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NBIA Incubator of the Year gives biotechnology clients a “big company advantage”

by Mary Jo Milillo

February/March 2010

In less than five years, California’s San Jose BioCenter has become an incubator to celebrate—winning both NBIA’s 2009 Randall M. Whaley Incubator of the Year award and the Dinah Adkins Incubator of the Year award in the technology category.

Between opening its doors in August 2004 and being recognized for its achievements at NBIA’s 23rd International Conference in Kansas City, Mo., in April, the San Jose BioCenter has become self-sustaining —breaking even in fiscal year 2007-08 and recording a 43 percent growth in revenues over the previous year. Revenues for fiscal year 2008-09 totaled $1.7 million, primarily from client leases and service fees.

The BioCenter’s financial success was one of many reasons judges selected it as an NBIA award winner. “The BioCenter’s results speak for themselves —it is a superior, successful and comprehensive program with spectacular results in attracting serial entrepreneurs,” said one judge.

Since its inception, the BioCenter has graduated 14 companies —six of which lease or have purchased their own buildings and employ from 30 to 400 people. Today, the BioCenter has 40 clients: 22 resident and 18 affiliate companies.

The incubator is a project of the San Jose Redevelopment Agency, which initially invested $6.5 million to fund the incubator, and the San Jose State University Research Foundation, a nonprofit corporation that provides financial oversight and facility management. The SJSURF hired Prescience International, a company founded by Melinda Richter, to manage the BioCenter’s day-to-day operations.

Ingredients for success

How has the BioCenter become so successful after such a short period of time? Richter says one reason for success is the “big company advantage” the incubator offers. Clients focus on work; nearly everything else —equipment, office support, education, access to funders, supplies —is provided.

“We are very industry focused. We run the incubator like a business and we operate like entrepreneurs,” says Richter. “We exemplify good leadership to our clients and set an example for them to emulate.”

As with any business enterprise, acquiring capital for the BioCenter is paramount. A tireless fundraiser, Richter is always looking for creative ways to make money —and help clients in the process. One fundraising method is a tiered sponsorship program.

In this program, the incubator offers multiple levels of annual sponsoring opportunities ranging from $1,500 to $50,000. Sponsors receive numerous benefits —depending on the level of sponsorship —from getting their logo on BioCenter marketing materials and opportunities to mentor BioCenter clients through on-demand “practice your pitch” sessions to having their name tied to incubator events, programs and/or conference rooms. The BioCenter also offers one-time opportunities to sponsor a product show or an exhibit at BioCenter workshops and panel discussions.

Exposure to potential high-growth start-ups —“the best in the [Silicon] Valley in the emerging life science market” —is a major benefit for corporate sponsors, says Richter. Several BioCenter client companies have been the subject of articles in national media, including the New York Times, Time magazine, the Wall Street Journal and CNN.

Networking pays off

A tenacious networker, Richter is “big on being out —circulating, connecting and conversing … to build rapport and begin building the trust, the foundation of any personal or business relationship.”

At the BIO 2009 conference in Atlanta last spring, Richter met venture capitalists to make contacts and determine “if the BioCenter has companies that match their criteria.” She says getting to know venture capitalists, pharmaceutical company representative and funders “helps make our companies successful.”

As part of its program, the BioCenter facilitates clients’ access to venture capitalists and representatives of pharmaceutical companies at a monthly “meet with” series, in which funders explain what they are looking for in a start-up. Following their presentation, selected clients “meet with” possible funders to explain their products in 15-minute sessions that are designed to match clients with investors interested in funding particular projects. A BioCenter company creating a vaccine, for example, is matched with a pharmaceutical company interested in purchasing or funding a company involved in vaccine research.

BioCenter events and programs offer informal networking opportunities for clients, potential funders and pharmaceutical companies. With these connections, clients can capitalize on the liaisons that the BioCenter has built.

Service is essential

Besides building trust with everyone connected with the BioCenter, Richter says that providing excellent service is a priority. “By creating an environment where everything is provided, researchers can come into a space and begin working within an hour,” she says.

In addition to state-of-the-art equipment and facilities, the incubator handles any permits, licenses, certifications, compliances, safety inspections and protocols necessary to operate a life science and emerging technologies incubator. The BioCenter includes a chemistry wet lab and a biology wet lab, each with more than $1 million of laboratory equipment.

The BioCenter also has negotiated lower prices for items purchased in bulk —often at a 30 percent to 50 percent discount. Clients purchase these items through the incubator at a lower price than they could on their own, even with an administrative fee for the service and convenience. Vendors are willing to offer the incubator good deals for their products and services in hopes of retaining clients’ business when they go out on their own.

One client’s experience

One BioCenter client credits the incubator with helping it get where it is today. Single Cell Technology President Rich Jorgensen says the business “would not have grown so fast without the incubator. We moved here with three people a year ago and now employ nine.”

Single Cell Technology identifies and ranks antibodies for both therapeutic and diagnostic purposes. Thanks to the incubator, Single Cell staff is moving rapidly toward commercialization. “It’s a fantastic environment [in which] to start a company, and they bring in people who want to help us,” Jorgensen says.

Not long ago, the BioCenter arranged for Single Cell’s management team to meet-with a major pharmaceutical company to discuss funding. “You’d never get these meetings on your own. Without the incubator, a small company wouldn’t have the resources to attract a large pharmaceutical company to consider funding their project,” Jorgensen says.

Richter says it’s to the BioCenter’s advantage to connect clients with possible funders because the incubator’s success depends on the success of its clients.

Watching the incubator grow from scratch has been a “tremendous learning and fun-loving experience,” she says. Richter credits NBIA with providing “a great network for us to bounce new ideas off of.”

“NBIA is a network of people who are so knowledgeable, creative and supportive,” she says. “Winning these awards is very influential for us and speaks to our model of what a full-service technology incubation program can do.”

Randall M. Whaley Incubator of the Year

Dinah Adkins Incubator of the Year, Technology Category

San Jose BioCenter
5941 Optical Court
San Jose, CA 95138

Year established: 2004

Incubator size: 36,500 square feet with an additional 36,500-square-foot expansion planned.

Focus: Technology, including life sciences, clean technology, nanotechnology, biotechnology, pharmaceuticals, diagnostics, medical devices, industrial biotechnology, agricultural biotechnology, materials science and biophonetics.

Current number of clients: 40

Number of graduates: 14

Organizational structure: Partnership between the city of San Jose and San Jose State University.

Mission: To be the premier commercialization “destination network”: the most respected, comprehensive, flexible, turnkey operation in which to start an emerging science company.

Goals: To grow and scale emerging businesses that create economic impact and social benefit. Specifically to be the leading provider of specialized operational infrastructure, capital equipment and services to attract the best high-growth emerging science companies that will employ and develop talent; to catalyze a life science cluster and create economic wealth in the community for residents, faculty and students in the area; and to be a self-sufficient enterprise.

Keywords: best practices, client services – general, financial management – incubator, special focus incubator, technology incubator

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