Recently, Chris Emmons and some associates had to make a stop at Pika Energy, a local business. The bankers drove up to a home, went around the back, and entered the basement, where a handful of people comprising Pika’s executive management and staff were awaiting their $30,000 check.
That’s not usually how bankers deliver loan funds. Actually, the check didn’t represent loan proceeds. Instead, Emmons, who is the president and CEO of $910 million-assets Gorham Savings Bank, was delivering jumpstart money to the fledgling firm’s three founders, all with roots at the Massachusetts Institute of Technology. Pika, started in 2010 to devise wind turbine technology—practical down to the level of individual homes and mini-grids—had won the bank’s first annual “Launchpad” competition.
The bank had opened the competition in January to encourage entrepreneurial efforts that would boost Maine’s prospects. Pika’s team had earned the award after a tough multi-stage competition that drew nearly 250 entrants, each of whom began by submitting a detailed business plan for what it would do with the top prize and explaining how it would improve the Maine economy. Pika’s president and cofounder Ben Polito had lived on an island farm in Maine that was off the grid, during high school, and brought some early experience with wind generation technology there to his startup.
This summer, Pika used its winnings to move production of its Pika Energy T701 Wind Turbine out of the basement and into a 4,300-square-foot manufacturing facility. The firm expected this to enable commercial-level production, enabling it to begin marketing its systems to homeowners this year. “This is an exciting time at Pika as we transition from an R&D operation into a manufacturer of clean distributed-generation systems,” says Polito.
Banker Emmons himself is excited about the entrée that the competition provided for Gorham Savings to the state’s community of entrepreneurs, innovative small firms, inventors, and startups that he says typically fly beneath the radar of commercial lenders—even community banks.
“There is a whole culture and community that supports these efforts,” says Emmons. But often they don’t immediately mesh with banks because of their size and lack of bankable cash flow.
“Through Launchpad, we’ve had the opportunity to get much closer to this community,” says Emmons. “It has engaged our bank in a way that many of our employees have grown very excited about.” The bank has seen multiple payoffs from an effort that began simply.
Getting Launchpad off the ground
“A breath of fresh banking” is Gorham Savings’ marketing motto, and management and the bank’s marketing firm were searching for ways to make that attitude concrete among the southern Maine business community. At the same time, Emmons says, there had been much discussion among board members, as well as among members of the Maine Bankers Association, about how banks could do things to positively impact the state’s economy.
With tools such as crowdfunding, where strangers invest in product and service ideas through websites like Kickstarter, the management knew that there was interest in funding entrepreneurs. “That kind of idea came up early, and it struck a chord with everyone,” says Emmons. The bank tapped government agencies, educational institutions, associations, and private organizations that work with entrepreneurs to frame the program and set rules. Among the criteria for ideas were that they had to lead to added jobs, new products or services, enhanced exports, or cost-saving efficiencies.
The bank’s contacts helped convince management that the Launchpad prize had to be real money to attract attention and make it worth the entrepreneurs’ time and effort to frame formal business plans for submission.
Launchpad was set up as both a section of the bank’s website and as a Facebook page, and was promoted through Twitter as well. Entries were accepted in January and February. Completed entries were screened by a committee of the bank’s numerous corporators, who selected seven semi-finalists. In March, a three-judge panel convened a public meeting where each semi-finalist had five minutes to present their proposal. These were videotaped.
The recorded presentations by the three finalists that the judges selected from the seven were posted on Gorham Savings’ website. Members of the public were encouraged to visit the site, view the presentations, and vote once for their favorite. The finalists were permitted to promote their entry, encouraging friends, family, and fans to cast a vote for their ideas. Website traffic rocketed up, and around 25,000 votes were cast all told. (You can still view the three five-minute pitches on YouTube.)
“Much of our program was driven by social media,” says Emmons. “The activity level far exceeded our expectations.” The bank received more than triple the number of entries anticipated. Some came from people with little more than a concept that needed seed money to get going; others came from established firms that had raised some capital, but whose funding remained short of critical mass, or who needed additional equipment or other goods to carry out their plans.
“We saw the full spectrum of need from the entrepreneurial community,” says Emmons.
While the winner, Pika, was a high-tech firm, any kind of company or idea was eligible. Indeed, Emmons says that four of the seven finalists’ proposals involved Maine food products. One entrant, for instance, had devised an alternative soft drink using Maine honey, while another had devised a snack of natural vegetable chips. Another was developing means of recycling restaurant waste into a soil additive.
“The outreach and goodwill that this generated was tremendous,” says Emmons. Already, the bank is looking at a 2014 competition, with some adjustments. One change under consideration is multiple levels of prizes, rather than a single grand award. Another idea being considered is establishing multiple categories of award, ranging from raw ideas requiring a start to firms needing second-stage capital to established companies requiring an injection of funds to bring an idea to its full potential.
Launchpad’s longer-term benefits
“Launchpad made us aware that there is an industry waiting to grow, and explode, in Maine,” says Emmons. The bank has already begun building on the contacts generated by the competition.
In some cases, the contest put the bank forward to small firms that hadn’t considered it before, and “some of them have become customers of the bank,” says Emmons.
More broadly, management became aware of the need among this business segment for information and advice. It has reached out to all entrants to offer its bankers, and other experts it will bring in, to serve as speakers or panelists on programs, and even for one-on-one advice. Key topics that the bank has zeroed in on include advice on better structuring of business plans and how to develop effective presentations to potential lenders.
Emmons believes the overall effort has helped to further distinguish Gorham Savings from heavy and varied competition, ranging from local credit unions to branches of major national banks and regional banks.
Launchpad “best symbolizes the bank’s mission of understanding the needs of our customers,” wrote Chairman Daniel Willett in the bank’s annual report, “and building stronger communities.”