Connect the Dots: Ones to Watch

Posted: Thursday, January 22, 2015 12:00 pm

By Benjamin Akande

St. Louis increasingly is being recognized as a Mecca for enterprising and innovative business owners. In recent months, major news outlets, including The Wall Street Journal, Forbes, TechCrunch and MSNBC have all hailed the Gateway City as the destination for startups.

Indeed, the number of companies opening shop or raising capital to get off the ground has almost doubled in the last two years, according to the St. Louis Regional Chamber of Commerce. This is due, in large part, to a supportive environment that offers plenty of access to mentoring, networking, Arch grants and new venture funds.

The Ewing Marion Kaufmann Foundation reports that Arch grants played a key role in creating a community of entrepreneurs. These entrepreneurs received small grants and also were connected with local support organizations. As of July 2014, the report notes that 20 recipients of these grants had created 104 jobs, generated more than $2.8 million in revenue, and raised more than $17 million in investment.

This is just a taste of many, many wonderful things to come this year and in the coming years in the commercial life of the St. Louis metropolitan area.

The following is a handful of budding companies that exemplify the prosperous years ahead for the St. Louis region and ought to be watched closely in 2015:

• This promises to be an exciting year for BacterioScan, a locally based company that offers microbiology diagnostic systems for rapidly detecting infection and antibiotic susceptibility and resistance. The company plans to roll out its first clinical application of rapid screening of urine specimens for bacterial urinary tract infection (UTI) during the second quarter of this year. This clinical, global market segment is booming, and is projected to exceed $10 billion by 2017.

Adoption of this new technology will reduce costs and delay in diagnosis, and is expected to reduce the unwarranted use of antibiotics in treatment of UTI. Leading research organizations such as the U.S. Centers for Disease Control, St. Jude’s Children’s Research Hospital, UCLA Medical School, and the U.S. Army Medical Institute have begun trials to use the company’s platform for rapid measurement of antimicrobial resistance and susceptibility. It is expected that this will provide valuable guidance in diagnosing bacterial infections and other related diseases. It also will help address the growing challenge of drug-resistant pathogens.

• Total Hockey & Lacrosse, a one-stop store and online retailer specializing in hockey and lacrosse sports markets, is raising capital in the private markets to propel its next round of rapid growth. In recent years, the St. Louis-based company has expanded to 24 stores in seven key markets, including Detroit, Chicago, Philadelphia, Washington, D.C., and Minneapolis. Annual revenues currently hover at about $60 million. With its new infusion of capital, Total Hockey plans to establish 85 stores in 20 key U.S. markets by the year 2020.

Like BacterioScan, Total Hockey & Lacrosse has been smart about developing its playbook for strategic growth. The future looks bright for this specialty retailer. Participation in lacrosse has risen steadily in recent years: Almost 750,000 young people played organized lacrosse in 2013, according to U.S. Lacrosse. And USA Hockey reports that a record number of people now play hockey across the country, increasing by 16 percent over a 10-year period.

• Last fall, CIC@4240, a company that provides flexible working space for startups and emerging businesses, opened its first location outside Massachusetts in St. Louis’ innovation district. CIC@4240 was attracted to the Gateway City for St. Louis' reputation as a destination for entrepreneurs. It appears the company’s instincts were spot on. Just weeks after the company opened its 32,000-square-foot building on Duncan Avenue, it had already had 20 tenants, including Washington University, Boeing Ventures Group and Husch Blackwell. Company officials are confident that all 70 spaces will be occupied within 12 to 18 months of opening.

• T-REX is another critical player in the St. Louis ecosystem. The co-working space and technology incubator, which provides startup entrepreneurs with affordable space and offers the community useful programming, now occupies five floors of The Lammert Building on Washington Avenue. T-REX currently has more than 100 tenants, a number that continues to rise steadily.

• Cultivation Capital is another critical element in the region providing significant funding support to financial services and technology startups. Building on a $20-million investment fund initiated in 2012, it plans to double that through a newly created fund targeting 20 additional startup companies. One of the most active seed venture capital firms in the Midwest, Cultivation Capital provides a significant resource in keeping St. Louis vibrant as the destination for startups.

The future looks bright for all of these companies –and for our region.

Benjamin Ola. Akande is a professor of economics and dean of the George Herbert Walker School of Business & Technology at Webster University.

Connect the Dots: The Year that Was

Posted: Friday, December 26, 2014 12:00 pm | Updated: 9:39 am, Mon Dec 29, 2014.

By Benjamin Akande

From weeks of unrest in Ferguson and the acquisition of a St. Louis-based life sciences and high technology company by a German pharmaceutical giant, to the economic impact of the Cardinals’ fabulous post-season run and the launch of two major business incubators providing start-up support, 2014 was a big news year for the St. Louis region.

Many of the stories had a significant economic bearing – for better or worse. Here is my ranking of the year’s biggest stories in the region.

1. Ferguson

This is probably No. 1 on the list of most St. Louisans. Not since the Rodney King verdict in 1992 has there been such outrage over perceived police brutality. In the weeks following Michael Brown’s fatal shooting, rioters attacked and looted businesses in Ferguson as well as in nearby communities. A second wave of rioting followed Thanksgiving week when the prosecutor announced the grand jury’s decision. The riots battered the region’s image and have sparked protests, even boycotts and heated discussions nationally about race, and the antagonism between law enforcement officials and African-Americans.

2. The Cardinals and the Post-Season

Who says sports don't matter? According to the St. Louis Regional Chamber of Commerce, more than 3.4 million people trooped to Busch Stadium to watch the Cardinals during the 2014 season, and approximately 6 million people visited Ballpark Village. The Cardinals had a fantastic run, winning 90 games, tying for fifth-most wins in the majors, and making it all the way to the National League Championship Series before being eliminated by the San Francisco Giants. The winning streak was apparently good for business. It's estimated the Cardinals had an economic impact of $338 million on the region.

3. Two New Major Business Incubators

T-Rex, the joint effort between city, state and county business development resources, (Downtown CID, SLDC, St. Louis Economic Development Partnership, the St. Louis Regional Chamber and the Technology Entrepreneurship Center) partnered to acquire and staff the former Lammert building. This collaboration advances the region’s capacity to incubate and support high-growth, technology-focused businesses. This facility current supports the efforts of 101 different technology companies in a single building.

CIC Cambridge selected St. Louis Cortex as home for its second location after extensive global search for innovation communities. The CIC believes start-ups make the world much better. CIC helps them by setting up and managing their office so the start-up can focus on their business. The first center in Cambridge, Massachusetts, has helped more than 1,400 companies. These companies have attracted more than $1.8 billion of venture capital. CIC’s choice to open its second location in the Cortex development creates another home for entrepreneurs in St. Louis. It includes more than 40 start-ups, as well as the innovation centers for Boeing and Nestle Purina.

As the result of these openings and other community resources, no other community in the country can offer more resources to early stage companies.

4. Sigma-Aldrich Joins the Merck Family

Merck, the German giant pharmaceutical and chemical company, acquired St. Louis-based Sigma-Aldrich, one of the area’s largest and most prominent corporations, for $17 billion in cash last September. The deal is expected to expand the reach of Merck’s chemical unit, EMD Millipore, and improve its earning power.

5. The Region’s Most Powerful Woman

For the eighth year in a row, Pam Nicholson made Fortune’s list of Most Powerful Women in Business. Nicholson, the first non-family member to serve as CEO of Enterprise, was No. 22 on the list. Her success at a high-profile family business has inspired many women to pursue professional careers in the St. Louis area.

It's obvious that 2014 was a year of action milestones and activism. Let's ensure that 2015 is a year of transformation, especially as we celebrate the 50th anniversary of the Gateway Arch. Onward, forward!

Benjamin Ola. Akande is a professor of economics and dean of the George Herbert Walker School of Business & Technology at Webster University.

Connect the Dots: Give Small Business Big Gains

Posted: Thursday, November 20, 2014 12:00 pm | Updated: 12:30 pm, Thu Nov 20, 2014.

By Dr. Benjamin Akande

For The Alpine Shop, a retail establishment that specializes in backpacking and camping gear, Small Business Saturday, or the Saturday after Thanksgiving, has become the official kick-off day for holiday shopping. To entice customers, The Alpine Shop, which has stores in Kirkwood, Chesterfield and O’Fallon, Illinois, works with suppliers to drop prices on popular brands by as much as 30 percent.

Traditionally, many big suppliers wait until the week before Christmas to drop prices, but The Alpine Shop’s strategy has paid off handsomely. In recent years, the chain has doubled its sales and attracted twice as many customers during Small Business Days as on Black Fridays.

Millions of small businesses around the country are discovering that Small Business Saturday is a great way to kick-off the holiday shopping season. It also is a wonderful way for customers to support local small business and help boost their city’s economy.

In 2012, consumers spent $5.5 billion at local small businesses and restaurants on Small Business Saturday, according to a survey conducted by American Express and the National Federation of Independent business, a Washington, D.C., trade association.

When you shop at a small business, there’s a good chance you’re supporting a neighbor, friend, church member or old schoolmate. There’s also a good chance you’re helping create job opportunities in your community. In effect, by spending with a local business, you are more likely to have an immediate and meaningful impact on your local community than if you spend with a big-box, multi-national retailer that’s susceptible to the whims of Wall Street.

Small businesses, defined by the U.S. Small Business Administration (SBA) as enterprises with fewer than 500 employees, are the engine of our nation’s economy. They are the biggest job-creators and account for half of the private sector GDP. According to the SBA, in 2011, there were 28.2 million small businesses in the U.S. Small businesses accounted for 63 percent of net new jobs created between 1993 and 2013, and 60 percent of new jobs created after the recession, according to the SBA.

This year, several business districts in the Greater St. Louis region are hosting an array of events to promote small businesses in their communities prior to Small Business Days and throughout the holiday season. On Nov. 29, the City of St. Louis will host a St. Louis Holiday Magic festival, an event that will feature a variety of entertainment and shopping. Several exhibitors will be in attendance, including vendors who will offer gift ideas.

Maplewood and Brentwood have posted Small Business Saturday events on their websites. At many of these events, the downtown boutiques and restaurants of these cities will offer gifts, drawings, treats and discounts.

But supporting local businesses shouldn’t just be confined to festive time, even though most businesses make the bulk of their revenues during that period; it ought to be a year-round endeavor.

For this forthcoming Small Business Day, local small businesses should endeavor to draw customers in with head-turning decorations and aggressive online media promotion. Once inside, they should cultivate them by offering great products and service, coupons, refreshments and opportunities to win gifts. They also should strive to engage customers year-round.

This way, the customer, small business and the community win.

Benjamin Ola. Akande is a professor of economics and dean of the George Herbert Walker School of Business & Technology at Webster University.

Connect the Dots: Ebola & Economic Uncertainty

Posted: Thursday, October 23, 2014 12:00 pm

By Benjamin Akande, Ph.D.

To date, the Ebola virus has infected approximately 9,000 people and killed at least 4,500 in several West African countries. The numbers continue to rise exponentially. The Centers for Disease Control says in a worst-case scenario, the infected numbers could balloon to 1.4 million by mid-January.

The limited spread of the outbreak to Dallas—where a Liberian man died and two nurses have been infected by the virus—and to Spain offer a glimpse of the potential of this epidemic to cause grave health risks and economic uncertainty to the entire globe.

In the countries directly impacted by this outbreak–Liberia, Sierra Leone, Guinea and, to a much lesser extent, Nigeria–fear of the disease has interrupted the daily routine of millions of people, truncated the school year, and kept many from church and the local markets.

The second-biggest casualty of this epidemic has been the economic impact. In recent years, many African countries have experienced unprecedented economic growth. Indeed, eight of the world’s 15 fastest-growing economies are in Africa. They include Nigeria, which is the world’s third fastest-growing economy. Many other African countries, including Liberia and Sierra Leone, have made significant economic progress in recent years and attracted considerable overseas investment only to see all of the gains wiped out by the Ebola epidemic.

The agricultural sector, which accounts for 40 percent of the economic output in Liberia and Sierra Leone, and 25 percent of Guinea’s, has been hit particularly hard. The drop in production has been triggered, in large part, by the Ebola-related deaths of many farmers, which has effectively led to the loss of the planting season.

These events could ultimately hit closer to home in the St. Louis region. Ivory Coast, the world’s largest producer of cocoa, has shut its borders to Liberia and Guinea, countries that are home to a large percentage of the migrant workers who pick cocoa. This labor shortage could delay cocoa exports and lead to a spike in cocoa prices, including the price of products made by local company ConAgra, formerly Ralcorp. Monsanto, which is engaged in limited trading of seeds and crop protection products in West Africa, also is paying close attention to developments in the sub-region.

Nigeria, one of the leading suppliers of oil to the United States, is a key reason why gas prices in the U.S. have remained relatively low over the years. In the face of the Ebola crisis, the government took swift actions in monitoring potential cases and has since been praised for its efforts in holding down the outbreak. The country also has experienced a rise in e-commerce as companies do their part to stock and deliver hygiene products, which help prevent the spread of Ebola.

In the early stages, the epidemic was largely portrayed as an African crisis; but as the struggle to contain what is potentially the biggest health crisis in modern times continues, one thing is increasingly clear: We all have a stake in this fight. Ebola is a global catastrophe that requires all of us to pay attention and do what is necessary to stop the spread.

Benjamin Ola. Akande is a professor of economics and dean of the George Herbert Walker School of Business & Technology at Webster University.

Connect the Dots

Posted: Thursday, September 25, 2014 12:00 pm

By Benjamin Akande, Ph.D.

One of the few gems of good news in the aftermath of the unrest in Ferguson was the announcement from Centene Corporation that it would open a claims processing center in the troubled city. The center will create up to 200 full-time jobs with health benefits.

The announcement is a shot in the arm for the predominantly African-American community that has wrestled with relatively high levels of poverty and unemployment—even before the riots.

Poverty, lack of access to good paying jobs, and feelings of economic and political marginalization are often triggers for unrest. We applaud Centene and its CEO, Michael Neidorff, for taking steps to uplift this community.

However, Centene can’t do this alone. Revitalization requires the teamwork of corporations, foundations, nonprofits, universities, churches, current and former elected officials, and an assortment of other community leaders. Together, they can examine the root causes of the riots and ensure that those underlying problems are eliminated. They also should examine other economically disadvantaged communities that are potential trouble spots, particularly in the North County area.

Here are a few other areas they could work on together:

Job creation: Unemployment is disproportionately higher among African-Americans than whites in the greater St. Louis metro region. Area corporations should consider following in the footsteps of Centene by creating jobs in Ferguson or making commitments to hire residents who live within that zip code. They should team up with the local school districts to offer internships or part-time jobs to promising students, and develop pathways to steer them to college or the vocations. They also could make financial commitments to the city, such as paying for the installation of cameras in patrol cars or renovating or building recreational facilities.

Take the ivy tower to the streets: The greater St. Louis region is home to a large number of colleges and universities, many of which offer job-training programs. St. Louis Community College, which operates a campus within a mile of the neighborhood that was at the heart of the riots, offers numerous job-training opportunities, but participation by Ferguson residents needs to be increased. This could be a great opportunity for the college to partner with community organizations, corporations and the city to attract young people. Some of these partner organizations could consider underwriting some or all of the educational costs for these students.

The other St. Louis-based colleges should consider working together to study underlying problems like crime, unemployment, underemployment and poverty issues dogging Ferguson – and devise solutions to vanquish them. They could also use their unique resources and programs to benefit the community. Locally based universities and colleges could use Ferguson as a testing ground for the implementation of many of these innovative ideas. Other universities should consider picking individual issues and focus on tackling them. Academics specializing in public administration and law enforcement, for instance, could study the idea of encouraging a merger of the 24 police departments that serve North County municipalities in an attempt to create a more diverse law enforcement agency.

Develop a collective voice: Corporations, foundations, community organizations and leaders could work together to lobby the federal government for financial resources, such as economic development funds and disaster recovery funds. St. Louis is the home of the some of the world’s largest and most powerful companies. It also is the hometown of some respected former elected officials, including Dick Gephardt, John Danforth and John Ashcroft. Their talents—and clout—should be enlisted in this effort.

An investment on the part of all will not be a one-way street. A community that is safe, vibrant and financially healthy is good for business.

Benjamin Ola. Akande, Ph.D., is dean of the George Herbert Walker School of Business & Technology at Webster University.