in the Marketplace, assuming their products meet the criteria
established. With regards to customers, the scalability is virtually unlimited.
6. Existing Models:
A sampling of comparable niche ecommerce models include the following:
·
Five companies cited in the 5/18/12 issue of PC World as “Best Online Marketplaces for Selling
Handmade Gifts”
o www.etsy.com
o En.dawanda.com
o Bonanza.com
o Zibbet.com
o iCraft.ca
·
NHmade.com – Primarily promotes stores showcasing NH made products. Stores are located off
of I95 adjacent to NH Wine & Liquor Outlets. Website also connects wholesale buyers with
member merchants.
·
BestofVermont.com – Sells 900+ food and health/beauty (e.g. lip balm) products from 75 local
producers.
These sites have several features in common with the proposed Adirondack Branded Marketplace,
including but not limited to:
·
·
·
Similar revenue models
Stated criteria for selling through the website
Interactive, engaged communities
7. Exit:
According to mulitmerchantchannel.com, ecommerce transactions now dominate the multichannel
retail mergers and acquisitions market, comprising 92% of all deals in 2011 – up from 59% in 2006.
Most ecommerce deals consist of Internet retailers acquiring other operators of Internet
storefronts, which sell similar or complementary product lines. Recent examples include Fanatics’
~ 26 ~
acquisition of Dreams in April 2012 (both sell licensed sports gear), and Shoebuy.com’s acquisition
of Cozy Boots in October 2011 (both sell footwear). Perhaps even more interesting is a growing
number of brick and mortar retailers and product manufactures who desire to increase their
internet presence through similar acquisitions. For example, National Vision, a brick and mortar
retailer of eyeglasses, purchased Arlington Contact Lens Service in March, 2012.
Multiples
Best
Average
Slow
Best
Average
Slow
Revenue
EBITDA
2.0
5.0
1.5
4.0
1.0
3.0
Fully Distributed trading value
$ 1,476,835
$ 1,322,170
$ 1,107,626
$ 1,057,736
$ 738,418
$ 793,302
8. Regional Leverage:
This venture has the potential to leverage the talents of producers and artisans throughout the Park,
with the emotional bond that many visitors to the Park develop for the Adirondack Region. Such
talents reside among craftspeople (woodworkers, pottery artisans, jewelry makers, spinners, and
many more), specialty food producers, and manufacturers of outer gear and sports equipment.
9. ABC Theme/Domain Expertise:
·
·
·
Adele Connors
Bob Lievense
Vinny McClelland
10. Capital Requirements:
Total capital requirement for implementing the Adirondack Branded Marketplace is estimated at
approximately $450,000.
11. Time-to-Market:
Once an entrepreneur has been identified to head this venture, time-to-market is estimated at 9-12
months to allow for the development of the brand and website and to source and recruit vendors
and staff.
12. Year-round:
This will be a year-round business.
~ 27 ~
13. Regional Focus:
This venture is a strong fit with Adirondack Future’s vision regarding the need for branding and
promotion of the Adirondack Park. It provides sellers (artisans, food producers, etc.) throughout the
Adirondack Park the opportunity to greatly broaden their potential market, increase their sales, and
help them go to scale on products that would otherwise not be feasible to produce. For example,
The Mountaineer is interested in introducing a line of outdoor clothing but is constrained by the
need to produce the clothing in small 2-3 dozen unit production runs, and the difficulty in finding a
production partner who can economically work with such small numbers. As a result, the store’s
original plan has been scaled back to creating one Mountaineer-branded product that will be
produced to the Mountaineer’s specifications by Vermont-based IBEX, but only as their production
schedule facilitates. The Adirondack Branded Marketplace has the potential to generate enough
sales for a Mountaineer-line of products to potentially allow the store to broaden their product line,
increase their production runs, and reduce their unit costs.
14. Synergy:
·
Tourism – Through the Adirondack Marketplace, tourists will have the opportunity to extend
their Adirondack experience, thus strengthening their ties to the Park. This in turn should
generate increased tourism.
·
Other Sectors – By providing a mechanism for Park visitors to purchase Adirondack-made
products once they leave the Park, the Adirondack Marketplace should help stimulate growth in
a number of key sectors, including but not limited to Food and Agriculture (i.e. specialty foods);
Light Manufacturing (i.e. outdoor gear such as the Mountaineer product line, Placid Boatworks,
Adk Packworks), and Beverage/Brewing (craft beers).
Discussion:
If executed correctly, we believe the Adirondack Branded Marketplace has the potential to be a gamechanger by significantly raising the recognition of the Adirondack Park outside the Blue Line. There are
several factors that will be critical to the venture’s success:
· The development of a brand and underlying philosophy that truly encapsulates the Adirondack
“experience” and drives the look and content of the Adirondack Branded Marketplace. To
accomplish this, we are suggesting a series of focus groups be held in different parts of the Park
to get input from key audiences (visitors, second home owners, etc.), regarding the essence of
the Adirondack Brand.
· The development of a thorough, well-articulated set of criteria for seller participation, (models
already exist).
· To avoid the need for a large brick and mortar investment, the Adirondack Branded Marketplace
will be set up so that sellers drop ship customer orders. Although this model, which is used by a
number of very successful ecommerce niche marketplaces (i.e., etsy.com), allows the
Marketplace to limit the size of its overhead and investment, it does present some risk in terms
~ 28 ~
of ensuring that the sellers successfully adhere to Marketplace policies regarding order
fulfillment. Marketplace management will need to study other ecommerce operations with
similar models to learn how they have addressed this issue.
A preliminary list of product categories includes:
·
·
·
·
·
·
·
Specialty Foods (i.e. maple sap and syrup)
Outdoor Gear (i.e. Mountaineer product lines)
Sporting Equipment (i.e. Placid Boatworks, fishing rods, tents, etc.)
Craft Items (i.e. tapped wood maple products, candles, wool mittens, spun wool, etc.)
Books
Pets (i.e. handcrafted catnip filled sleeping bed for cats)
Home (pine storage boxes, Adk Storage Sheds, Adk Packworks, etc.)
The product sourcing team will be charged initially with scouring the Adirondack Park Region to identify
sellers with products appropriate for the Adirondack Branded Marketplace. Key Resources for this
process include:
·
·
·
·
·
·
Community blogs : www.adirondackinspired.com, www.adirondackminute.com
ANCA, which runs the Buyers Days Trade Show each Spring in Saratoga Springs, featuring
Adirondack crafted products
The Adirondack Craft School
The Artisan Council (a new venture in development as per conversation with Diane Litynski, Paul
Smiths College Faculty Member)
Whallonsburg Commercial Kitchen and Paul Smiths Food Incubator (in development)
Regional Tourism Council, ROOST and other groups working on promoting the Region and its
assets
It should be noted that the domain address of www.AdirondackMarketplace.com is available and has
been registered by the ABC Team in anticipation of the potential establishment of the Adirondack
Branded Marketplace.
Risk Factors:
·
·
·
The ability to identify and recruit enough “early adopter” seller/vendors willing to pay a
Licensing/Marketing fee to participate in the Adirondack Branded Marketplace.
The ability to source a critical mass of sellers/vendors and related products to help fuel the
venture’s growth.
Although mergers and acquisitions activity in the multi-channel retail market exists today, it is
unclear whether any existing players in this industry would be interested in acquiring a venture
of this kind.
Recommendation:
It is our recommendation that ABC recruit a qualified entrepreneur and invest sufficient additional
resources to develop the Adirondack Branded Marketplace.
~ 29 ~
Concept: Craft Brewing Contract Incubator
Abstract:
The primary services provided by this entity would include contract brewing and packaging (kegs, bottles
and cans) of specialty beers for independent microbrewers throughout northern NYS. Initial annual
brewing capacity of 20,000 barrels would stem from a 25 barrel brew house system and 6 fermentation
tanks. Additional services could include recipe consultation and development, warehousing, and
import/export facilitation. Incubator customers would be responsible for all marketing, labeling
design/sourcing, licensing/approvals, and distribution functions. Location preference for this concept
would be toward the eastern edge of the Park, to facilitate easy / less costly distribution out of the
region. In addition to serving the craft beer industry, this entity could also engage additional beverage
industry segments such as craft distilleries, hard cider producers, and specialty soft drinks.
Criteria
1. Economics:
Utilization of brewing facility capacity is critical to the economic viability of this concept. As such, the
economic success of the contract brewing incubator will be foremost dependent on its ability to
attract and support craft brewer “tenants” who are in turn successful at establishing a customer
following. With better facilities, brewing expertise, and scale economies, the incubator should
greatly increase the chances for success of its tenants, and thereby serve its own interests.
Highlights from pro forma projections are given here, and represent a six year ramp from 1,000
barrels in Year 1 to 10,000 barrels in Year 6.
·
·
·
Positive cash flow achieved by Year 3
Gross margin of 49% and 25% to incubator and tenants, respectively
IRR of 21%
2. Market:
Nationally the craft brewery segment of the domestic beer market continues to outperform other
segments as consumption continues to rise at double digit rates. Moreover, industry capacity
continues to grow aggressively with 2012 seeing the addition of 422 breweries coming online,
bringing the national total to 2,514 midway through 2013, (Brewers Association). The Brewers
Institute estimates this total even higher, at 2,751. Five of the fastest growing brands of beer in 2012
were craft brewers (Demeter Group).
From a regional consumption standpoint, upside market potential is strong in NYS as the state is not
saturated as compared to states like Washington, California, Colorado, Oregon and Vermont that
have several times the number of breweries per capita. New York has in the range of 80-90 craft
breweries, many of which are running at almost full capacity with expansions planned (Brewers
Association). And while NYS is considered a “high growth” craft brewery state, the northern NY
~ 30 ~
region is greatly underserved with only seven existing and startup craft brewers identified serving a
population base of over 600,000:
·
·
·
·
·
·
·
Adirondack Brewery in Lake George … 4,000 – 8,000 barrels/year
Great Adirondack Brewing in Lake Placid … 350 – 400 barrels/year
Big Tupper Brewing in Tupper Lake … recent startup, contracting to Adk Brewery
Blue Line Brewery in Saranac Lake … recent startup, unknown capacity
Paradox Brewery in Schroon Lake … recent startup, unknown capacity
Racquette River Brewing in Tupper Lake … recent startup, 200 barrels/year
St. Lawrence Brewing Co. in Canton … recent startup, 1,000 – 2,000 barrels/year
The largest of these companies, Great Adirondack Brewery, also provides some contract brewing to
smaller and startup breweries. Two of the companies listed above, Big Tupper Brewing and
Racquette River Brewing, have indicated an interest in sourcing from a non-competing contract
brewery. Anecdotally, there appear to be several other prospective craft brewery startups being
contemplated within the Park, including a “brewers association” being spearheaded by Ken Tucker,
president of the Adirondack Brewers Coalition, located in Ticonderoga. Additional discussion of craft
brewing market attributes are provided in the Discussion section of this profile.
·
Capital Efficient – Providing contract brewing services offers craft brewers a much lower entry
point with regard to capital requirements and time to market. Moreover it limits the craft
brewer’s startup costs to single batch investments of $25,000 to $50,000 versus $1.0M to $1.5M
for the construction of their own brewery. This model better facilitates market acceptance
growth curves, giving startup craft brewers time to ramp up without the burden of high fixed
costs.
·
Water – A competitive advantage lies in the abundance of good, clean usable water for brewing.
The available water does not need filtration and is considered “good to use” as is. This mitigates
regulatory and compliance issues, and reduces the cost of production.
·
Diversification – The incubator will enjoy the advantage of brand diversification given its
revenues will stem from a broader array of independent brands, versus a more limited number
of internal, proprietary brands. Not competing against its own customers with proprietary
brands will further encourage the contracting model.
·
Scale Economies – The combined production volume of the incubator’s craft brewers will allow
it to purchase raw materials at much greater scale than independent brewers can individually.
4. Regulation:
~ 31 ~
Production of alcoholic beverages is a highly regulated activity, with much of it stemming from
Prohibition Era laws. Regulatory oversight occurs at both the federal and state levels, and involves
all aspects of the business, including production, bottling, labeling, storage and distribution.
Agencies involved in the permitting and oversight of craft breweries include the US Department of
Treasury, US Department of Alcohol, Tobacco and Firearms, NYS Liquor Authority, and the NYS
Agriculture and Markets department.
NYS has recently enacted legislation for the purposes of supporting NYS’s craft brewery industry.
This legislation provides tax incentives and reduced licensing costs for existing and startup craft
breweries.
5. Scalability:
Expansion of production capacity is primarily tied to additional fermentation tanks, and possibly
warehouse space should the company offer that service, or an import/export function. Market
reach for a single production location is generally limited by physical distribution costs, thus keeping
many craft breweries regionally focused. Sam Adams Brewery offers a potential growth benchmark
for other craft brewers, and has a current annual production volume of nearly 2M barrels.
6. Existing Models:
·
·
·
Adirondack Brewery – Located in Lake George, this long time brewery does offer contract
brewing to craft brewers, but on an “as available” basis. Their offering of contract brewing
allows them to opportunistically fill unused capacity within their own production cycles.
Hermitage Brewing Company – Located in San Jose, CA, Hermitage Brewing represents a more
direct model as a craft brewer incubator. Started in 2009, the company currently produces over
10,000 barrels annually on behalf of nearly two dozen independent craft brewers. Additionally,
it produces malt for two independent micro distilleries and approximately 15K – 20K cases of
soda for independent soft drink distributors.
Brew Hub – Founded by former AB executives, this well-funded organization is establishing
incubator breweries for “partner brewing” opportunities … essentially a turnkey go-to-market
incubator for startup craft breweries, without the capital risk exposure. The group has plans for
five $20M facilities across the US, with the first under construction in Lakeland, Florida.
7. Exit:
A 2011 analysis by the Demeter Group suggests that M&A activity within the craft brewer segment
is expected to increase. Major brewers are expected to turn their acquisition attention away from
international markets and focus again on pursuing domestic growth through acquisition. An example
includes AB-InBev’s purchase of Chicago-based Goose Island Brewery for $40M in May of 2011. The
Demeter Group study also suggests that larger craft breweries will seek to expand their portfolios
through acquisition. Craft breweries targeted for acquisition are typically valued between 3-3.5X
revenue and 12-13X EBITDA.
Private equity and investment banking firms have also participated in the craft brewery business.
~ 32 ~
One example includes KPS Partners/NAB’s acquisition of Vermont-based IBU (Magic Hat) in 2010,
along with several other craft brewers, which were later sold to Costa Rican company Florida Ice and
Farm Company (2012). Another includes Griffin Group’s acquisition of Anchor Brewing in 2010.
Multiples
Best
Average
Slow
Best
Average
Slow
Revenue
EBITDA
3.50
13.5
3.25
13.0
3.00
12.0
Fully Distributed trading value
$ 6,712,585
$ 4,513,138
$ 6,233,114
$ 4,345,985
$ 5,753,644
$ 4,011,678
The strongest and most obvious leverage here is the vast supply of good, clean, and “constitutionally
protected” water supply. Moreover, leveraging the Adirondack ‘mystique’ in a manner similar to
Coor’s “Rocky Mountain freshness” would further tie this venture concept to the Park.
David Heidecorn
Total capital requirements for establishing this entity are estimated at $1.5M to $2.0M. These high
level estimates are provided by industry experts, including Lou Jemison of Hermitage Brewing
Company and Ken Tucker of Adirondack Brewers Coalition. As another point of reference, the
startup capital requirements of the St. Lawrence Brewing Company of Canton, NY amounted to
$600K; note that this facility has approximately one-half the brew house capacity of the planned
incubator.
11. Time-to-Market:
From inception to first production run, the St. Lawrence Brewing Company required 18 months.
12. Year-round:
This will be a year-round business with small revenue fluctuations expected between seasons.
13. Regional Focus :
~ 33 ~
Such an entity would likely foster the establishment of additional craft brewers throughout the
region, primarily because of its low cost entry point. This approach also ties in well with the limited
market opportunity for any individual craft brewer, in that is facilitates consolidation of production
capacity able to serve the broader region. It should be noted that a 2011 study conducted by UC
Berkley showed the most significant economic impact from the craft brewing industry within
California was seen in more rural communities that suffer from high unemployment. These areas of
California tended to be home to some of the state’s top craft breweries.
14. Synergy :
·
Tourism – Many microbreweries offer tours and tasting rooms to visitors to their area. Craft
brewery lovers will often research microbreweries proximate to their planned vacation locations
to identify possible microbreweries to visit. From a regional perspective, each hamlet within the
Park could enhance its tourism opportunities by developing its own local brand of craft beers, as
is common throughout much of Europe. Such destinations could become the basis of a “craft
brewery tour” package within the Tour Operator concept also proposed in this report.
·
Food/Farming – Raw ingredients for craft brewing (barley, hops, etc.), can be produced within
the North Country climate. Of historical note is the Park was once the largest producer of hops
in North America. New York State has also enacted legislation that encourages establishment of
microbreweries that source their raw materials within NYS, which is also expected to increase
production of barley and hops throughout the North Country.
·
ADK-Branded – Craft beer can be distributed across many state lines (34 states allow this), thus
providing the opportunity for Park visitors to continue their purchases of ADK regional craft
beers after returning to their home state. Additionally, an Adirondack “Beer of the Month”
subscription service could be initiated once a critical mass of craft brewed brands is established.
·
Related Verticals / Services – Once established a craft brewing incubator could expand its
services to support other industry verticals, such as soft drinks, bottled water, and liquor. The
company could also spur the establishment of related service organizations, including
import/export, distribution, and warehousing.
Discussion:
We believe the Adirondack Park holds significant potential in the craft brewing industry. An abundance
of clean, “constitutionally protected” water is certainly the basis for the region’s competitive advantage.
Additional advantages include the following:
·
Among all states, NYS has one of the lowest excise tax levels in the industry. As points of
comparison, North Carolina imposes an excise tax of $.63/gallon and Minnesota (2nd fastest
growth market last year in microbreweries) is at $.48/gallon, versus NYS that imposes no excise
tax on the brewer’s first 500K gallons, and $09.5/gallon above that level.
·
If located proximate to I-87, production facilities would enjoy relatively easy access to NYC,
Boston, and Montreal markets, and within distribution reach to over 100M consumers.
~ 34 ~
·
Western craft breweries are looking to expand their production to the east coast. Recent
examples include the following:
o
o
o
Sierra Nevada (AC) and New Belgium (CO) breweries have opened facilities in Asheville, NC
Lagunitas (CA) has opened a second facility in Chicago, IL
Goose Island (IL) shifted/outsourced some of its production to AB facilities in western NY
and NH
·
The rural, and environmental nature of the Park seems to resonate well with the industry, as is
evidenced by California’s industry growth (mentioned above), and the decision criteria used by
New Belgium and Sierra Nevada in deciding to establish second sites in Asheville, NC
(http://www.fastcompany.com/3000850/asheville-new-craft-beer-capital-america).
·
For further illustration of the craft brewing industry on a NYS and national level, visit these web
links … http://www.thinknydrinkny.com/NYSBA_Brochure_INSIDE.pdf and
http://www.newyorker.com/sandbox/business/beer.html, respectively.
Risk Factors
·
·
·
·
High fixed overhead associated with this concept brings the inherent risk of under utilization
Acceptance of craft brewers’ products by consumers
Shortage of raw materials
Changes in consumption patterns
Related Opportunities
As stated above we believe a craft brewer incubator concept holds much promise for the Adirondack
Park. However, there are several other potential opportunities for ABC to invest in this space. First, Louis
Jemison, the founder and owner of Hermitage Brewing Company of San Jose, an existing craft brewing
incubator in San Jose, CA, has indicated receptivity to discussing an east coast implementation of his
current operation. His expertise and direct experience in this space would offer ABC a lower risk version
of this opportunity, and likely a faster time to market.
Secondly, there also exists a potential investment opportunity with the St. Lawrence Brewing Company
of Canton, NY. SLB shipped its first production batch of craft beers in June 2013. Should the company
meet its sales and production milestones over the next 12-18 months, it plans to expand its production,
canning and warehouse capacity. This expansion is expected to require capital infusion of $750K - $900K
in the 2014-2015 time period. SLB’s owner, Ken Hebb, has taken a very environmental / sustainable
approach to the design, development and operation of his brewery, and may enjoy some distinct
competitive advantages as a result.
Thirdly, Ken Tucker of the Adirondack Brewers Coalition is seeking funding through the EB-5 program to
establish a brewing facility in Ticonderoga. His focus appears to be more related to attracting a west
~ 35 ~
coast craft brewer to establish a second site facility as part of his Ticonderoga-based startup. In essence
he is looking to model the results achieved by Asheville, NC mentioned above.
Recommendation
resources to develop and implement this concept. More specifically, we would recommend connecting
Ken Tucker and Louis Jemison as possible partner-founders to this concept. Ken’s local presence and
enthusiasm toward this concept, coupled with Louis’ domain expertise and experience with this
business model, would make a compelling startup team for bringing this venture into existence with an
ABC investment.
~ 36 ~
Concept: Energy Savings Company (ESCO)
Abstract:
The objective of the company is to provide energy cost savings to households in the North Country
Region by thermally retrofitting homes and providing alternate and/or supplemental lower cost heating
systems, thereby lowering home heating costs, potentially by up to 30-40%, while adding substantial
resale value to their homes, and increasing their personal comfort. Target customers will be owneroccupied homes, heated with fuel oil, and built prior to 1950. The business model is to manage the sales
and marketing function, pre- and post-project audits, and project management for execution of
retrofitting and system installation services. Project work would be subcontracted to existing
contractors and suppliers in the region.
Criteria
1. Economics:
·
·
·
·
·
·
Expected gross return of 25% on each retrofitting project
34% compound annual revenue growth expected in the first 6 years
Low fixed expenses due to subcontracting (from 8% of revenue in Year 1 to 2% of revenue in
Year 6)
Net income/free cash flow growth from 9% in Year 1 to 13.5% in Year 6
Typical consumer pay back 7 years post project completion
IRR of ___
2. Market:
·
·
Total Available Market (total housing units): 443K
The serviceable addressable market (owner-occupied homes, heated with fuel oil, and built
prior to 1950) is equal to 80,000 homes
·
Primary advantage is derived from strong consumer outreach/education and use of free audit as
primary business development tool; company executes a sophisticated marketing/sales function
to an unsophisticated industry (residential contracting). Outreach efforts are further
supplemented by mentoring consumers through maze of financing and subsidy alternatives.
·
Pre- and post-project audits will establish knowledgebase for outreach efforts, testimonials, and
longer-term potential for guaranteed outcomes agreements.
·
Sub-Contracting project activities to companies with high quality service and low overhead
costs.
4. Regulation:
·
Energy Auditors and contractors providing retrofitting services will need to be certified, which is
not an onerous process.
~ 37 ~
·
Little to no additional regulation exists for servicing the residential market. For the commercial
building sector regulations do exist in some geographic markets (e.g., NYC http://www.swinter.com/services-energy-consulting-energy-auditing.htm)
·
Should the ESCO provide in-house financing of projects, additional regulatory burden would
occur, although not nearly as onerous as those experienced by third party finance companies.
Applicable regulations to in-house financing: http://www.nrel.gov/docs/fy10osti/46668.pdf
5. Scalability:
·
The size of the target market within the Park (SAM) allows for company growth within the ADK
Region for more than 14 years (assuming constant growth over the period).
·
Geographical scalability is not limited to the park but is most suitable for colder rural regions in
which energy savings will be more meaningful. Next Step Living (see Existing Model) has
demonstrated strong scalability beyond its original geographic market. NSL completed a second
round of funding for expansion within 4 years of operation and completion of 25,000 projects.
6. Existing Model:
·
Energy Savings Retrofitting – The existing model most proximate to the Region is Next Step
Living (www.nextstepliving.com). NSL also provides supplemental heating systems based on
renewable energy technologies (solar and geothermal).
·
System Installers – While not comparable models with regard to the emphasis on customer
outreach and acquisition, these organizations do provide the retrofitting and heating system
installation services that would comprise the ESCO’s delivered projects.
o
o
o
o
o
o
Greenway Solutions in Keeseville, NY
Crest Solar LLC, Keeseville, NY
D&D Artisans, Tupper Lake, NY
Solar Thermal, Gloversville, NY
Woltner Summit Contracting, Keene, NY
Triangle Electric, Plattsburgh, NY
7. Exit:
Potential acquirers include similar companies operating in adjacent geographic markets, such as
Next Step Living. The table below illustrates possible valuation scenarios upon exit.
Best
Average
Slow
Revenue
2.0
1.5
1.0
Multiples
EBITDA
Net Income
11.0
15.0
8.0
11.0
6.0
8.0
Fully Distributed Valuation
~ 38 ~
Free Cash
16.0
12.0
9.0
Best
Average
Slow
$ 30,604,590
$ 22,953,443
$ 15,302,295
$ 30,168,435
$ 21,940,680
$ 16,455,510
$ 30,668,134
$ 22,489,965
$ 16,356,338
$ 31,432,372
$ 23,574,279
$ 17,680,709
·
High cost of fuel oil in the Park coupled with low availability of natural gas presents a strong
market opportunity for both efficiency retrofit and alternative/supplemental heating system
solutions.
·
Demographics of residential homes in the park (age, pervasiveness of fuel oil heating systems),
combined with the North Country climate should provide further receptivity to the company’s
solution offering.
·
·
·
Dan Leff
Rob Riley
Dan Mason
Office and FFE
One Year Operating Expenses
Auditor Salaries
$
$
$
80,000
261,000
240,000
Total
$
581,000
Note that should the ESCO choose to offer in-house financing (installment type program; see
Discussion section below), total capital requirements would increase to $1.6M.
11. Time-to-Market:
Low time to market due to existing and available subcontractors. Cycle time for project sale is
estimated at one to two months, although longer if subsidies are configured into the proposed
solution.
12. Year-round:
The majority of annual revenue will be seasonal in accordance with industry norms and
subcontractor availability for implementation of projects. Operationally, the ESCO’s project
management activities will also be seasonal while customer outreach, audits and project proposal
development would occur year round.
~ 39 ~
13. Regional Focus :
This concept supports regional goals relating to lower carbon emissions and greater sustainability
and energy efficiency.
14. Synergy :
Some synergies exist with other ventures and concepts under consideration, specifically pertaining
to energy financing, renewable-based heating systems.
Discussion
Interest in and reception to this concept’s value proposition is expected to be positive. A recent
study (Feb 2013) of single family home owners in Vermont indicated strong interest in energy
retrofit opportunities, with lowering of heating costs being the driving motivation. These same
home owners, however, also affirmed that high project costs are a key inhibitor to adoption, and
that financing and rebate opportunities were important ‘enablers’ to project adoptions.
Beyond the availability of in-house or third party financing, the key differentiators for this business
concept stem from the customer acquisition, project management, and customer service elements
of the business. Moreover, the business model strategy for this concept stems from the following
observations:
·
While the greater opportunity for customer savings lies in the thermal inefficiency of their
homes, versus the fuel type of their heating system, customers require substantial “education”
by the project auditor to understand the benefits of efficiency retrofit projects.
·
Informed customers appear to tolerate a significant amount of delayed economic gratification,
in the form of a 6-7 year payback on their investment. However, most will seek financing and/or
subsidies to mitigate large cash outlays to fund the project.
Using the home energy audit as a loss leader, the resulting project proposals can be customized to
address the structure’s current thermal efficiency and fuel type, customer preferences toward
heating systems, and available financing and payback expectations. The ESCO would derive its
revenues from markups applied to subcontractors’ services, with additional revenue potential from
“in-house” PPA-like financing (see below).
As mentioned above, financing options will play a critical role in whether a project is undertaken, as
we expect most consumers will not be receptive to making the large cash outlay and waiting the 6-7
years to realize a return on their investment. Beyond the availability of subsidies pertaining to
customers’ income levels and/or choices of heating system fuel type, financing options for
remaining project costs will typically include the following:
·
Home equity loan or second mortgage – Requires sufficient equity in the capital structure of the
residence.
~ 40 ~
·
·
·
Third party financing (e.g. Admirals Bank, GE Finance) – Requires sufficient credit worthiness of
the home owner.
On-bill financing – Administered by NYSERA, involves repayment of financing through surcharge
on National Grid utility bill.
ESCO’s in-house, PPA-like installment program.
The in-house financing program is designed as a PPA-like contract that would provide customers
with an immediate 10% reduction in their heating costs, and a 30% reduction upon fulfilling their
installment contract obligations, (7-8 years). This model continues to support a 25% gross return to
the ESCO.
Risk Factors:
·
·
·
·
·
Ensuring quality of work among subcontractors
If in-house financing is offered, risk of default
If customer behavior changes post-implementation of project (e.g., setting thermostat higher),
projected cost savings could be affected and economic model invalidated
Sun-setting of renewable energy subsidies could affect customer receptivity to such investments
Depending on home owner income levels, projects can be lost to government funded programs
that subsidize projects via grants
Recommendation
resources to develop and implement this concept. Inclusion of the in-house financing alternative is also
recommended.
~ 41 ~
Concept: Tour Operator (ABC Tours)
Abstract:
ABC Tours will be a Tour Operator Company with the mission to provide world class experiential
vacation packages to upper middle to high net worth individuals and families, both domestically and
internationally. There currently are no known tour operators within the Adirondack Park that focus on
an all-inclusive concierge service to provide point-to-point transportation throughout the entirety of the
Park. Through direct personal assistance with customers, ABC Tours will create fully customizable tour
packages. This involves brokering transactions with third party operators that will provide lodgings,
excursions, and meals, all while ensuring a seamless transition for the customers among these locations.
Criteria:
1. Economics:
·
·
·
·
·
·
Start-up expenses: $321,546
Annual operating expenses: $796,372
Earnings Before Income and Taxes: $(76K) in Year 1, growing to $623K in Year 10
Initial customer capacity: 30tourists/day
Breakeven: average of 8 customers/day, throughout the year
IRR: 44%
2. Market:
·
·
·
·
·
·
·
·
The tourism market is large and growing; $6.6 trillion in 2013, with $1.2 trillion carried by tour
operators; overnight visitor arrival growth in Q1 2013 was 5.7% over Q1 2012
1 billion international trips in 2012 (worldwide)
$175.8 billion generated in the US from international visitors in 2012
Canadians spent 194,413,000 nights in the US in 2012 and spent $17.4 billion (CAD)
NY was top state visited by Canadians: 4,263,000 visits; 11,461,000 nights; $1.6 billion (CAD)
Overall average visitor party size to Adirondack Park was 4 people in 2012
Average length of stay 5 days; average expenditure $100/person/day; average age 50; average
income $90,000
Greater than half of visitors to the Park were from New York State
·
·
·
First-mover advantage in the tour operator market in the Adirondack Park
Hands-on interaction throughout the planning and execution of luxury tours
Uniqueness of the Park
~ 42 ~
·
Development and utilization of “tour alert software” that combines GPS with pre-programmed
routes and visual icons to assist drivers in delivering maximum value
4. Regulation:
·
·
·
·
·
Register business name and complete a Certificate of Incorporation
Drivers need a Class E license (Taxi and Livery) to drive for-hire vehicles up to 14 passengers
Future certification as a Certified Tour Professional (CTP)
Future membership in the United States Tour Operators Association (USTOA)
Future membership in the National Tour Association (NTA)
5. Scalability:
·
·
Scalable by adding more vehicles and drivers to the fleet
Outside the Park, scalability is unlimited, but with much more competition
6. Existing Model:
·
Economic model is similar to cruise lines
o Carnival Corporation (CCL) http://www.carnival.com
o Royal Caribbean Cruises (RCL) http://www.royalcaribbean.com
·
Sample tour operators include:
o Abercrombie & Kent http://www.abercrombiekent.com
o Travcoa http://www.travcoa.com
o Adventures by Disney http://www.adventuresbydisney.com
o Great American Adventures http://www.grandamericanadventures.com
o Globus Journeys http://www.globusjourneys.com
o Trafalgar http://www.trafalgar.com/usa
o Maupintour http://www.maupintour.com
o Collette Vacations http://www.collettevacations.com
o TUI http://www.tui.com
o Road Scholar http://www.roadscholar.org
·
All-inclusive luxury tours range in price from $200 - $1,500 per person per day
7. Exit:
Best
Multiples
EBITDA
5.0
Fully Distributed
Valuation
$ 3,402,442
~ 43 ~
Average
Slow
4.0
3.0
$ 2,721,954
$ 2,041,465
·
·
·
·
·
·
·
Adk Park was ranked #21 among “The 46 Places to Go in 2013,” by the New York Times
(http://www.nytimes.com/interactive/2013/01/10/travel/2013-places-to-go.html?hp&_r=0).
6 million acre Park celebrated for its lush forests and pristine waterways
At least 2,000 miles of hiking trails, the largest network in the northeast
Longer fall foliage season than anywhere else in the northeast
Celebrated sporting history; home to Lake Placid, host of ’32 and ’80 Winter Olympics
Year-round opportunities
Rich in adventure, history, culture, agriculture, ecology, and incredible sights
·
·
Tourism represents a dominant theme among the council’s early ideas and concepts
Among all council members, there is a collective knowledge of the Park’s independent operators
such that “hidden gems” can be mined
o John Ernst (Elk Lake Lodge)
o Rich Kroes
o Vinny McClelland (The Mountaineer)
o Jim McKenna (ROOST – Regional Office Of Sustainable Tourism)
o Diane Fish (Adirondack Council)
o Stephanie Ratcliffe (The Wild Center)
·
·
·
Startup costs: $321,546
Annual internal operating costs: $796,372
Total investment: $1,117,918
11. Time-to-Market:
·
·
Minimal, due to lack of major infrastructure requirements
Approximately 8 months in total; 2 months each for business establishment, web platform
creation, initial advertising efforts and public relations, and lead time between tour bookings
and initial tour operations
12. Year-round:
~ 44 ~
·
·
·
Current tourism in the Park shows strong seasonality
o 36% of visitors arrive in July/August
o 22% in September/October
o 14% in November/December
o 13% in January/February
o 10% in March/April
o 5% in May/June
ABC Tours will need to aggressively promote tours during the “low seasons”
Greater tourism in the “high seasons” must offset potential losses in the “low seasons”
13. Regional Focus:
·
There is strong affinity with the regional strategy outlined by ADK Futures
(http://adkfutures.org/2013/03/04/ecotourism/)
o Ausable Chasm, High Falls Gorge, etc. could be marketed as ecotourism
o Farm tours and farm stays are currently available
o Many lodgings and restaurants are tied to sustainable operations and local food
o Portion of revenues could provide a funding stream for environmental protection
·
The Regional Economic Development Council calls for tourism to diversify the Park’s economy
o ABC Tours would attract more tourists who spend money in the Park
o ABC Tours would also provide greater employment for third party operators
·
The Wild Center is committed to demonstrating ecotourism and ethics
o Bring more attention and business to the interior of the Park
o Ecotourism is defined as "responsible travel to natural areas that conserves the
environment and improves the well-being of local people." (TIES, 1990)
14. Synergy:
·
·
·
·
·
Leverage the Adirondack Brand and brand development
Leverage related promotional efforts …
o Adirondack Tourism Council (www.visitadirondacks.com)
o I Love NY promotional efforts
o Governor Cuomo’s announced $60 million advertising campaign
Leverage the Adirondack Park Recreation Strategy Plan
Create partnerships with local established businesses
o Lodgings
o Excursions
o Restaurants
Promote other Adirondack businesses through targeted tourism activities
o Microbrewery
~ 45 ~
o
Adk Packworks
Discussion:
Service Offering: ABC Tours’ service offering would include the following elements.
·
·
·
·
Package, promote, sell, and oversee world class vacation experiences
o Fixed week, weekend, or weekday schedules
o Customized schedules
Daily concierge service
o Point-to-point transportation
o Guarantee high quality of experiences and interactions
Ancillary revenue streams
o Adk branded products
o Travelogue videos / photography
Customization options
o Meeting and drop off points
o Length of stay
o Destinations
o Accommodations
o Dining
o Activities
o Outfitting
Economic Sustainability:
·
·
·
·
ABC Tours requires 2,655 person-days annually to break-even
Maximum capacity is 10,950 person-days based on year-round operation
High service volumes in peak seasons will be required to overcome losses during low seasons
The following chart illustrates profitability based on the average number of people per day for a
specific number of operating days in the year
o Red indicates losses greater than $50,000
o Yellow is the breakeven zone, with expected EBIT between $(50,000) and $50,000
o Green indicates profitability of greater than $50,000
o The black-outlined squares indicate projected profits for first ten years of operation
§ Year 1 anticipates fewer people for fewer days each year
§ As awareness and demand grow, so should the number of people and days
~ 46 ~
Promotional Strategy:
·
Leveraging the Adirondack Brand throughout its promotional activities, ABC Tours will utilize
various promotional elements to generate awareness and interest within its target market.
o Mailing lists – ADK Tourism currently has a list of 120,000 names
o Word-of-mouth
o Print ads in numerous high end travel magazines
o Electronic search engine advertising
o Using PR Firm, ABC Tours will seek story placement in key print and online publications,
including NY Times, WSJ, etc.
·
ABC Tours will require a strong sales force
o High end luxury travelers demand 24/7 availability of customer service
o International customers live in all time zones and need convenient times to call
o Minimum of 5 salespeople are required to staff around-the-clock service
·
Employee / Customer Interaction
o Video Skype sessions
o Co-browsing
o Front office location in high-traffic area in downtown Lake Placid
·
Strong, attractive website
o Social media
o Venue for guests to share their pictures and emotions and give recommendations
~ 47 ~
o
o
Portray authentic Adirondack experience where guests experience a unique journey
Emphasize commitment of ABC Tours’ staff to provide continuous premium service
Risks / Challenges:
·
·
·
·
·
·
·
·
Seasonality effects
Ensuring the level of service by staff
Ensuring the level of service of third party operators
Commoditization of packaged holidays
Increased costs / fuel costs
Economic downturn
Disaggregation as consumers have the ability to assemble their own packages
Scheduling optimization for each vehicle
ABC Tours’ Products:
·
Micro-segmentation of the target market
o Empty nesters & retired seniors
o Dual income couples without kids
o Families
o Sportsmen / sportswomen
o Physically disabled
·
Themes – Price per day varies depending on the theme
o Adventure - $700/p/d
o History - $600/p/d
o Ecology - $600/p/d
o Sightseeing - $500/p/d
o Agricultural tourism - $500/p/d
o Cultural experiences - $600/p/d
·
Highlight six geographically distinct regional centers and excursions within a 30-mile radius
o North-central Saranac Lake
o Northeastern Westport
o Southeastern Lake George
o South-central Blue Mountain Lake
o Southwestern Old Forge
o Northwestern Cranberry Lake
Intellectual Property:
·
·
Excellent opportunity to create “tour alert software” for GPS device or smart phone app
All routes to be pre-programmed to create optimal route for driver to follow for each tour
~ 48 ~
·
·
Icons located along the pre-programmed route act as reminders for tour presentation
o Vistas
o Historical events
o Ecological significance
o Scheduled stops
Allow drivers to preview upcoming tours to improve quality of service
Recommendation
It is our recommendation that ABC initiate a search for an entrepreneur with appropriate experience to
develop and implement this venture. ABC should also look into partnering with Adirondack Tourism,
and investigate strategic glamorous campground partners that would provide preferred guest
accommodations.
Supplemental Information:
Sample Tours:
·
·
·
·
3-Day, 2-Night Packages, Friday through Sunday
4-Day, 3-Night Packages, Monday through Thursday
7-Day, 6-Night Packages, Sunday through Saturday
Customized Packages
Sample tours described on following pages.
~ 49 ~
3-Day, Northeastern Adirondack Agricultural Tour - $1,500 per person
1. Friday – Saranac Lake
- Airport pick up from ALB at 12:30pm; SLK at 3:45pm
- Stretch your legs as you walk around the downtown shopping area of Saranac Lake towards
Lake Flower.
- Travel to Hohmeyer’s Lake Clear Lodge to freshen up before meeting for a local beer tasting,
followed by a gourmet dinner. Then explore the hand-crafted Wine & Beer Cellar.
2. Saturday – Westport
- After breakfast, travel along the Scenic Olympic Byway, detouring up the Whiteface
Mountain Memorial Highway for an impressive view of the Adirondacks, before reaching
Vesco Ridge Vineyards in West Chazy for a catered picnic lunch and wine tasting.
- At approximately 1pm continue to Elfs Farm Winery & Cider Mill in Plattsburgh for another
wine tasting. Then continue to Hid-In-Pines Vineyard for another taste of Champlain Valley
wines known for their cold hardy varietals that shrug off cold temperatures and snow.
- Travel along the Scenic Lakes to Locks Passage to DaCy Meadow Farm and freshen up before
enjoying a “Farm to Table” dining experience.
3. Sunday
- Stroll around the working farm featuring heritage livestock before enjoying Sunday Brunch.
- Return to Saranac Lake by noon. Drop off at SLK airport, or continue to ALB airport by 3pm.
~ 50 ~
4-Day, Southern Adirondack Winter Adventure Tour - $2,800 per person
1. Monday – Blue Mountain Lake
- Airport pick up from ALB at 12:30pm; SLK 3:45pm
- Stretch your legs as you walk around the downtown shopping area of Saranac Lake towards
Lake Flower and visit the Ice Castle.
- Travel along the Scenic Adirondack Trail to Hemlock Hall in Blue Mountain Lake to freshen
up before enjoying a delicious home-style meal. After dinner, strap on snow-shoes for a
guided lantern hike.
2. Tuesday – Old Forge
- After breakfast, travel along the Scenic Central Adirondack Trail to Old Forge to ski or
snowboard on McCauley Mountain.
- In the afternoon, head to The Woods Inn in Inlet to freshen up before heading outside again
to capture the remaining daylight while snowmobiling.
- Warm up with a gourmet meal in the main dining room, and then enjoy a drink in the
Laughing Loons Tavern.
3. Wednesday – Lake George
- After breakfast, head to the Lake George Recreation Center to explore their four miles of
cross country ski trails.
- Refuel at the Adirondack Pub & Brewery before venturing onto frozen Lake George with ice
skates.
- Travel to the Friends Lake Inn in Chestertown to freshen up before enjoying a gourmet meal.
Then relax in the Jacuzzi and allow your muscles to recover.
4. Thursday
- After breakfast, head to the Circle B Ranch for an hour horseback ride through the forests
and fields of the Adirondacks.
- Travel along the Scenic High Peaks Byway to return to Saranac Lake by noon. Drop off at SLK
airport, or continue to ALB airport by 3pm.
~ 51 ~
7-Day, 6-Village Sightseeing Tour - $3,500 per person
1. Sunday – Saranac Lake
· Airport pick up from ALB at 12:30pm; SLK at 3:45pm
· Stretch your legs as you walk around the downtown shopping area of Saranac Lake towards
Lake Flower.
· Travel to Hohmeyer’s Lake Clear Lodge to freshen up and enjoy a gourmet 3-course
Adirondack dinner.
2. Monday – Westport
· After breakfast, head to High Falls Gorge in Wilmington and take a nature walk to view the
Ausable River as it spills over ancient granite cliffs. Then continue to Ausable Chasm.
· In the afternoon, travel to Westport and stop at Split Rock Mountain on Lake Champlain, the
dividing line between the warring Native American tribes of Mohawks and Algonquins.
· Travel to Elk Lake Lodge in North Hudson to freshen up and enjoy a gourmet dinner.
3. Tuesday – Lake George
· After breakfast, head to the Natural Stone Bridge and Caves in Pottersville to explore some
of the oldest rock in North America and the largest marble cave entrance in the East.
· In the afternoon, head to Lake George to visit Fort William Henry.
· Circumnavigate the Scenic Dude Ranch Trail before arriving at Camp Orenda in Johnsburg to
freshen up and enjoy a gourmet dinner, then relax by the fireside along a babbling brook.
4. Wednesday – Blue Mountain Lake
· After breakfast, travel along the Scenic Central Adirondack Trail to Blue Mountain Lake and
visit the Adirondack Museum.
· In the afternoon, head to Raquette Lake to board the W.W. Durant for a scenic cruise of
Great Camps.
· Check-in at Great Camp Sagamore, explore the grounds, and enjoy a gourmet dinner.
5. Thursday – Old Forge
· After breakfast, travel to Old Forge and ride the Scenic Chairlift to the top of McCauley
Mountain, and then explore the shops downtown.
· In the afternoon, head to The Woods Inn in Inlet to check in, and then enjoy the peaceful
tranquility of the Adirondack Mountains.
· Enjoy cocktails at sundown in a prime location for watching the sun set into the mountains
before dining.
6. Friday – Cranberry Lake
· After breakfast, travel along the Scenic Adirondack Trail to Cranberry Lake, and hike up Bear
Mountain to a scenic view of the lake.
~ 52 ~
·
·
In the afternoon, head to Tupper Lake to visit The Wild Center.
Travel to Club Rocky Top in South Colten for a gourmet meal, and meet the team of sled
dogs at Call of the Wild.
7. Saturday – Return
· After breakfast, enjoy a wheeled cart tour through the forest pulled by Siberian Huskies.
· Return to Saranac Lake by noon. Drop off at SLK airport, or continue to ALB airport by 3pm.
~ 53 ~
Recommended Venture Opportunities
The project team has identified, screened and substantially vetted two prospective venture
opportunities. They include:
·
Adk Packworks – Manufacturer of innovative bag and pack products
·
Wholeshare.com – Ecommerce company providing affordable, local, organic and sustainable
foods
Screening profiles, business model canvases, and economic summaries for each opportunity are
presented herein.
~ 54 ~
Company Name: Adk Packworks (www.adkpackworks.com)
Abstract:
Inspired by the iconic Adirondack Pack Basket, Adk Packworks plans to be a “game changer” by
leveraging its patentable internal frame bag design to revolutionize the reusable grocery bag, shopping
totes and backpack industries, giving consumers the ability to have packable bags that stand upright on
their own, are folded flat for easy storage, and are carried in a variety of different ways (over the
shoulder, as a backpack, and by a handle).
For additional information, please contact Adk Packworks directly.
~ 55 ~
Company Name: Wholeshare (www.wholeshare.com)
Abstract:
The mission of the company is to provide consumers with access to a healthier, more sustainable and
affordable food source by organizing people who live or work near each other into groups that buy
directly from wholesale organic food distributors and local farmers. Wholeshare groups are organized
and managed by independent Group Coordinators recruited by Wholeshare sales and marketing efforts.
Group members place orders individually through Wholeshare’s web site, from which orders are
aggregated and placed directly with regional food producers and distributors. Products are shipped to
Group Coordinators who then distribute to group members. Coordinators are financially incentivized to
recruit members to join their buying group.
For additional information, please contact Wholeshare directly.
~ 56 ~
Deferred and/or Culled Business Concepts and Investment Opportunities
Business Concepts
·
Community-based Virtual Net Metering (CBVNM) – CBVNM is defined as an electric power
producing system that, through a voluntary program, provides power and/or financial benefit to
multiple community members. There has been much expressed by ABC Steering Committee
members regarding this concept and the incentive it could provide to North Country residents to
move to solar powered energy. There is currently legislation pending in the NYS Legislature that
would allow Community Based Virtual Net Metering, however it is unclear as to when that
legislation will be finalized, (one estimate is that it is still a year away).
·
Energy Efficient New Housing – At the suggestion of a few of the civic leaders interviewed by
the Team, the Team looked into the viability of establishing a real-estate development venture
focused on building energy-efficient new homes, targeted at the young professional market.
Although there is a significant inventory of vacant housing stock within the Park, particularly in
Saranac Lake, the returns for a venture of this size do not meet the criteria for the ABC Fund.
·
Fixed-Base Operator at Lake Clear Airport – The concept of establishing an FBO that would
offer regularly scheduled, daily flights from Saranac Lake to either Westchester or Teterboro
airports, was identified early on as a potentially viable opportunity for the ABC Fund, as there is
a perceived need for such a service and several successful models to emulate. However, the
concept has been deferred for now as Cape Air has indicated a willingness to expand their flight
schedule to include service to/from the NYC metropolitan area, assuming they can secure EAS
funding. Congressman Bill Owens has indicated a willingness to support such funding.
·
Blue Sphere Industries (www.bluesphereind.com) – Located in Clarkson University’s Shipley
Center for Innovation, Blue Sphere has developed a sustainable, modular aeroponic growth
system. Demonstration systems, located in the Shipley Center’s business incubator, are capable
of growing a wide variety of fruits and vegetables, including citrus trees. Illusion LLC, a New
Hampshire-based affiliate organization, produces major components for the Blue Sphere
system. Founded by Clarkson University graduate students, the innovative nature of Blue
Sphere’s system is evidenced by the company’s strong showing in several business plan
competitions and favorable press coverage. Regrettably, from an ABC Fund investment
standpoint, the company lacks both a clear strategy for product commercialization and
experienced leadership to guide the company’s efforts.
·
Pet Ecology, Inc. (www.petecologybrands.com) – This venture was brought to the Team’s
attention by Ed Marin. Currently based in Dallas, TX, Pet Ecology is a manufacturing and
distribution business with a line of eco-friendly, pet healthy products, including their hallmark
Perfect Litter ™, an ultra-light, clumping, organic, flushable cat litter that detects if the cat is sick.
The Company was interested in moving their operation to Plattsburgh to be more strategically
and centrally located to its main supplier of raw materials and its largest client in Montreal. As
their needs are more immediate than is feasible for the ABC Fund, they are seeking other
Northern NY locations and investment partners.
~ 57 ~
·
AWR Energy, Inc. – See screening profile below on following pages
~ 58 ~
Company Name: AWR Energy, Inc.
Abstract:
AWR Energy, Inc. (AWR) is an early stage renewable energy company that has developed and sells the
highest efficiency wind turbines available. The company claims its innovative design is capable of
extracting up to 3 times more energy than all comparable conventional (open-bladed) and vertical axis
wind turbines resulting in energy costs as low as 1.5¢ to 4¢ per kilowatt-hour. Their production-ready
system hopes to resolve the growing energy demand crisis by producing electricity that is competitive
with grid-based power.
Criteria: (based on information provided by AWR documentation)
1. Economics:
·
·
·
The 1.5kW turbine from the bearing up sells for $14,980 and $38,280 for the 10kW model
Gross margin starts at 21% and grow to 39% by 2016
Company claims pro forma IRR exceeding 50%
2. Market:
The U.S. electricity market is currently $353 billion with a historical growth of 2% and a projected
market growth to be at $1.2 trillion by 2035. The current nationwide grid cannot support this
growth without a costly and major overhaul. National Renewable Energy Lab (NREL) estimates the
current market for “green” electricity is over $20 billion and growing rapidly. By 2015 it is expected
to exceed $100 billion.
AWR claims its technology offers the highest energy output to cost ratio with almost limitless
installation opportunities. Features include the following:
·
·
·
·
·
·
·
Extracts 2 to 3 times more energy than conventional (open-bladed) or vertical wind turbines
Produces energy at wind speeds as low as 2 mph and as high as 50 mph
Only 3 moving parts result in very low maintenance and operation costs
Return on Investment (ROI) is under 2 years in most cases with an average of 5 years
Can be placed on towers as low as 30 feet and on rooftops
Over 70 Domestic and International patents pending claims in design and application
Products have been designed and tested with aerospace industry validation
4. Regulation:
No regulatory authority exists that oversees the entire wind energy industry. However, the AWEA
(American Wind Energy Association ) does promote industry standards recommended for achieving
state certifications for energy system rebates.
~ 59 ~
5. Scalability:
The business appears to be highly scalable.
6. Existing Model:
While a variety of wind energy turbines exist in the market today, relatively few are similar in design
and price-performance to the AWR system. These competitors include Honeywell
(www.freepowerwindturbines.com/honeywell_wind_turbine.html), and
FloDesign(http://wattnow.org/1891/flodesign-wind-turbine-theres-change-in-the-wind).
7. Exit:
The company projects a Year 6 exit valuation range of $3.8M to $5.2M, based on EBITDA multiples
of 6.0 and 8.0, respectively.
Several opportunities exist for AWR to locally source elements of its proposed supply chain,
including such companies as General Composites.
Dan Leff
Company is seeking $5M in investment for capital expenditures and working capital.
11. Time-to-Market:
Six to nine months would be required to produce initial order inventories, along with acquiring
necessary certifications.
12. Year-round:
Installation seasonality would only be a factor in colder climates.
13. Regional Focus:
The company’s innovation is highly eco-friendly and thus shares this theme with thought leaders
~ 60 ~
and advocates of the Park’s future.
14. Synergy:
As a source of renewable energy the AWR technology could potentially enjoy synergy with the
proposed Energy Savings Company presented elsewhere in this report.
Discussion/Recommendation:
The company enjoys an experienced management team, guided by Ed Marin. Working prototypes have
shown superior price-performance and overall value proposition advantages over existing competition.
The company claims to have several pending orders and letters of intent for substantial initial order
volume.
We believe that while this opportunity exceeds the proposed level of target investment of the
prospective ABC Fund, a collaborative investment with another fund should be given consideration.
However, such consideration will require appropriate due diligence.
Below are photographs of the company’s working prototypes.
~ 61 ~
~ 62 ~
Conclusions and Recommendations
Based on the ABC Project Team’s collective analysis, it is our conclusion that the proposed investment
fund can achieve its objectives, and the collective recommendations for business concepts and
investment opportunities described herein comprise an attractive starting portfolio, assuming that
identifiable risks are mitigated to the extent possible. Specifically, we recommend the following:
1. ABC Fund – Establish the proposed ABC Fund, coupled with these additional risk mitigation
strategies:
a. To partially address the risk of limited investment diversification, increase the target
fund size to $20M. Continue project team’s efforts via Advisory Council members and
Fund management to identify additional business concepts and investment
opportunities.
b. To address the risk of limited deal flow, place high emphasis on the Fund management’s
outreach efforts, so as to foster entrepreneurial awareness of the Fund and its support
network of Advisory Council members.
c. To address the risk associated with recruiting qualified entrepreneurs to adopt and
implement the recommended business concepts presented herein, require active
participation among all Advisory Council members to identify best possible candidates.
2. Adirondack Branded Marketplace
a. Invest sufficient additional resources to develop and implement this concept.
b. Actively recruit an ecommerce industry executive with personal ties to the Park.
c. Leveraging Advisory Council members, place significant emphasis on organizing the
artisan and crafts people community within the Park to embrace the venture concept
3. Craft Brewing Contract Incubator
b. Introduce Ken Tucker and Louis Jemison as possible partner-founders to this concept.
4. Energy Savings Company
b. Explore possible strategic affiliation and/or co-investment with Next Step Living, a
residential energy efficiency company located in Massachusetts. The company’s CEO,
Geoff Chapin has expressed interest in expanding into NYS.
~ 63 ~
5. Tour Operator
b. Actively recruit a tourism industry executive with personal ties to the Park.
6. Adk Packworks
a. Continue monitoring of company’s performance, specifically with regard to retail
metrics achieved with Whole Foods.
b. Assuming achievement of company milestones and strong performance within Whole
Foods, position ABC Fund for 2014 Series A round investment in the company.
7. Wholeshare.com
a. Continue monitoring of company’s performance, specifically with regard to achievement
of NYS region milestones.
b. Assuming achievement of company milestones and continued strong performance,
position ABC Fund for 2014 Series A round investment in the company.
c. Mitigate risk associated with managements’ ability to effectively scale the company’s
operations by making a CEO search a primary condition for investment on the part of
ABC Fund.
~ 64 ~
Appendix A – Investment Fund Slide Deck
~ 65 ~
~ 66 ~
~ 67 ~
~ 68 ~
~ 69 ~
~ 70 ~
~ 71 ~
Appendix B – Interviewee Listing
Name
Title
Association
Domain(s)
Allard, Dave
Allot, Jeff
Owner
SVP/Owner
Lyndon Furniture
General Composites
Maple Forest
Manufacturing
Bales, Carter
Bender, Dave
Founder/Partner
SVP
New World Capital
Canton-Potsdam Hospital
Investment Management
Healthcare
Bouyea, Lee
Brill, Gail
Partner
Founder
FreshTracks
Adk Farm to Fork
Food & Agriculture
Brunner, David
Bullard, Travis
Owner
Manager
ABC/Asgaard Farms
Global Foundries
Inv Mgt/Food & Ag.
Manufacturing
Calhoun, John
Chapin, Geoff
Manager
Founder & CEO
3D Systems
Next Step Living
Manufacturing
Energy
Chattopahhyay,
Somak
Childs, Mark
General Partner
Amory Square Ventures
Licensed Admin.
Village at Brookwood
Connors, Adele
Cross, Cairn
Culpepper, John
Curran, Pat
Davis, Laurie
Deming, Anita
Owner
Partner
Dungate, Dave
Dzwonczyk, Mark
Ernst, John
Evans, Jeremy
Farrell, Mike
Fish, Kate
Fite, Kevin
Gaus, John
Gignoux, Reg
Glenn, Kate
CEO
CEO
Owner
Director
Director
Director
Faculty, Biomed Eng.
Owner
Owner
Sustainability Coord.
Goldfarb, Ron
Gonyer, Daegan
Hafer, Matt
Hagemeister, Bob
Hale, Greg
Hardy, Scott
Hebb, Ken
CEO
Owner
Owner
Owner
Senior Energy
Advisor
President
Owner
ABC/Adworkshop
FreshTracks
NC Treetops
Curran Renewables
ADK Harvest
Cornell Coop Ext./Adk
Harvest
ACT Bioenergy
Slic.com
ABC/Elk Lake Lodge
SL Community Dev
Cornell Coop Ext. (Uihlein)
ANCA
Clarkson University
ZeroPoint Clean Energy
ABC/Split Rock Ventures
Paul Smiths Kitchen
Incubator
Trudeau Institute
Blue Sphere / Illusion LLC
KMA Construction
Paradigm Design
NY State
Sr. Citizens/Retirement
Comm.
Branding
Energy
Energy
Food & Agriculture
Food & Agriculture
Heidecorn, David
Partner
Owner
Coordinator
Linckia/Adk Packworks
St. Lawrence Brewing
Company
Catteron Partners
~ 72 ~
Energy
New Venture Development
Tourism
Economic Development
Maple Forest
Biotech
Energy
Tourism
Biotech
Manufacturing
Energy
Manufacturing/3D Printing
Energy
Manufacturing
Beverage
Hill, Beth
Hipps, Alan
Hockey, Joe
Hodges, Richard
Holstein, Alyse
Ingram, Linda
Jemison, Louis
Karasin, Leslie
Keet, Lee
Kilbourn, Jay
Kimball,
Mark/Kristen
Knight, Steve
CEO
ED
Owner
CEO
CEO
Owner
Owner
Chair
CEO
Manager
Owner
Ft. Ticonderoga
HAPEC/Also Energy Auditor
Racquette River Brewing
GreenIT
HPG Partners, Inc.
Ceiba Nature Tours
Hermitage Brewing Co
ABC/SL Planning Board
ABC/Vanguard Atlantic
Casella
Essex Farms
Tourism
Housing & Energy
Beverage
Branding
New Venture Dev.
Tourism
Beverage
Energy
Food & Agriculture
CEO
United Helpers
Koenig, Robin
Kroes, Rich
LaValley, Jim
Lavigne, Dick
Leff, Dan
Lena, Sandra
Lien, Paul
Lievense, Bob
Litynski, Diane
Lundin, Dan
Major, Jim
Marin, Ed
Martino, Cynthia
Mason, Dan
McClelland, Vinny
McFadden, Chris
President
Director
Owner
Manager
CEO
Client Services
President
Retired
Business Professor
President
Chairman
Founder
Chemist
Retired
Owner
Partner
McGill, Chris
McKenna, Jim
Meyers, William
Mills, John
Misarski, Bruce
Morgan, Tammy
Morhouse, Sandy
Murphy, Bill
Murphy, Jim
Murray, Bob
Owner
CEO
General Manager
President
Comm Dev. Admin
LP Teacher
Vice Chairperson
Organizer
Director
Co-Owner
TA - Europe
ABC/Oracle
Big Tupper Brewing Co
Commercial Kitchen/Malone
ABC/Placid Group
Wittus Stoves
Pet Ecology
AC Nielsen
Paul Smiths College
Bionique
Ticonderoga Revitalization
Gradients, LLC
Bionique
NCCEC
ABC/Mountaineer
ABC/Health Evolution
Partners
Oakvale Construction
ROOST
Casella
Paul Smiths College
HAPEC
North Elba Digester Project
Ticonderoga Revitalization
Adk Teleworks
AEDC
Greenway Solutions
Sr. Citizens/Retirement
Comm.
Manufacturing
Beverage
Food & Agriculture
Energy
Energy
Manufacturing
Inv Mgt/Branding
Biotech
Manufacturing
Biotech
Energy
Tourism/Branding
Inv Mgt/Healthcare
Murray, Jim
Musits, Bela
Co-Owner
Partner
Greenway Solutions
High Peaks Venture
Energy
Nelson, Russ
Research Associate
Clarkson University
Energy
~ 73 ~
Energy
Tourism
E-waste
Food & Agriculture
Housing & Energy
Energy
Energy
Newman, John
Nicoson, Wendy
Norfolk, Darcy
Pelky, Duane
Perry, Jennifer
Pratt, Kevin
Ratcliffe, Stephanie
Riley, Rob
Robinson, Charlie
Ruder, Brian
Rumbough, Doug
Salluzzo, Robert
Schwartzberg, Paul
Sellner, Kent
Shulman, Zach
VP
Director
President
VP
Energy Project
Manager
ED
CEO
Chair, Biomed Eng.
CEO
Founder
CFO
Principal
Manager
General Partner
TA - Europe
Global Foundries
Ad Workshop
Community Bank
ANCA
SL Water Systems
The Wild Center
ABC/Northern Forest Center
Clarkson University
ABC/Skylight Partners
Adk Packworks
TA - Europe
Barkeater Inn
Adirondack Beverage
Cayuga Ventures
Manufacturing
Manufacturing
Branding
Energy Financing
Energy
Beverage
Tourism
Energy
Biotech
Manufacturing
Manufacturing
Tourism
Beverage
Simpson, Rob
Smith, Renee
Director
CEO
CenterState CEO
Sugar Hill Farm
Food & Agriculture
Snell, Jerry
Stehlin, Karen
Director
Regional Director
St. Lawrence County Housing
SBDC in Plattsburgh
Energy
Thew, Spencer
Tucker, Ken
Owner
Founder
Call of the Wild Tours
Adk Brewers Coalition
Tourism
Beverage
Tyrrell, Steve
Valentine, Jeff
President
Entrepreneur
NC Community College
Waters, Susan
Webb, Dave
Retired
Founder and Owner
ABC/SL Deputy Mayor
Camp Orenda
Tourism
Wekin, Andy
Wells, Ryan
Owner
Director
Pedal Power Engineering
Admirals Bank
Energy
Energy
Wobby, Chuck
Woo, Peter
COO/CFO
Founder
Linckia/Adk Packworks
Wholeshare
Manufacturing
Food & Agriculture
~ 74 ~
App C
Available on Request. Contact Melinda Little at: Melinda@pointpositiveadk.com
~ 75 ~

Adirondack Business Creators Phase 1 Project

Transcription

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