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A meeting of minds: It’s educational all around when incubators and academia come together

by Mary Alice Casey and Corinne Colbert

February 2006

Jan DeYoung, director of the St. Louis Enterprise Centers, is giddy as a schoolboy – an apt analogy, considering that new linkages with his area’s academic institutions are the cause of the excitement.

The latest development is a plan for a four-week entrepreneurship academy for 15 to 30 high school students from three local districts, employing a curriculum already used by St. Louis University, another Enterprise Centers partner. Hosted by the Enterprise Centers, the academy would use incubator clients as examples and resources; university graduate students would mentor individual students.

The project has the full and enthusiastic backing of school superintendents, chambers of commerce and the university’s John Cook School of Business, DeYoung says. “I can’t tell you how exciting this development is,” he says.

But that’s not all. At the same time he’s been setting up the entrepreneur academy, DeYoung has been enhancing the Enterprise Centers’ relationship with ITT Technical Institute’s Arnold branch, the biggest of the institute’s 80 technical-college campuses nationwide. DeYoung recently joined the institute’s curriculum advisory committee and already has discussed possible mutual benefits for the incubator and the college. For example, incubator clients may share their experiences with ITT students as guest speakers or host field trips; ITT students could work for incubator companies as interns and, after graduation, as employees.

“I’m sure there are many other examples around the country of these kinds of relationships,” DeYoung says.

He’s absolutely right. About one-fourth of North American incubators are sponsored by academic institutions; many more programs have formal or informal agreements with colleges and universities, proving that incubators and their clients need not be sponsored by a university to avail themselves of campus resources. Nor do they have to be near a major research university to reap the benefits: Community colleges are partnering with incubators, too.

The benefits of these relationships flow both ways, says Jim Finkle, former director of the Long Island High Technology Incubator in Stony Brook, N.Y., which is sponsored by Stony Brook University.

“The university’s goodwill in the community adds credibility to the clients,” he says. “The university gets to be close to companies that are licensing its technology and gains an additional venue for the employment of their undergraduates and graduate students.”

It’s a no-brainer, really: Students get hands-on experience in entrepreneurship. Researchers gain partners with the ability to take their innovations to market. And incubator clients get access to faculty and staff expertise, state-of-the-art facilities and specialized equipment.

Here’s a look at the ways incubators, clients, students and universities win when they work together.

Benefits for incubators

One of the primary perks of affiliation with a university is access to the institution’s research facilities and infrastructure. For example, university libraries are extensive and typically include subscriptions to online journals and other materials that may be beyond a start-up’s budget.

Other benefits depend on the university. LIHTI clients can take advantage of Stony Brook University’s radioactive-use license, giving them an opportunity to possess radioactive isotopes earlier in their businesses’ timeline than they might otherwise. Lab animal facilities are available as well, as is specialized equipment at a campus rate that represents a 25 percent savings over commercial rates, Finkle says.

In Utah, clients of the Miller Business Innovation Center at Salt Lake Community College have access to real-time digital conferencing, classes and training worldwide via the Internet and direct satellite uplink. “One of our [clients] recently did an online real-time video teleconference with a company in Madrid,” says Sterling Francom, incubator director.

Beyond physical resources, universities and colleges offer faculty and research expertise. Clients of the St. Louis Enterprise Centers who want to start food-based businesses can call on Jack Cancila, director of the hospitality and food service management program at St. Louis University.

Under a formal agreement with the Enterprise Centers, Cancila serves as a mentor for clients with food-service businesses. One such firm, Time for Dinner, which provides fresh, ready-to-heat-and-eat meals for busy families, awaited the opening of a “kitchen incubator within an incubator” within one of the centers’ four mixed-use facilities overseen by DeYoung.

Last spring, Cancila arranged for two classes – one in industrial psychology and another in database applications and design – to assist Time for Dinner through a pair of class projects. The company came away with a new database and a tailor-made employee-training program. “Our students really enjoyed a real-life project,” Cancila says, “and the owners were happy because they got a quality product for free.”

In the fall, Cancila’s food and beverage management class turned its attention to the kitchen incubator itself. “We [developed] a marketing plan and an operations plan and [identified] all of the regulatory, legal and licensing issues that may impact the kitchen and its clients,” says Cancila, who also serves on DeYoung’s client-selection committee when food-service businesses are considered for incubator space.

Academic institutions also offer incubator clients a certain level of clout by association, says Joel Stevenson, director of the University of South Carolina Columbia Technology Incubator. “It’s a stamp of approval,” he says.

Benefits for students

Of course, universities exist to educate students. Incubators can help by giving students job and internship opportunities that allow them to roll up their sleeves and get into nitty-gritty business details.

At USC, about 25 MBA students in the Moore School of Business work on special projects each year for incubator clients. For example, BioMatics – a promising medical technology business in the incubator – found focus for its enterprise with the help of Altonya McMillan, who was pursuing an international MBA.

“Altonya worked directly with our management team to refine our business plan, help us define our product and begin to develop marketing and revenue models,” says Peter Lloyd, the company’s vice president of business operations. “She worked with us to extract important business information and to refine our strategic direction as a company.”

The two-year-old firm, which is developing automated image processing software with applications in chronic-wound healing, became one of the incubator’s 24 current clients in 2004. A successful Columbia community member who wants to see incubator clients succeed underwrote McMillan’s pay.

“There was no cost to us,” Lloyd says. “Altonya was helpful in providing an outside point of view and forcing us to ask some important questions about our business organization. We still have a lot of work to do, but we are much clearer today in our goals and processes.”

Students like McMillan, meanwhile, are getting valuable experience that cements the concepts they learn in class. “Ideally, they become loyal, appreciative business builders and stay in Columbia,” says business professor Richard Robinson.

“We do a lot of applied activities where we essentially run the courses like a consulting business,” he adds. “The incubator has been a really nice addition to the opportunity portfolio.”

The Andrew M. Scibelli Enterprise Center, a division of Springfield Technical Community College in Massachusetts, includes not only a traditional mixed-use incubator, but also an incubator aimed specifically at students. Clients include twin brothers who run a DJ service; a nontraditional student in her 60s who offers fashion design and tailoring; a student who makes nutrition bars; and the mother of an autistic child who coordinates support services for other autistic children and their families.

The program is designed to meet the needs of a very small, one-person operation. For $50 a month, student entrepreneurs get a cubicle with Internet and telephone service, plus access to the center’s on-site support services, which include offices of SCORE and the Western Massachusetts Small Business Development Center.

With its bare-bones infrastructure and use of existing incubator services, “It’s an economical way to incubate student businesses,” says Debbie King, director of the Scibelli incubator. And because the program is open not only to STCC students, but also to students enrolled at other area colleges as well as high-school students, it showcases STCC to potential enrollees.

Benefits for academic institutions

Although their primary missions are academic, universities have a wide variety of ancillary goals as well. Whether those goals are primarily local or potentially global, they can be supported by partnerships with business incubators.

Workforce development is central to the mission of most community and technical colleges. Their students include not only the standard 18- to 22-year-old crowd, but also single parents, retirees and veterans, all of whom can face barriers in education and entrepreneurship.

Take the case of one of King’s clients, a Navy veteran who had been unable to secure traditional financing to launch his digital media business. As a Scibelli client, he successfully applied for a loan from the Western Massachusetts Enterprise Fund, a microenterprise loan fund with offices in the Scibelli Center. He now has 10 employees who provide photography, digital retouching, graphic design and Web design services.

When King told a college administrator about the client’s success, the administrator noted that STCC’s graphic arts department had just received approval for a new program in digital photography. King arranged an introduction and now “[the client] is going to be on the advisory board and is helping to develop the new curriculum,” she says.

Nurturing local entrepreneurs who in turn strengthen college programs is one payoff of an incubator-college partnership. At larger universities, incubators can help bring research innovations to the marketplace, potentially affecting lives worldwide. Since 1980, when Congress’ enaction of the Bayh-Dole Act allowed universities to patent technologies developed with federal research funds, nearly 250 colleges and universities have established technology transfer offices to help commercialize faculty inventions. But according to studies by the Ewing Marion Kauffman Foundation, university technology commercialization isn’t yet reaching its full potential.

One roadblock is that many university researchers may not think about the applications of their work. Incubators can help.

“Scientists do great work, but they’re scientists. They’re not businessmen or businesswomen,” says Tom McCoy, vice president for research, creativity and technology transfer at Montana State University in Bozeman.

MSU faculty can get help in redirecting their thinking from TechRanch, an incubator the university helped establish in 2000. Among its endeavors is a Grow-Your-Own program that creates companies around promising MSU technologies.

Executive Director John O’Donnell says the incubator has produced five companies this way, taking the promising technology and examining potential markets, seeking grant funds, handling licensing issues and more. Three of the companies are still in business. “We take the ball from the 1-yard line and try to get it to the 10-yard line,” O’Donnell says. At the 10, which O’Donnell says one of the three is approaching, he hopes to hand off to a CEO who can run with the new enterprise.

“The whole program is truly innovative and exciting,” O’Donnell says. “It just wouldn’t work if we didn’t have a real and true partnership with the university.”

Among TechRanch’s Grow-Your-Own firms is Envirozyme, a life science and agricultural plant food company based on the work of scientists with the university’s Thermal Biology Institute. In the unique thermal environment of nearby Yellowstone National Park, institute researchers discovered an enzyme able to break down indigestible plant compounds used in animal feed. They replicated the enzyme in their lab and now are conducting feeding trials on a composite food for the $9 billion aquaculture industry. It is thought that the food – and like products for cattle, chickens and other animals – could supplement or eventually replace today’s environmentally destructive animal feeds.

In addition to the Grow-Your-Own firms, seven of the 36 companies TechRanch has assisted resulted from core technologies developed at MSU. That’s a trend McCoy, as head of Montana State’s research division, would like to see continue.

In Rochester, N.Y., High Tech Rochester helps two of its higher education collaborators float researchers’ innovations for feedback and potential funding. For the past two years, HTR, which operates the Lennox Tech Enterprise Center, has teamed with the University of Rochester and Rochester Institute of Technology for pre-seed workshops. The two-day programs, held on consecutive Fridays, arrange for six three-person teams – each comprising a researcher, an MBA student and an entrepreneur – to look at one invention apiece from the participating schools. Both institutions put forth three innovations for scrutiny.

“Each team did a presentation of their particular idea and how it might find market expression,” says HTR President Paul Wetenhall. Their audience: venture capitalists and angel investors. Of the 12 concepts examined so far, three already are moving forward, including at least one that could land in the Lennox incubator. In the long run, technology commercialization can make universities known more for their impact on lives than for their football teams. And incubators can make that happen.

“The big picture is that universities need to be involved in R&D that eventually leads to technology getting into the public’s hands,” McCoy says. “[Incubators] are a very important component of that process.”

Drawbacks of campus ties

More often than not, educational institutions and incubators make great partners. But that doesn’t mean it’s all sunshine and roses. Incubation professionals who run and have run university incubators say there are some definite drawbacks to that particular arrangement.

1. Mission dissonance

Most universities have three-pronged missions: research, teaching and community service. Professors and most university administrators are more strongly focused on the first two missions, especially at larger research universities. They didn’t enter academia to foster specific programs for economic, community or workforce development, and most are not rewarded (in terms of salary or tenure) for doing so.

Because university goals encompass far more than economic development, university incubators have to add activities that provide value in a higher education setting to their own missions of job and wealth creation. As a result, university incubator staffs find themselves managing student intern programs, teaching courses on entrepreneurship and technology commercialization, sitting on university committees and task forces, and so on. All of which, if properly managed, can add great value to the incubator program – but take staff away from helping clients.

2. Culture clash

Universities are at the same time bastions of free thought and hierarchical organizational structures. They are full of liberal thinkers and conservative bureaucrats, innovators and those who cling to the status quo. So universities foster freedom to think, but not always freedom to act.

Incubators, by definition, are places of action. Thus it’s no surprise that, as one longtime university incubator manager puts it, “University incubator directors are pressured not only to think before they act (a good thing) but also to think instead of act (a bad thing). As a result, it’s tempting to cover your own back and hand off responsibility for decision making to others – or to seek consensus, which can take time.”

And while its laboratories and classrooms are devoted to experimental thought, the university’s administrative offices are more risk averse. It’s a system that is more likely to punish those who try and fail than to reward those who try and succeed. The goal becomes to avoid failure, rather than maximize success (which can mean taking risks). So while the university breeds experimental thought, it can limit experimental problem solving.

And what of those who try to bypass the system? They “get labeled as ‘mavericks,’ which the system can heavily punish through a myriad of ways,” says one former university incubator manager.

3. Advisors, not directors

Unlike freestanding incubators, university-run incubators often don’t have a distinct board of directors. Instead, university incubators tend to have boards of advisors. Often, the incubator director’s boss is not the board, but one person on (or sometimes not even on) the board.

The problem with that arrangement is that advisory boards can’t make things happen when they need to happen. They can influence, but not act.

“At one point, I had an advisory committee made up primarily of outside venture capitalists and entrepreneurs,” says a longtime university incubator manager. “We came up with a plan of which one of the VCs said, ‘This is the best damn idea the incubator has ever come up with.’ The problem was that we didn’t have university participation in or direct support of the idea. And the ‘best idea’ failed.”

One way around that problem is to make sure the board includes representatives of the highest echelons of the institution: regents, chancellors, trustees, president, vice presidents, provosts and deans. Without them, even the “best ideas” can fail.—CC

Forging ties with educational partners

The possibilities are endless when it comes to incubators working with universities and colleges. Like any relationship, however, it takes work. Listen in as incubator directors offer advice on how to create strong, mutually beneficial relationships with educational partners.

Create win-win partnerships

Jan DeYoung believes in the power of people – many, many people. As director of the St. Louis Enterprise Centers, four mixed-use incubators that dot the greater St. Louis map, he puts his contacts (and his contacts’ contacts) to use every day.

“One of my core responsibilities is to establish collaborative, strategic alliances with the private, public and educational sectors to support small-business growth and encourage community involvement,” DeYoung says.

Among his educational partners are St. Louis, Washington and Webster universities, the area’s community colleges and even high schools. Students in business, information technology, engineering, drafting, electronics, criminal justice and other disciplines work with incubator businesses in numerous capacities.

How does DeYoung suggest building college and university partnerships that nurture and nudge clients toward success?

  • Network and build personal and professional relationships with key educational partners.
  • Support their events with your presence and participation.
  • Listen carefully to understand their needs and then structure relationships toward mutual wins for the school and your client companies. Opportunities for community service, internships and jobs for students, research collaborations for faculty and public/private financing options are especially attractive to educational partners.
  • Look for success stories that could result in good PR for your partners, your client companies and your own organization.

Help cut through red tape

“We have quite a bit of bureaucracy to deal with. It can be cumbersome,” acknowledges Richard Amato, who directs the Clean Energy Incubator at The University of Texas at Austin. The important thing, he says, it to make sure that clients don’t get dragged down by it. “A lot of times we have to make sure we absorb the bureaucracy and try to act as a buffer,” he says.

The Clean Energy Incubator, part of the university’s Austin Technology Incubator and IC2 Institute, provides an environment and services specifically for clean-energy companies. Among them is e60 Vision, which specializes in three- and four-dimensional graphic visualizations of environmental data.

Phil Knudson, e60 Vision’s CEO, suggests incubator directors ensure their clients know what services are available from the university on a recurring basis and seek their ideas for additional offerings. “Have a section of the quarterly review focus on needs of the [client] and resources available to them,” he says.

Encourage an active role

At the University of South Carolina, the president and provost attend incubator companies’ graduations and other functions at the USC Columbia Technology Incubator, which invites university officials to play a visible role in the incubator.

“If the president and the top brass at the institution don’t want this to happen, forget it,” says Director Joel Stevenson. “The support we have here from the university goes all the way to the board of trustees.”

Create a web of connections

It’s smart to establish strong relationships at many different levels within the framework of partnering colleges and universities.

“When you’re a nonprofit organization, you’re a very small thing compared to a big university. We try to be pretty nimble,” notes Paul Wetenhall, president of High Tech Rochester and manager of its Lennox Tech Enterprise Center. “We try to plug in at many levels.”

Wetenhall also suggests talking about incubator issues and opportunities with community leaders who are in a position to influence university initiatives and partnerships.—MAC

Keywords: partnerships -- organizational/corporate, sponsor, stakeholder development, student intern, technology commercialization, university partnerships

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