Speeding up the incubator process -- Gazette.Net


For six years, green energy business Clean Currents made the Rockville Innovation Center above the downtown Rockville library its home.

The company enjoyed reduced costs for spaces and certain services than it would have had in the general private market. It had access to shared conference rooms, administrative help, a kitchen and copy machine, all pretty much financed by Montgomery County.

When Clean Currents “graduated” last year to reside in larger commercial space near the Silver Spring Metro station, it had grown from two employees in 2007 to about 20.

Officials praised the company as exemplifying the intent of the Business Innovation Network program to see startups blossom into thriving businesses, but they admitted this week that the ideal goal is to get such companies out faster, preferably in three years, rather than six.

Thus, the county has been working on a plan to reorganize its five innovation centers — once called incubators in reference to their role of hatching young businesses — to better focus them and provide more intensive services that can make them grow faster.

“We want to rethink the system,” Steven A. Silverman, director of the county’s Department of Economic Development, said during a council committee meeting.

Proposal would refocus centers, close Wheaton

One proposal from Silverman’s department calls for focusing the two Rockville centers on data analytics. Those include the 23,000-square-foot downtown one and the 60,000-square-foot Shady Grove center that is the oldest, having opened in 1999. The latter has mostly life sciences companies such as NeoDiagnostix, a cancer diagnostics company with an emphasis in women’s health. The former has a mix of information technology, life sciences and professional services.

The 32,000-square-foot Germantown center, the newest one that opened in 2008 with 45 offices and 11 wet labs, would retain its life sciences focus.

The 20,000-square-foot Silver Spring center, which formed in 2004 and is in the only building owned outright by the county, would become an accelerator, which provides more intensive programs, including access to funding, in a fixed, reduced time frame. The 12,000-square-foot Wheaton facility, the smallest one which opened in 2006, would close once its lease is up in 2016.

While there would be savings in lease costs, the changes would likely necessitate increased funding for operating costs and possibly additional staff, said former County Councilman Michael Knapp, CEO of Germantown consulting firm Orion Ventures, who is working with the DED on its proposal. The five centers now have an annual budget of about $4.5 million, with about $2.5 million recovered in rent, licensing fees and other income.

The current program was designed more to meet real estate space needs of startups, while the current best practice among incubators and accelerators is provide more targeted programs that include investment from venture capital firms and more intensive mentoring, Knapp said. “The idea is to get away from real estate management to partnership management,” he said.

Transitioning the Silver Spring center into an accelerator may result in a steeper learning curve than thought, said Jacob Sesker, a senior legislative analyst for the county who generally supported the plan. Closing the Wheaton facility could also prove more difficult and costly in trying to move current tenants into surrounding private space, he said.

County Councilman Marc Elrich said he would like to see what innovation center models have been most successful and how to replicate that success.

The program has graduated more than 100 companies into private space since forming in 1999. Over the past three years, about 50 have graduated, with 40 of those such as Clean Currents operating within the county, said Ruth Semple, a county business development specialist who oversees the Rockville centers.

The proposal is in the initial planning stages and the DED would likely need help from an outside firm with the realignment process, Silverman said.