Milwaukee Energy Incubator Channels Manufacturing Past to Power Future

Milwaukee has made efforts over the past several years to establish itself as a global hub for water technology, a push that gained momentum last year with the opening of The Water Council’s Global Water Center and the launch of a water tech startup accelerator there.

Now, a coalition of big companies, academic researchers, and government officials—spearheaded by the Mid-West Energy Research Consortium (M-WERC)—is moving ahead with a similar initiative that aims to strengthen another one of the area’s industry clusters: energy, power, automation, and control. (This broad swath of technologies, as defined by M-WERC, includes everything from fossil and renewable fuels to power transmission to “control” products like thermostats, smart energy grids, and technology that directs factory machinery.)

The heart of the effort is a $9.6 million project to fix up part of an old building on the city’s north side, previously an Eaton Corp. research and development facility, so it can house a cleantech startup incubator, corporate and academic research teams, and business service providers.

One of the goals is to provide M-WERC’s member companies—which include industry leaders that have local headquarters or major presences here, like Johnson Controls (NYSE: JCI), Rockwell Automation (NYSE: ROK), and Eaton (NYSE: ETN)—with a collaborative space to tinker with skunk works projects while having access to a pipeline of innovative startups that could become product suppliers or acquisition targets, says Jeff Anthony, M-WERC’s director of business development and its planned Energy Innovation Center.

The more daunting, longer-range goal is to help the startups become successful enough to ramp up hiring and outgrow the space, ideally expanding to bigger offices nearby. That would be a boon for the surrounding neighborhood, which has struggled for decades, partly due to the exodus of manufacturing jobs to Milwaukee’s suburbs and other countries.

“Part of this is the restoration of good-paying jobs in this area,” Anthony (pictured above) says. “That’s not our mission, per se, but we can play a part.”

M-WERC was founded in 2009 as a partnership between the engineering schools at University of Wisconsin-Milwaukee, Marquette University, and Milwaukee School of Engineering. It has since developed into an organization with more than 75 members in academia, industry, and economic development who are focused on research, work force development, and public policy initiatives.

Now, M-WERC is centralizing those efforts in a physical space. The organization is leasing 65,000 square feet on four floors of the 200,000-square-foot building at 4201 N. 27th St.

Xconomy toured the space this week to get an update on the renovation project, which will be done in phases over the next two years. The dust is flying, and one section should be finished by January: a wing with desks for nine startups, along with offices for investors and service providers like lawyers, accountants, and marketers, Anthony says.

Two startups are already renting space there: Edison DC Systems and Alliance Federated Energy. Early next year, M-WERC will solicit applications from startups interested in setting up shop there by next summer and participating in the organization’s planned incubator/accelerator.

The startup program can’t be precisely defined yet because M-WERC is still working out the details. It’s yet to be determined, for example, if the chosen startups would receive an equity or grant investment, which is typical of accelerators. Anthony expects there will be elements taken from other similar programs, such as access to mentors and business training. But unlike traditional three-month startup accelerators, he doesn’t think M-WERC’s program will have a rigid curriculum or a defined time period for each “class” of startups.

The plan is to target cleantech companies that have a prototype and previously raised seed funding, Anthony says. The companies could be developing technology in biofuels, energy storage, wind power, and building energy efficiency, among other sectors. The idea is to find startups that are aligned with M-WERC’s corporate members’ industries—but can address those members’ “technology gaps,” Anthony says.

“There’s such a rich history in this part of the state and the state as a whole” in energy, power, and control technologies, Anthony says. “Part of what we’re doing here is re-establishing that industrial commons, if you will.”

But creating a thriving collaborative space isn’t easy, and it could take some time for the corporate R&D teams and startups to figure out how best to work together. M-WERC is seeking the advice of partners like Greentown Labs, a Somerville, MA-based cleantech incubator that has made efforts this year to better connect its tenant startups with big corporations.

M-WERC and Greentown are sharing best practices, with M-WERC having more experience partnering with corporations and Greentown being the startup incubator expert that knows “how to set up the ecosystem,” Anthony says.

“We’re modeling some of what we’re doing after Greentown,” Anthony says. “We’re using them to jumpstart our launch.”

M-WERC is also watching what’s happening at The Water Council’s building just south of downtown Milwaukee, an initiative that has a lot of parallels with the Energy Innovation Center. Both projects are part of a broader effort to build on Wisconsin’s historic strengths and better align big water and energy companies located here, while growing the next generation of companies in those sectors. Both projects have received public funding—in M-WERC’s case, $900,000 from two state agencies. And both projects involve renovating old industrial buildings to make a hub for startups and corporate and academic research.

“The comparisons to The Water Council make sense,” Anthony says. “I don’t think we’re in competition with them.”

M-WERC’s location has advantages and disadvantages. Thanks to its former occupant, the building is already equipped with the industrial-grade power infrastructure necessary for testing and making prototypes, such as a chamber for subjecting objects to extreme temperatures. Building that infrastructure from scratch could have doubled the project’s $9.6 million cost, Anthony says. “This is kind of a gem waiting to be polished,” he adds.

But convincing startups and other potential tenants to move into the building could present a challenge, given the stigma of the city’s north side, which has received a lot of government funds for redevelopment in recent years, but still suffers from poverty, blighted houses, and crime. That’s a barrier that the Global Water Center, located in the increasingly trendy Walker’s Point neighborhood, hasn’t faced.

“But I think the people who are investing in the area see the long-term potential,” Anthony says of M-WERC’s north side neighborhood. “This is the next Menomonee Valley for the city.”

The Menomonee Valley, once characterized by empty industrial buildings and polluted land, has been rehabbed and is now home to a number of manufacturers, a casino, and Miller Park stadium. City and corporate leaders are now trying to coax a renaissance of M-WERC’s neighborhood through a 60-acre research and industrial park.

There seems to be a growing buzz about M-WERC’s building, which is also home to a community development agency and a health and human services provider. Local businesses that have nothing to do with energy have called up M-WERC asking if they can have an office in its center, Anthony says, simply because they want to be part of what’s happening there. “People are excited about this space,” he says. “This is going to be where a lot of innovative things happen.”

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2 responses to “Milwaukee Energy Incubator Channels Manufacturing Past to Power Future”

  1. Jesse DePinto says:

    Great article Jeff! I’m very excited to see how this all shakes out. This will undoubtedly draw engineers & entrepreneurs in Milwaukee to the EPC industry.