Bye Bye, Michigan

Bye Bye, Michigan

Florida can still attract

companies, especially if it recruits them from anti-business states such as Michigan. One tech company banked on connections in Naples.

ENTREPRENEUR by Jean Gruss | Editor/Lee-Collier

Think things are bad in Florida? Try Michigan.

William Fitts, the chairman and chief executive officer of EnVont, still has that new-arrival glow since he moved his company to Naples. Sunshine, low taxes and an entrepreneurial culture in Florida make the state a free-enterprise haven, at least compared with Midwestern states.

But Naples has something else going for it: Retired chief executives and other wealthy investors from the Midwest who are ready to put their money in the next industrial revolution.

And they're not investing in Michigan.

EnVont is a good lesson for industry recruiters who are desperate to bring high-tech jobs to the Gulf Coast to diversify economies that are still reliant on tourism, real estate and agriculture. EnVont got its start in Michigan, but most of its backers live in Naples and that's the reason Fitts moved the company here late last year.

Incentives were nice, of course. Fitts says EnVont got $240,000 through the county's economic-development arm to offset its move, even though Naples isn't exactly a high-tech hub. But it is a hub for hugely successful retirees. "These people can pick up a phone and call on a global level," says Fitts. "That was all part of the strategy of moving down here."

The other advantage to Naples is that wealthy investors for the most part aren't venture capitalists. In fact, Florida doesn't have the venture-capitalist depth that California or Massachusetts have. Instead, these Florida investors are so-called "angels" who are more concerned with helping entrepreneurs build a business than to sell it.

Fitts says he has insisted on maintaining ownership control of EnVont, turning down millions of dollars in venture-capital money. Better to grow with more limited funds from angel investors and reap the rewards of success, he says.

EnVont is in the business of developing nanotechnology products, one of the hottest areas of the high-tech world. A nanometer is one-billionth of a meter, so small you need a microscope to see it. Coating things from cars to windows and heart stents with these tiny parts improves performance, durability and hardness.

Understandably, Fitts is careful about what he says; no need to tip off the competition. But his goal all along has been to partner with a major chemical company and he's confident he'll announce it within 90 days. "That was our strategy from day one," Fitts says.

Angels from Naples

Fitts, 39, founded EnVont in 2006 near Detroit. A native of Royal Oak, Mich., the young engineer got his start in the car business with General Motors and later with Nippon Paint of America. With his engineering background, Fitts worked in the area of protective coatings for automobile companies.

The name of the company is a play on the words "environmental nanotechnology." Using his savings to get it started, Fitts knew he had to find more investors because he wasn't expecting a return until 2010.

Fitts didn't need tens of millions of dollars. That's because he wasn't planning on building manufacturing plants or a big sales force. Instead, his strategy was to develop the technology and enter into a royalty or other kind of partnership with a large chemical company that already had all these capital assets. He won't disclose those negotiations until he has a deal.

Fitts won't say who's on the company's board of directors or who his investors are. But for the most part they're not the same people. There are six outside investors, but only one is on the six-member board.

EnVont's angel investors aren't as fixated on the sale of the company as venture capitalist, Fitts says. And they don't demand controlling ownership, something that Fitts says compelled him to turn down venture-capital money. "VCs are just focused on the returns," Fitts says. "They want your company." Angel investors, he says, "are much easier to work with."

Part of the appeal of angel investors is that many of them have been in Fitts' shoes before. They're usually entrepreneurs who have built their own companies before retiring to Naples. "They started somewhere, too," Fitts says. "They're really passionate about what we do."

Of course, angel investors expect a return and Fitts says EnVont will deliver. Together, Fitts, his partners and investors have put $4 million into the venture. When the equity markets recover, an initial public offering may be one exit, though Fitts isn't fixated on that idea. "We don't want to sell the company," he says. "This is what we do."

One alternative is to start paying shareholders a dividend. Fitts says that can start when the company starts selling its products in 2010.

I do windows

The appeal of maintaining control of the company among its founders and original investors is because the technology is so promising, Fitts says. "The whole thing is unimaginable," he says.

Consider window cleaning. EnVont scientists have created a product called NanoKlean, which is a liquid that contains titanium dioxide and can be sprayed on windows. The tiny nano-particles adhere to glass, creating a thin film that keeps the windows clean. What's more, the titanium dioxide reacts with the sunlight to kill germs. When it rains, the dirt and germs wash themselves off the windows, eliminating the need to hire window washers or do that yourself. You reapply more NanoKlean every five to seven years.

The potential savings on large office buildings is self-evident, not to mention marital relations.

Cleaning glass is just the beginning. NanoKlean can be applied to concrete, stone, metal or ceramic. "If it's self-cleaning, you could apply it to anything," Fitts says.

Another promising area is that of medicine. Coatings of tiny particles can improve the performance of stents and other medical devices, particularly those that control fluids. Nano coatings could also be used to filter impurities in water and air.

So far, the company has applied for three patents. The company has 11 employees, but Fitts expects to have 40 employees within two years. A tie-up with a major chemical company will be the key to the company's growth and Fitts isn't worried about a global economic slowdown if that happens. "We'll be first to market with a titan," he says.

REVIEW SUMMARY

Company. EnVont

Industry. Nanotechnology

Key. Angel investors are an area's best recruiters of desirable industries.