Join us for the 35th annual Michigan Growth Capital Symposium (MGCS) to take place on May 17 & 18 at the Marriott Resort in Ann Arbor/Ypsilanti. In addition to providing a platform for Midwest startups to pitch investors; the two-day conference will feature two keynote speakers, several panel discussions, a technology transfer pitch session and ample networking opportunities. More than 450 investors, entrepreneurs and related stakeholders are expected, with nearly 75 investment firms represented. The deadline for presenting company applications is Thursday, March 10. Apply online. Register to attend at www.MichiganGCS.com.
“Inventiveness” or “resourcefulness” constitutes a key building block for entrepreneurial ventures, and the Finnish translation, “Neuvokas,” is the moniker of an advanced-materials company from the far reaches of Michigan’s Upper Peninsula. For founders Erik Kiilunen and Ken Keranen, inventiveness inspired a breakthrough product that gave them a promising foothold in the $140 billion annual global market for rebar, a ubiquitous and generic construction industry material.
In 2009, Kiilunen, a Michigan U.P. native, launched a precursor company EcoStud, which manufactured, distributed and installed green building materials. Three years later, his efforts to develop a second-generation product and manufacturing process led to the development of a low-cost method of producing fiber-based rebar and the launch of a new company with the potential to transform the reinforced-concrete building materials market.
“Fiber reinforced polymer rebar (FRP) has been around for more than 30 years ─ but it has been too expensive for nonspecialized uses,” Kiilunen explains. “We created a high-speed processing technology that takes the manufacturing cost out of the equation. We are able to price our product at parity with conventional steel rebar and maintain very healthy margins.”
In the past couple of years, Kiilunen has purchased and refitted a scuttled turn-of-the-century, 32,000-square-foot mining building in Ahmeek, Michigan, to house Neuvokas’ FRP rebar manufacturing line. The Neuvokas team has boosted its production rate from 30 feet to 75 feet of rebar per minute ─ more than 10 times faster than the nearest competitor.
“We now have a saleable product and a manufacturing process that is bullet-proof,” Kiilunen says. “Our factory is located in Michigan’s Keewenaw Peninsula and sits on a ridge of basalt that was mined from the late 1800s to the 1970s. We plan on using existing mine waste as a feedstock to produce basalt fiber, a key component of our FRP rebar. This vertical integration not only will allow us to drop our price below that of steel rebar, but also will help to remediate prior environmental damage and promote economic development in the region.”
Neuvokas’ FRP rebar offers labor, transport and insurance savings while providing superior performance at the same cost as untreated steel rebar. In addition, it is lighter, rust-proof and more eco-friendly compared to steel.
In 2013, Kiilunen landed the company’s first customer, Stahl Concrete in Door County, Wisconsin, after trailing a semi-trailer truck carrying steel rebar for two hours to the concrete contractor’s facility. The intrigued facility owner introduced Kiilunen to a local businessman looking for an opportunity to invest the proceeds of a recent exit. One month later, Neuvokas received the first tranche of a $1.2 million investment from that high-net-worth investor and a tag-along investor.
In late September, Neuvokas began selling in its target market, Houston, where its FRP rebar is being used for slab-on-pavement applications, such as parking lots, private roads and home patios. Kiilunen estimates the company’s revenues in the fast-growing Houston alone could reach $40 million over the next four years.
Neuvokas’s ability to scale more quickly depends in large part upon fundraising. To date the company has raised $2.2 million in angel capital, $1.45 million in grants and $350,000 in unsecured debt. Kiilunen met with investors last May at the Michigan Growth Capital Symposium in an effort to drum up support to fill out the remaining $1 million of a $2 million Series B round. “We will reach profitability in November 2016, if we raise enough capital to put the proper people and processes in place,” Kiilunen predicts.