Tuesday, December 4, 2012

Perseverance Pays Off for Pullman SBDC Client

Partners Dan Surfus, left, Steve Thompson
and Dirk Wischmeier of Viral Science.

Moscow animal additive testing company thrives with SBDC counsel

11/28/2012  PULLMAN, Wash. - If you were to make a list of all the products that contain ingredients of animal origin, you might never stop. It’s a long list and it grows longer every day.
 
Companies that use animal additives must submit those ingredients for independent testing on a regular basis. It’s an industry niche that Viral Science of Moscow, Idaho can now serve, thanks to dogged persistence, patience and an able assist from the Washington Small Business Development Center (SBDC).
 
The Washington SBDC, Washington State University and the University of Idaho are part of a consortium of businesses and economic development councils working to promote the Palouse as a center for research and technology transfer. The partnership was developed as a way of promoting the economic growth in Moscow, Pullman and surrounding areas together, as opposed to independently, in order to capitalize on opportunities, create alliances and recruit new industry to the region.
 

Expertise and experience

In early 2011, Dirk Wischmeier and two partners, all with years of experience in the biotechnology industry and particularly in viral compliance testing, decided to start their own company doing U.S. Department of Agriculture (USDA) and European Medicines Agency (EMA) testing on serums, cell cultures and other products for human use.
 
Viral Science would provide independent testing and verification that the additives used by pharmaceutical companies and other biotech companies - for products such as flu shots, other vaccines and even cosmetics - were free from animal virus contamination.
 
Wischmeier and partners Dan Surfus and Steve Thompson had the technical expertise - plus an in-depth understanding of the industry, skilled employees ready to come on board and client contacts - to go from zero to 60 very quickly. Unfortunately, they were stuck in "Park.”
 
Wischmeier needed a $1.1 million loan to build the testing facility and couldn’t get the loan without financials showing he was making money on testing. But he couldn’t do the testing until he had a facility and he couldn’t build the facility without a loan.
 

A recession-proof venture

Viral Science is the kind of small business that politicians of every stripe say is key to the nation’s economic recovery. Not only does it provide a service critical to public safety, but it will employ 12-15 skilled technicians when fully staffed. And there is strong international demand for the testing provided.
 
Beyond that, Wischmeier said, the business is recession proof. As the biotech industry continues to grow, there will be more demand for the type of testing Viral Science does.
 

SBDC counsels as company finds funding

Still, finding capital for the startup was an ordeal. Fortunately, early in the process, a bank loan officer suggested that Wischmeier contact Terry Cornelison, an advisor with the SBDC in Pullman, Wash. The Washington SBDC is a no-cost business advising program of Washington State University and the U.S. Small Business Administration.
 
The SBDC does not make loans, nor is it involved in loan approvals. But, Wischmeier said, Cornelison was a significant help nonetheless. In one-to-one meetings over the course of a year or more, Cornelison assisted with preparing financial projections, reviewing and updating the business plan, discussing options and validating that the business concept was viable and worth fighting for.
 
The partners had come up with nearly $400,000 of their own money to invest, but the banks weren’t biting. Then Wischmeier approached venture capitalists and angel investors, but they wanted too much control. As the months ticked by, the partners were scraping by doing lower-level testing in a temporary facility while continuing to look for capital.
 
Every time they hit a dead end, Wischmeier said, he knew he could sit down with Cornelison and together they’d come up with a new avenue to try.
 
"He was just a dictionary of who to talk to about what,” Wischmeier said. "We never gave up. We always kept coming up with ways to stay alive.”
 

Testing begins

They got a small break in late 2011 when the partners got a $250,000 loan from the Clearwater Economic Development Association, which was enough to get the frame of the building ordered. Finally, after more months of waiting and frustrating delays, the loan came through in 2012.
 
Viral Science moved into the new 7,500-square-foot facility in July and has been going through required inspections and certifications from large U.S .and European companies.
 
Each company does its own audit, Wischmeier said, and it can take six to eight weeks for paperwork to be completed and filed so that samples can be sent and testing can begin.
 
"We’ve got an awful lot in the pipeline,” Wischmeier said. "It looks extremely good.”
 

Strong future for families

His advice to other entrepreneurs trying to start an atypical business is to line up funding first. With 40 percent down and a recession-proof business, he and his partners assumed they’d have no problem getting a commercial loan. Instead, they went almost 18 months without a paycheck.
 
Now, with the facility built and more orders arriving daily, Wischmeier said all their work is paying off.
 
"I’ve created a good future for my family, my technicians and their families,” he said.
 
It’s a family-oriented business where people watch out for each other, and it has a future in Eastern Washington without fear of a corporate buyout, he said.
 
"In the end, we have the company I dreamed about,” he said.

Contacts:
Dirk Wischmeier, Viral Science, dirk@vsciinc.com, 208-882-4854
Terry Cornelison, Washington SBDC, tlcornelison@wsu.edu, 509-335-8081 
More information
For more information about Viral Science, go to http://www.vsciinc.com/
 
With more than 26 centers across Washington, the SBDC provides confidential, no-cost, one-on-one advising, as well as training and market research, for clients looking to start, grow or sell a small business. For more information, go to http://www.wsbdc.org and type in a zip code to find the nearest SBDC center.