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SMBI requires clients to prove themselves annually

February/March 2013

Resident clients of the Sid Martin Biotechnology Incubator at the University of Florida in Alachua, Fla., have cleared a hurdle – but it’s a challenge they will face each year they remain in the program.

That’s because every year, client companies at the incubator must do much the same thing all over again – demonstrate that they and the incubator are right for each other.

“Of all the practices we have here, the one I like the best is when we review a company and license space to them, a company is given 12 months; then, they go before a review committee,” says Patti Breedlove, associate director of the program. “They go through the same process they did on entry. Every single year.”

The practice, she says, keeps clients on their toes, while making sure the best available companies populate the north-central Florida incubator, and lets the incubator respond to changes in the area’s biotech ecosystem. “It allows management on a regular basis to make decisions based on current supply and demand, so we have the strongest crop of companies in the program,” she adds.

Clients make their presentations each year to the program’s Biotech Advisory Committee, a group of varying size made up of venture capitalists and others with biotech experience. “There are times for all incubators when you may say yes easily because you want to stay as full as you can while still keeping space for existing companies,” says Breedlove. “There are times when demand is higher, so you want to move out poorly performing companies. The mere fact that they have to go through this process with outside advisors affects the entire perception companies have of your program, that it is a scarce resource.”

An added benefit, she says, is that it puts companies in touch with venture capitalists and hones entrepreneurs’ skills at explaining their companies – highly useful experience for the day they seek outside funding. The process also provides a natural sense of when a company is ripe for graduation. “It allows another set of eyes besides local management to determine when graduation should take place,” Breedlove says.

Though it sounds as if a company can count on only one year at the 40,000-square-foot incubator before perhaps being replaced, it hasn’t worked out that way, Breedlove says. Since the program opened in 1995, only four or five companies have failed annual renewal. “There are no surprises – companies know when they’re in trouble,” she says.

On the rare occasion when a company is asked to leave – either as the result of a review or as the result of a management decision not during a review – the incubator works to maintain good relations with the departing company, even helping them find a new location. The goodwill has extended to the point where Breedlove quotes the head of one departing company as saying, “I hope I get good enough to come back someday.”

“We’re using common sense, and they understand this,” she says. “Bioscience companies have long childhoods, and we have had fabulous results.”

The annual review with residency on the line has proved useful for all involved. “The review makes them stand up straight, puts a little fear in them,” says Breedlove. “This affects the relationship companies have with the program. It is also a way to reassure stakeholders and demonstrate that we’re working with the best businesses possible.”—Dennis E. Powell

Keywords: client services – general, special-focus incubator, strategic planning, license agreement¬–incubator, lease, exit policy, client selection/admissions

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