Incubators: Proven Tools for Tech-based Economic Development

The headlines of many tech and business publications scream of massive Internet incubator layoffs, closures, and restructuring. The rapid rise and fall of these organizations has left some local tech-based economic development practitioners wondering if encouraging the growth of incubator facilities is a worthwhile strategy to pursue. Closer scrutiny of the incubator phenomenon of the last few years, however, reveals many communities and states are increasing their investments in facilities to encourage technology start-ups at the same time for-profit incubators are closing. 



Whether it is called a technology incubator, business accelerator, or innovation center, the real difference seems to lie in the orientation or goals of the entity: is it intended to make money for its private investors or is it organized as a not-for-profit to encourage local technology business growth? The dire headlines and talk of incubator crashes all refer to for-profit accelerators formed in the past two years to cash in on the dot-com craze. When the craze crashed, so did many of these get-rich-quick entities. 



On the other hand, the number of non-profit technology incubators -- those with a true economic development emphasis -- continues to explode. A daily sweep of newspapers around the country reveals at least one story each day related to creating or expanding another nonprofit incubator. A few recent examples illustrate the point: 



Little Rock, Arkansas: Arkansas Bioventures an incubator project of the University of Arkansas for Medical Sciences received $1.5 million from the Economic Development Administration to support the construction of a 20,000 sq. ft. facility to encourage the growth of medical technology and biotechnology businesses. 



Macon, Georgia: the 12-year-old Allied Enterprise Center is expanding its programs to help existing businesses outside the incubator, to launch smaller companies to address some of their manufacturing needs. 



New Albany, Indiana: the city is in the early stages of finding capital to convert the former Grand Theater into a high tech business incubator. 



Norman, Oklahoma: In April, the Norman Economic Development Coalition will open eTec – the Emerging Technology Entrepreneurial Center to support business growth and commercialization of technology coming out of the University of Oklahoma. 



Rural Utah: Governor Mike Leavitt has requested $250,000 to support the creation of high-technology incubators in rural areas around the state. 



Richmond, Virginia: Capital One Bank gave the Southside Community Development and Housing Corporation a grant of $225,000 to create a 10,000 sq. ft business incubator and entrepreneurial training center. 



Huntington, West Virginia: a $5 million technology incubator is proposed to anchor the city’s new 95-acre technology park. City officials are looking to use federal funds to support the center’s construction. 



Madison, Wisconsin: The nonprofit Genesis Development Corp. is securing funds to turn a small shopping center on the south end of town into a technology incubator. The city has committed $655,000 of its federal Community Development Block Grant (CDBG) funds to the project. 



In addition to federal funding from sources like the Economic Development Administration and CDBG, local tech-based economic development practitioners looking to create or strengthen a tech incubator program may wish to check out any of the incubator titles in the SSTI bookstore and to contact the National Business Incubation Association (NBIA). Based in Athens, Ohio, NBIA is a member-based organization dedicated to strengthening local business incubation efforts around the country. A wealth of information and resources are available at their annual conference, training institutes, and website: http://www.nbia.org/