The Heritage Group—which two weeks ago launched a corporate venture arm, HG Ventures, that company officials say will invest $50 million in growth companies annually—is making news again.
On Thursday, the local family-run business announced it is partnering with the worldwide entrepreneurial mentoring network Techstars to start a business accelerator.
The accelerator, to be called the Heritage Group Accelerator powered by Techstars, will be housed in 50,000 square feet at THG’s corporate research and innovation facility at Intech Park off of West 71st Street and Interstate 465.
The accelerator—like HG Ventures—will operate out of the New Ventures Group, THG’s newest division.
“This is no PR stunt,” David Brown, Techstars founder and co-CEO, told IBJ. “I’m convinced that with the resources the Heritage Group and Techstars brings to this, it’s absolutely going to be an entrepreneurial hub—a place where they’re doing world-class research and development—in this community. We think this will create some very exciting opportunities in Indianapolis.”
The initial term of the agreement between THG and Techstars is for three years and renewable thereafter. THG expects to invest more than $10 million in direct and indirect costs for the accelerator over the initial three-year period, company officials said.
Gov. Eric Holcomb called the partnership between THG and Techstars “a huge win for Indiana.”
“We’ve worked hard to create the right business climate for exactly this type of world-class entrepreneurial undertaking,” Holcomb said in a written statement. “It’s a significant investment that advances our state’s innovation economy, and I look forward to seeing it produce real results.”
Each year, THG Accelerator will select a group of 10 startup teams from what is expected to be hundreds of applicants from around the world—including the most promising local and regional early-stage ventures.
Applications for the first group of startups in the new accelerator will open in early 2019 with a focus on companies innovating in the materials science, environmental services and specialty chemical fields. The selected startups for the first group will begin work at the accelerator in the early fall of 2019.
Each accepted startup will receive an equity investment of $120,000 and access to Techstars global network of financial, managerial and technical experts.
Jointly, THG and Techstars will take between a 6 percent and 9 percent stake in each of the startups.
The accelerator will be funded entirely through THG New Ventures Group. THG officials stressed that there will be no reliance on public or government funds or grants.
Techstars, which was founded by a group of entrepreneurs in 2006 in Boulder, Colorado, has more than 40 accelerators worldwide, each based on a different business theme or vertical market. This is its first in Indiana.
THG, a privately held company controlled by the Fehsenfeld family, was founded in 1930 and has about 6,500 employees globally in its portfolio of 31 companies, with about half of those employees working in Indiana. The company has various holdings in environmental services and remediation, specialty chemicals and fuel products, and construction and materials.
The company’s new venture arm, company officials said, was born out of the desire of CEO Fred Fehsenfeld and President Amy Schumacher to invest in innovative institutions looking at opportunities through a different lens. The accelerator is a desire to extend its involvement with and mentoring to startups and early-phase companies and entrepreneurs.
“The accelerator is another part of the Heritage Group’s commitment to foster innovation, grow our business internally and externally and position us for the future,” Schumacher said.
The company’s “dare to innovate” philosophy goes back to her great, great grandfather, THG founder John E. Fehsenfeld, Schumacher told IBJ.
“Our culture is anything but traditional. At the heart of it is innovation and problem solving,” Schumacher said. “This venture strategy is the next step in our evolution.”
Officials for the startups chosen will spend three months at the Heritage Group Accelerator, where they will have access to THG’s resources and guidance and mentoring from company officials as well as from Techstars.
The intensive three-month program will culminate in what is called Demo Day, when every company in the program during that session will pitch its business plan to a group of venture capitalists, corporate innovation leaders and industry experts.
“The goal is to facilitate venture investment in the companies while broadening and energizing the local entrepreneurial community,” said Kip Frey, Heritage Group's executive vice president of new ventures.
The collaboration between THG and Techstars got started earlier this year when Frey reached out to people he knew within Techstars.
“Techstars is absolutely the premiere company in this space,” Frey said. “When we decided we wanted to do something like this, we reached out to them and no one else.”
Frey said the new accelerator is a way “to make [THG] smarter, help our customers and at the same time help build on the state’s entrepreneurial ecosystem.”