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Stirring the region’s entrepreneurial cauldron

After six years at Greater Rochester Enterprise Inc., where technology companies and their development are one piece of a larger economic puzzle, James Senall moved to High Tech Rochester Inc. last year to concentrate exclusively on entrepreneurial growth.

Ironically, that concentration has been diluted in his role as president of HTR, where managerial, administrative, political and strategic considerations compete for his attention.

Leading a non-profit whose mission is crucial to the technological rebirth that Rochester hopes for is anything but easy. HTR is a hub that connects technology, talent, capital and expertise.

With 15 employees and an annual budget of some $3 million, HTR has the job of identifying, developing and incubating new businesses in technology while also promoting product and process innovations at small manufacturing firms.

HTR was organized in 1987 by three founding members: the Greater Rochester Chamber of Commerce, Rochester Institute of Technology and the University of Rochester. Twenty years later, HTR completed a corporate restructuring that made UR the sole member. Simultaneously, it expanded its board of directors to include key regional stakeholders.

Approximately 25 percent of HTR’s revenue comes from incubator building income, 25 percent from client project fees, 20 percent from annually scheduled events and programs, and 5 percent from community contributions. The remaining 25 percent comes from the U.S. Department of Commerce, primarily to support manufacturing innovation activities.

With his own work experience stretching from manufacturing and engineering to startups, venture capital funds and non-profits, Senall, 37, has a resume tailor-made for HTR.

An HTR board screened 150 candidates when the job opened up in early 2008 because Paul Wetenhall announced his resignation.

HTR’s leader for five years, Wetenhall previously had served as venture coach leading HTR’s Lennox Tech Enterprise Center incubator. Like Senall, his background was varied and included working for Xerox Corp., co-founding a software firm and later a business process software company.

He left Rochester in 2008 to become president and executive director of the Ben Craig Center, a business incubator and part of the Research Institute at the University of North Carolina at Charlotte.

Getting his start
Charlotte was where Senall got his professional start, roughly a dozen years ago, at Amp Inc., a manufacturer of electronics connectors and cables. The Pennsylvania-based firm was bought out by Tyco International Ltd. in 1999.

Senall, originally from Buffalo, had vowed as an engineering undergrad at Rochester Institute of Technology that he would leave the Northeast for good. During those student days, his interest in problem solving developed into an interest in entrepreneurship. In a notebook he carried, Senall frequently recorded observations, ideas and business plans for potential inventions.

He envisioned gadgets such as a lighter with a built-in cigar cutter, and technologies such as a VCR buddy, an answering machine that would connect to the VCR to record programs remotely.

Like many engineers, in childhood Senall had found himself compelled to tear things apart-televisions, telephones, radios.

"If I saw a screw on the back of something, I’d have to get a screwdriver," Senall says. "Usually I’d just break it and know not to do that again next time."

Curiosity always has been a part of his interest in business.

At Amp, Senall sometimes wondered why the higher-ups made the decisions they did, not out of resistance but to understand management’s vocabulary and perspective.

Senall spent two years at Amp on an accelerated program that allowed him to rotate among four manufacturing plants, producing software and designing new machines to make Amp parts. Later he joined a startup group within the organization that was intended to develop complete circuit boards and connectors instead of the individual components that Amp was offering.

That experience proved relevant to HTR, where part of the aim is to sharpen the region’s competitive edge in manufacturing. HTR offers consulting services from a network of experts, in addition to training programs and assistance in locating local, state and federal funds.

Through the Manufacturing Extension Partnership, HTR’s effort is part of a national network, sponsored in part by the National Institute of Standards and Technology and locally by New York State. HTR receives financial support from the state Office of Science, Technology and Innovation, New York’s high-technology economic development agency.

Engineering, though interesting, was not enough to keep Senall engaged, said his wife, Melissa. He wanted to concentrate on bigger issues with a wider impact, she says, although he might not have known what those issues were at first.

With some work experience under his belt by 1998, Senall left Amp to study marketing and entrepreneurship at the University of Rochester’s Simon Graduate School of Business. Upon graduation, he had four job offers from established technology companies and financial institutions. But an entrepreneurial class he had taken led him down a different road.

"For course credit you could go and mirror a startup CEO; you hang out with them, watch over their shoulders and learn. So then CEOs would come into class to describe their companies, and there was one that I just thought was really cool," Senall says.

Enticed by a startup
The company developed microdisplay technology. Senall shadowed the CEO and by graduation had decided to turn down his other job offers, taking $30,000 less in pay to join the startup-which happened to be based in the incubator at HTR’s headquarters, above Senall’s office today.

At the time, Senall and his wife had no children and little debt aside from school loans. Today they have four children under the age of 10.

"It was a good time to take a chance, since I was already not making any money. I was used to it," he says.

Besides the company’s two founders, Senall was the first employee. Subsequently, the firm grew to a dozen employees with more than $2 million in venture capital that Senall helped raise.

"It was a great experience. Everything I learned I put right to work," he says. "I stayed with the company for about three years, but the technology never quite got there."

It was during the time of the Internet bubble, and other new display technologies were coming out. Senall found himself embarking on a new career.

He started providing consulting services to other startups until eventually he was contacted by some locals who were looking to start a venture capital fund. From his experience trying to raise venture capital, he knew that was important. It was starting to become his personal cause.

The goal of the team was to raise $50 million in venture capital for Upstate New York, and Senall spent the last of his savings and the next 15 months trying to make that happen.

"That was a huge failure. We still thought what we had made sense, but I was the least experienced of the partners," he says.

A team with track records building successful companies and running VC funds was what endowments and other potential funders were looking for, Senall explains.

"I should have seen the writing on the wall, but I was dedicated to it. There was a need in Upstate New York, and there still is," he says.

"To have a sizable fund, you need to go after institutional investors as your limited partners in the fund. That’s where you get into university endowments, pension funds; those are the usual suspects. They will only invest in top-quartile performing teams," he says. "So you have to have one or two successful funds under your belt to even get their money, and we don’t have any of those funds in town. Therefore, we’re not going to get that money."

The other issue affecting the VC industry at large is the size of investments made today.

"If you have a $200 million fund, you can’t make $500,000 investments. You would have to have a hundred investments in your portfolio, and you could never manage it. So the only thing they can do is invest $5 million or higher, and therefore invest only in later-stage deals that need that much money, which expands this Valley of Death, as everyone likes to call it," he says.

This trend is what led to the formation of angel groups, he says. A 25-investor angel investment could total $300,000 to $500,000.

The need for such investments locally led in 2005 to the development of the Rochester Angel Network, of which Senall is director. To date, the $5 million fund has invested in at least eight local tech startups.

Joining GRE
While still a consultant, Senall met Michael Finney, who had just come to town to form GRE. The two met at a Digital Rochester networking event.

"One of the pieces he wanted to include was someone who would be focused on entrepreneurship and innovation. One conversation led to another, and I joined GRE," Senall said.

That was his first job at a non-profit, and it gave him insight into networking between public and private sectors.

At GRE, Senall began working with HTR and with Wetenhall.

"What we were doing at GRE, we were trying not to duplicate from HTR," he says. "I was trying to focus on the gaps that existed, such as early-stage funding, and that’s how we got the Angel Network started."

At GRE, Senall looked for emerging industry sectors the region could compete in to formulate a strategic plan.

"That’s what led me down the alternative and clean tech path," he says. "I was tasked with figuring out what our assets are and finding where we can create jobs in this very broad sector."

Senall continued collaborating with Wetenhall. When Wetenhall announced he was resigning from HTR, Senall saw an opportunity to play a bigger role in developing the entrepreneurial sector.

Moving to HTR meant even fewer hours at home in Penfield. And when he is home, Senall still has work to do.

With a wife, four children and a career, Senall has little time to himself. He enjoys golf and renovating the house, but besides that his free time is spent with the family.

"At home, Jim is really just a big kid. He loves to be outside with them, playing basketball or hockey," his wife says.

He is still trying to work out the balance between work and family, Melissa says. Only a year into his position at HTR, that is to be expected. Besides, the work is his passion.

"As soon as he heard about the job opening at HTR, he was very excited," Melissa says. "He immediately said, ‘This is what I want to do.’ He went after it full-bore, eventually he got the job, and he’s been happy ever since."

Senall said: "The exciting part was com-ing into it, and even while I was still at GRE I had ideas about what HTR could be doing and more broadly what the community could be doing.

"It is an opportunity to take an organization and resources that is right in the middle of this space and be able to really have an impact on the economy over time and really grow this entrepreneurial sector."

With the amount of talent on the street today, Senall says now is a great time to start a business. He is recruiting some of the talent to consult with startups at the Tech Center.

The work he does with startups themselves is minimal, as Senall relies on entrepreneurs in residence and other business consultants at HTR to do the coaching. Senall had hoped he would have more one-on-one time with business owners. Instead, most of the last 12 months has been devoted to other management duties, including the overhaul of HTR’s strategic plan.

Started in early October, the plan is nearing completion.

One overarching objective was reorganizing services, identifying the most effective ones and maximizing them, in addition to unifying HTR’s interface with the outside world.

HTR deals with three groups that traditionally have been separated, Senall says. One group represents the raw technology HTR seeks to test for market validity; another includes the fledgling companies HTR serves in one of its incubators; and the third is existing manufacturing companies looking to develop new products or market channels.

Instead of providing these services in isolation, HTR’s new strategic plan seeks to employ a wide range of in-house talent across a wider range of the organization’s most essential services.

Branding across these three main functions also is likely to become more unified, Senall says. So is clearer, simpler communication.

Developing HTR’s new plan has been tedious but also exciting. Senall says he loves challenges and solving problems. But now the time has come to stop researching alternative models and take action.

One priority is keeping high-potential companies here. Doing that, Senall says, depends on the availability of venture capital. Without it, many home-grown companies are forced to go to larger cities for the funds they need. One winner of HTR’s business plan contests, a thin-film solar company, had to move to Boston for that reason.

"It is a real problem. I think the only thing we can do is get these companies funded locally and try to create some roots for those companies," Senall says.

"We won’t keep them all, but if we can generate some local successes over the next couple of years, eventually the investors and venture funds will invest here willingly, knowing the ecosystem is strong enough to support the companies, or they might start opening their own offices here."

With the myriad services, programs and human resources HTR provides, its goal remains simple: building new companies.

"We’ve studied ourselves to death. We know the elements we need to create a vibrant economy. Let’s go build some successful companies," Senall says.

"If we could build five really high-potential companies a year as a starting point, that’s not an outrageous number. Over five years, we would have 25 really high-potential companies. If we could do 10 a year, that would be huge."

James Senall
Title: President, High Tech Rochester Inc.
Age: 37
Education: B.S. in engineering, Rochester Institute of Technology, 1997; MBA in entrepreneurship and marketing, University of Rochester’s Simon Graduate School of Business, 1999
Home: Penfield
Family: Wife Melissa; son Tyler, 9; daughters Madeline, 8, Talia, 6, and Elissa, 3
Hobbies: Golf, playing basketball and hockey with the kids, renovating the house
Quote: "It is an opportunity to take an organization and resources that is right in the middle of this space and be able to really have an impact on the economy over time and really grow this entrepreneurial sector."

3/19/10 (c) 2010 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail rbj@rbj.net.

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