Cem Erdem, a Turkish immigrant and CEO of software company Augusoft, plans to start a tech accelerator to help software entrepreneurs.
When former hotel manager Cem Erdem launched his first business 16 years ago, he had little help and few ideas on how to start.
He'd seen a lot of people in suits walking along the Minneapolis skyway. So, looking to sell Internet services, he decided to pass out postcards to successful-looking people as they walked past.
For the most part, he said, it didn't work.
Now, the CEO of Golden Valley-based software firm Augusoft Inc. is setting up a business accelerator program to help aspiring software entrepreneurs avoid his mistakes.
He calls it Project Skyway.
"When I started my company, I didn't know where to go for help," the Turkish native said. "I didn't have much access to resources and I struggled as a young, new entrepreneur in this country. I don't want to see other entrepreneurs like me running around skyways with black and white postcards."
Project Skyway will take in 10 companies nationwide that sell software as a service to businesses, offering them mentors and access to a network of experts who can help develop a product.
The idea of the three-month program is to groom the entrepreneurs to attract investors or prepare them to become self-sufficient. Erdem said the need for such a program has never been greater, as many entrepreneurs are struggling to finance their ideas.
"We are going to fill that gap, because right now there is a huge hole between an early start-up company and people with money," Erdem said.
Erdem's company, Augusoft, sells management software called Lumens in the continuing education market. Erdem said the company has hundreds of clients, including the Minnesota State Colleges and Universities system. Sales on average have grown 60 percent a year since 2001, Erdem said.
Erdem said he plans to personally finance Project Skyway's expenses for the first five years, but declined to state the amount of money. Erdem has never invested in other start-ups before the accelerator, and Project Skyway relies on about 20 active volunteers.
The accelerator would make money by having a small ownership in each start-up. In return, the start-up would receive seed money, office space and mentoring, as well as access to speakers and educational sessions.
For example, a company valued at $200,000 could receive $15,000 in seed money from Project Skyway, along with $10,000 in incubator expenses. Meanwhile, Project Skyway would own 7.5 percent of the company and at the end of the three-month program, companies would have a chance to meet with potential investors.
Members of Minnesota's entrepreneurial community were generally supportive of Erdem's initiative. "It's an additional set of resources brought to bear on developing growing and emerging tech companies," said Michael Gorman, a founding managing director at venture capital firm Split Rock Partners. "I applaud him and look forward to seeing the results."
At a recent Project Skyway meeting, about 20 people discussed the accelerator. Joy Lindsay, president of private venture capital fund StarTec Investments, said she looks forward to seeing more experienced entrepreneurs join Project Skyway's team. Lindsay attended the meeting through a conference call.
"If you have someone who has been a mentor, that person can add a certain amount of credibility to a company," Lindsay said.
Project Skyway is expected to start in August, but Erdem is thinking longer-term. By 2015, he hopes to expand the accelerator's focus to five innovation centers, producing 100 graduates. The goal is to have a self-sustaining business model and have Minnesota listed as one of the top five states for entrepreneurial activity, Erdem said:
"We can be another Silicon Valley."
Wendy Lee • 612-673-1712