National Business Incubation Association; Your source for knowledge and networks in business incubation

Netcelerating entrepreneurs' growth

by Sharon Hatfield

August 1998

No matter where you live in Georgia, it's a short drive to ATDC in Atlanta. And if your office is in ATDC, your information commute just got easier. Other incubators may find it an interesting drive.

A few years back, the Advanced Technology Development Center (ATDC) in Atlanta found itself in a thorny – though some might say enviable – position. Owing to a mixture of success, tight budgets and geography, it could not serve everyone who would benefit from its services.

Resources were spread thin among the dozen or so staff members. Demand was fast outstripping ATDC's capacity to respond. When none of these factors promised to change much, the staff took a sharp turn onto the information highway.

"Not only did we find a lot of companies that desired to be in the incubator but we found other talented, promising companies around the state that could benefit from our resources," Mark Kazlauskas, the ATDC staff member who manages Netcelerate, recalls. "As a way to leverage the resources and relationships that ATDC has, we decided to put a virtual incubator online, which gave incubator companies easier access but also gave geographically dispersed companies access, period. With this model, location became less and less relevant."

ATDC launched the virtual incubation community in October 1997, in cooperation with charter sponsors Bell South, Georgia Tech and the Georgia Research Alliance. The "citizens" include ATDC client companies and other select Georgia entrepreneurs looking for resources, information, capital, employees, alliances, products and services. ATDC-prequalified vendors seeking new customers, as well as ATDC-approved mentors interested in making a contribution back to the community, add to the demographic mix. Investors, too, can peruse the Web site for what ATDC calls "marriages made in cyberspace."

"Netcelerate is a great idea," says Stephen Fleming, a general partner in hotly sought-after Alliance Technology Ventures and a member of the Netcelerate community. "Venture capitalists are busy people. Anything that lets us find more deals faster without having to get in the car and make a trip, or having to take time out of our schedules during the day, is a real advantage."

Expertise for the asking

Sites on the Web for entrepreneurs are growing like kudzu, and plenty of them promise to be a one-stop shop or "everything an entrepreneur needs to know." Some of them are actually very useful. But Netcelerate adds a valuable extra. It benefits from an incubator mainstay: screening. Companies, investors or professional service providers who participate must meet established criteria. Entrepreneurs must be Georgia based, technology focused and growth oriented. Investors are required to meet accredited investor standards defined by the Securities Exchange Commission and ATDC. Service providers who want to participate must have a referral from another Netcelerate member.

After filling out an online application and gaining approval, the new member is allowed access to the password-protected portion of the site. This entitles him or her to join into discussion groups with other high-tech entrepreneurs and qualified business experts in an exchange of ideas, pointers and advice. Discussion topics range from "How to make your company attractive to venture capitalists" to "Marketing on a shoestring budget."

Another feature is a Tools & Information Library, which contains items such as downloadable forecasting software, templates for legal agreements and specifics about sexual harassment law. The library also contains announcements and reports from industry meetings as well as links to articles and journals with information entrepreneurs need to know.

A member directory lists ATDC-prequalified accountants, lawyers and consultants to help startups get business moving quickly and efficiently. For easy reviewing by the entrepreneur, the directory profiles service providers' offerings and credentials.

Even though Netcelerate is still in beta test as of this writing, traffic to the site has averaged a couple dozen hits per day, according to Kazlauskas. It has attracted some 180 participants, who have given overwhelmingly positive feedback. Current and potential ATDC clients are the main users while the site is revving up to full capacity.

Alcina Dalton, vice president of business development for TransNexus, a provider of reconciliation and clearinghouse services for the Internet telephone market, uses Netcelerate daily. "Netcelerate has truly allowed us to focus on building our business," she says. "We have saved time researching information on patents under the Tools & Information function. With a standard computer patent search, you get back a zillion entries. With Netcelerate, all of the documents on the system have been screened so you know the quality of information is there. That in itself is a tremendous benefit."

How it all got started

"The low-hanging fruit has all been picked," an anonymous wit on ATDC's Web site tells would-be entrepreneurs. "Can you be sure that your idea isn't part of somebody else's lunch?" This aggressive demand for originality and derring-do on the part of its clients may help explain the success of this organization, which was named Incubator of the Year by NBIA in 1996.

ATDC's track record leading to that award began 18 years ago on the Georgia Tech campus, where ATDC has been home to a growing number of small, fast-track, high-tech companies. Over the years, Mindspring, Theragenics, and more than 50 other graduate companies have added some 2,300 jobs and more than $280 million in annual revenues to the Georgia economy. And ATDC has kept growing along with its client companies, opening additional facilities at Warner Robbins in central Georgia and in the Georgia Center for Advanced Telecommunications Technology (GCATT) building on 14th Street in Atlanta.

But ATDC staff still felt they could do more for entrepreneurs. Gary Troutman, a former senior business consultant at ATDC, had the idea of Netcelerate, put it into its early form and helped stump for sponsors. Armed with contributions from state, corporate and private nonprofit sponsors, ATDC created Netcelerate for about $140,000. ATDC contracted the design work to WebTransit, a company Troutman started after leaving the incubator.

A decision ATDC had to make early on, says Kazlauskas, was whether to pass part of the cost along to the site's users. Options included charging each company a membership fee or charging sponsors for hosting a discussion group. But in the end, any fee to the user was ruled out.

"A lot of different revenue models were kicked around at first," he says, "but what we moved toward was financial sponsorship that wasn't linked to participation. On the Internet, by far the majority of sites are supported either by advertisers or sponsors, not by any kind of pay for use. I foresee that we will continue with financial sponsorship and encourage open and easy access by entrepreneurs."

Kazlauskas explained that part of the decision to use Lotus Notes as Netcelerate's database software stemmed from the fact that it is easy to maintain without a high degree of technical expertise. Netcelerate has a feature that allows service providers or companies to change phone numbers or other information on the site themselves, providing a high degree of self-maintenance.

Benefits to ATDC

Kazlauskas sees Netcelerate as a convenient extension of ATDC's staff. In the dead of night, after the last Fed-Ex truck has departed, Kazlauskas' clients can still find the resources they need on the 'net.

"In the past, if an ATDC incubator company wanted to get a list of intellectual property attorneys that work with early stage technology companies, they'd want to talk to someone on the staff of ATDC," says Kazlauskas. "They'd have to e-mail, make a phone call, or stop in at the office – they'd have to wait to connect or interact with someone. Versus now, 24 hours a day, 7 days a week, they can go into Netcelerate and find the people who have been screened to work with early technology companies – who have a track record with ATDC – and can get that resource immediately."

"It's allowed us to reach out and touch more companies," he says enthusiastically. "Obviously in a physical building, you are constrained by square footage and number of people – and the marginal cost of helping one more company is pretty high. They need a phone system, they need office space, they need a consultant. The marginal cost of putting a company on Netcelerate is basically zero. They're looking at the same resources, the same contacts as all the other companies, but it's not an additional effort." No net new staff was needed at ATDC, by the way, although staff composition changed somewhat.

Along those same lines, ATDC's focus is on a very specific type of technology company. Perfectly viable companies may not have gained entrance into the ATDC community before simply because their focus was outside the mission of ATDC. Now they can be an "affiliate" of ATDC through Netcelerate. "In that respect, it's more of a welcoming of all technology companies," says Kazlauskas, "whereas before we had to be very, very selective."

A third benefit to ATDC is that Netcelerate nourishes a feeder system of "wanna-be" companies that are not quite ready for ATDC membership but with some maturing could fit the ATDC client profile. Netcelerate's manager notes that traditionally ATDC has been hesitant to market itself extensively, simply because it could serve only a limited number of clients.

"The catch-22 of that is, you want the really, really good candidates to know who you are," he says with a sense of irony. "Netcelerate removes some of that risk of building up awareness and having to say no to 90 percent of the people. It's given us a resource to be able to reach out and affect a lot more companies than we ever could before."

"They're more prepared when they come to us," adds ATDC's Mary Leary, who was project manager for Netcelerate in its early months of operation. Companies who are not far enough along to be accepted into the incubator at first contact can build their businesses considerably by using Netcelerate's resources. It allows them to come back later and apply as true contenders.

New look, new service

The Netcelerate site has received rave reviews from many – including NBIA, which bestowed upon ATDC its Innovation Award in April. And a highly visible launch at a Georgia Technology Month event last fall resulted in coverage in the Wall Street Journal and digital south magazine as well as the local technology community and business press.

Still, ATDC is not resting on its laurels. A revamped version of Netcelerate with enhanced graphics and simpler navigation was slated for the end of June, as this article went to press. Although it will still be based on a Lotus Notes platform because of its easy-modification and security benefits, the site will have a more traditional "html" look.

A new feature on the updated version of Netcelerate is called Investor Matchmaking. Participating entrepreneurs submit an executive summary outlining their business plan, which is then posted in a private area of the Netcelerate site. These profiles detail what stage the company is in, its technology area, target market, and what kind of funding it is requesting. Profiles will be periodically updated to reflect company growth.

Targeted to accredited individual investors and professional venture capitalists, the Matchmaking database enables investors to search for companies matching their own interests and expertise. Investors can gather information while remaining anonymous, which allows them to investigate companies without setting expectations. Investors can also choose to be notified by e-mail each time a company is added to the database or its listing is modified.

"Funding is a major issue for startup companies," says Leary. "Companies must spend a lot of time looking for funding and often fail if they are undercapitalized. Anything that helps startups get funding is a boon."

Besides its matchmaking capabilities, the database offers trend-spotting opportunities by making a larger pool of startups available to investors. "Investors may not be interested in a specific company but wish to scan a population of start-ups to see emerging technologies and their future investment potential," Kazlauskas points out.

Netcelerate serves as think tank, service provider and Dear Abby for a growing number of early-stage companies. For now ATDC has no plan to market the product outside the state but is already customizing the site for other Georgia communities and starting its first real marketing push. Within a year it will encompass a widely dispersed technology community, putting innovators across the state in touch with what they need for success. Could it serve as a model that changes the way the incubation industry serves companies?

"We intend to find ways down the road to help make this resource available for other states," Kazlauskas says. "For now we'd like to have a little more of a track record behind us make sure we understand how people use it and the best way to support this kind of site."

Keywords: best practices, new technology, technology incubator, virtual incubation

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