the Michigan Economic Development Corporation (MEDC) , a state-funded resource for businesses.
“They needed over $1.8 million in capital, and we helped them put together a pitch,” explained Donaldson a regional director of the MI SBTDC (Lansing, MI). While giving much of the credit to Rudd and his associates for their technical acumen, he steered them away from some of their initial start-up tactics. Donaldson advised against seeking venture capitalists or other forms of professional equity investors. “We don’t see a lot of VCs or angel investors in manufacturing,” he explained. “They are looking for much higher growth rates along with higher risk.”
Practical Financing, Friendly Investors
Given the technical depth of the start-up team for Apex, and the fact that they had customer orders in hand, he did steer them towards approaching potential investors among their existing contacts. “As it turns out, a number of their business acquaintances wanted to be a part of the busi-
How is ProfitKey Making a difference in Quality Management?
How is ProfitKey Making a difference in Quality Management?
“ProfitKey has remained a reliable piece of software throughout our entire history spanning over 20 years."
“ProfitKey has remained a reliable piece of software throughout our entire history spanning over 20 years."
- Monty Peterson Aerospace Dynamics International
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- Monty Peterson Aerospace Dynamics International
ness—people that understood the market and what they had to offer,” he explained.
Then, Donaldson organized a group of potential lenders to meet the Apex team. These were lenders with whom Donald- son had previous experience. He suspected they would be receptive to the business plan.
Four of the lenders submitted financing proposals to Apex. “This gave Apex some opportunities to pick out the deal that was the best fit,” he said. While such competition in lending is a tad unusual these days, Donaldson pointed to the level of talent and skill at Apex. “Investors do not invest in companies, they invest in people,” he said. He felt Rudd and his team had made a desirable business case after covering the operations, financing, and sales and marketing functions in their messaging. Another selling point was the early equity investors who knew the market and the business and were backing it as well. “It said a lot to the banks that other people in manufacturing wanted to invest,” said Donaldson. “Advice I might give to a start-up is work your close network first,” Donaldson said. “They know you and trust you and that then provides credibility to other lenders.” The MI SBTDC is part of a national program. In addition to the SBA and the MEDC, 10 Michigan-based sources also provide funding. According to the organization, it helped raise $231 million to help 14,500 businesses in the state. “There is no fee for our services and we work on a confidential basis with businesses,” explained Donaldson. He noted that every state has an equivalent organization.
Equipment in Place—Planned Upgrades
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That financing translated into a well-equipped start-up contract manufacturer. Besides machine tools, Apex Precision offers a full range of services, including engineering design capability to support its machining capabilities. Their engineers use Unigraphics NX6, along with Unigraphics Manufacturing, or CATIA V5 for CAD work. Machine programming is done with MasterCam X6. They also accept native CAD in most popular formats, including IGES, Parasolid, or Solid Works. For machining tasks, Apex owns a three-axis YCM WV108A vertical machining center (VMC); a Hardinge GX1600 three-axis VMC with a fourth and fifth axis rotary table, an Okuma Genos L300-MW300 mm Multifunction CNC lathe (11.81" [300-mm] turning diameter capacity), and an Okuma GENOS M560V three-axis VMC. A Hardinge Bridge- port GX 1600 VMC along with a Mitsubishi wire EDM rounds
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