Incubator Round Up: Emphasis Grows Toward Creating Clusters within Walls

So it isn't too surprising to see the wave of incubator launches increase during this financial slowdown.

A new incubator can take several tacks toward filling its walls. Often the strategy toward defining target tenants depends on the assets of the community. A generalized incubator could be well suited to an area short on affordable space for start-ups in need of shared general business services.

Unfortunately, those facilities, and even many incubators tailored to tech start-ups, are not well suited for the specialized technical needs or energy-intensity of some industry sectors, like aerospace, energy, nanotech and biotech. If the university and industrial research base in a region is strong enough, in addition to generalized tech incubators, there may exist an opportunity to develop a critical mass of these hard-to-serve emerging tech sectors through a specialized incubator.

An unscientific survey of recent incubator-related headlines suggests specialized incubators are growing in popularity. For entrepreneurs, working with sector-specific incubators can provide easier opportunities for collaboration with their peers in the field, access to resources unique to the geographic area, and a focal point to attract the attention of industry experts, specialized financial sources and marketing linkages around the world.

For the incubator financiers and management, however, specialized incubators present greater challenges and risks. They often fill up slower than other incubators because of the limited market being served. As a result, these incubators may often require sustained financial support at higher levels for longer periods than less-specialized incubators. Lacking that funding, the specialized mission can be diluted and go unmet as the incubator takes all comers to meet its budget. As a result, the initiation of specialized facilities should be based on strong market analysis of the opportunity and a solid, long-term commitment of funding, and not just wanting to catch a piece of the next big thing.

Following is an overview of specialized incubators that have emerged over the past several months in the areas of national security technology, space-derived technologies, clean tech, biotechnology and entertainment. Recent generalized tech incubator announcements, because of their continued importance to most regions, also are included at the end.

National Security
Capitalizing on the advantage of a high concentration of intelligence and classified work in the San Antonio area, the University of Texas at San Antonio (UTSA) announced last month the launch of the UTSA Institute for Cyber Security, an Internet security incubator for companies developing technologies that address major cyber security and privacy issues. The incubator is structured to work with both innovations developed at UTSA and entrepreneurs interested in working with UTSA researchers. Participants must agree to significant collaboration with the institute in exchange for access to seed capital, intellectual property support and access to UTSA labs and researchers.

Earlier this year, a national security technology incubator was launched at New Mexico State University (NMSU) to boost technology transfer under federal agencies. Located in proximity to Los Alamos National Laboratory and Sandia National Laboratory, the NMSU incubator is part of the Technology Acceleration for National Security network, a group of incubators focused on security issues.

Aerospace Technology
Serving as a virtual home to companies developing space-derived technologies, the 8th Continent Aerospace Business Incubator opened at the Colorado School of Mines last month. The incubator provides resources such as access to capital and management advisory services for companies working directly on commercialization efforts from the Space Program.

Renewable Energy
To diversify local economies built on traditional industries, incubators are increasingly seeking entrepreneurs developing innovations in renewable energy and biotechnology. In Arizona, a new 10,000-square-foot incubator recently opened with a focus on clean and renewable energy technology. The Northern Arizona Center for Emerging Technologies will also house Northern Arizona University's tech-transfer office.

Biotechnology
A Duke University business incubator located at the North Carolina Research Campus is in the planning stages, according to the Charlotte Observer. The Biomarker Factory will attract scientists in molecular, clinical, genomic, and epidemiological fields. The structure of the incubator includes a nonprofit institute, a for-profit contract research organization and commercial partners, the article states.

Plans are underway in Oklahoma for a mobile incubator to attract biotech companies. Tax increment finance funds would be used to buy space from the Presbyterian Health Foundation's research park, which would then be leased back to the foundation for $1 a year, according to an article in The Oklahoman. The foundation will use the space as a mobile incubator, allowing start-ups to stay in place and grow once they reach profitability.

Following voter approval of a sales tax increase supporting the Johnson County Education Research Triangle in November (see the Nov. 5, 2008 issue of the Digest), Kansas State University officials announced plans to move forward with the Olathe Innovation Campus, which include Kansas Bioscience Authority sponsored biotechnology incubators and space for start-up and established biotech companies.

Information, Entertainment and Communications Technologies
State officials in New York recently announced a $2 million state grant to Polytechnic Institute to fund the Center of Innovation for Technology and Entertainment (CITE). The incubator will house technologists, filmmakers, TV producers, videogame designers and entrepreneurs and is envisioned as a hub for student, faculty, and professional creativity and research.

Not all new incubators are supported by public funds. For example, a newly launched technology incubator in Phoenix, called Gangplank, offers workspace, product consulting and financial support to early-stage software companies in exchange for equity in the firms. The private company encourages collaboration in the form of a co-working environment.

Other Generalized Tech Incubators
Plans for two new incubators expected to open next year in Tulsa were announced last month. The North Tulsa Economic Development Initiative will build and operate a 20,000-square-foot incubator with executive coaching and mentoring services and educational options, reports The Journal Record. Entrepreneurs will also have the option to seek incubator services in downtown Tulsa at a building being donated by a local property developer. The Collaboratorium will house approximately 17 to 28 start-up companies.

Last month, Indiana University broke ground on its $10 million Bloomington Incubator, an initiative under the new Innovate Indiana program. The 40,000-square-foot facility is designed for life sciences and Internet technology start-up companies and will complement the university's existing 67,500-square-foot incubator located on the Central Canal in downtown Indianapolis, according to a university press release.

Innovate St. Louis recently launched a virtual incubator that provides assistance in the form of resources in business planning and training, government procurement, research, life sciences, technology and information on entrepreneurial courses by local educational institutions.

The Santa Cruz, California-based company, NextSpace, recently launched as a co-working space for entrepreneurs and investors of early-stage companies in creative fields. Providing 10,000 sq. ft. of office and workstation space, the physical and virtual community also provides membership services including business formation consulting and capital investment.

Tech Ranch Austin is a newly-launched for-profit incubator that takes equity in pre-seed and seed stage technology companies in exchange for consulting and long-term planning and marketing strategies. Entrepreneurs sign up for office time with Tech Ranch executives to learn processes for funding and growth initiatives. Collaborative work spaces are also available.