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Monterey Bay business incubator nurtures fledgling companies

Silicon Valley/San Jose Business Journal

Eduardo Muñoz, a civil engineer from Chile with a business idea, hopes to find a home for his budding entrepreneurialism in the new Marina Small Business Incubator, a place where fledgling businesses receive support during their most vulnerable stage of business development.

A recent graduate from California State University at Monterey Bay, Mr. Muñoz is honing his entrepreneurial skills at weekly startup classes taught at the incubator. He has learned how to write a business plan and how to set up an accounting system for his venture, Georaster.com, a Web-based digital map application that allows user interaction.

It will be a good business, he says. But, first he needs a loan.

“This is the first time that I try to create a business in California,” Mr. Muñoz says. “I have very good expectations. I am not concerned about the economy too much. I want to do it.”

Nine other businesses have already signed lease agreements at the incubator, housed in land owned by the University of California’s Monterey Bay Education, Science and Technology (MBEST) Center. It is already 91 percent occupied, says Jennifer Blliss of the Marina Small Business Incubator. The remaining space still available includes one full office suite, four single-seat cubicles, and two two-seat cubicles, she says.

A joint product of the city of Marina and the University of California, the incubator is meant to be a nurturing home for startups and is an attractive alternative to venturing into a business alone. Tenants become part of a startup community, receiving help from a seasoned team of consultants who provide technical support services, links to regional research institutions, educational and networking programs, financing assistance, and technology transfer and licensing advice.

For the city of Marina, the incubator is a place to seed strong companies that will eventually relocate to adjacent business parks and contribute higher paying jobs to the regional economy.

Tenants are technology-, agriculture-, or marine science-related ventures and will soon include a laboratory for Tom Piatkowski’s 7-year-old company, Western Applied Technology, which makes soil amendment products such as compost tea. The incubator is also office space for businessman Ivan Prueitt, chief executive officer of Dawn Breaker Systems, a six-person technology company that provides more than 15 California school districts with customized application software.

Mr. Piatkowski is looking for about $850,000 in angel funding to push forward with his vision.

“Once I saw what they were doing, I realized this was an ideal set-up for the development of my company,” he says of the UC-Marina project. “They’re being very helpful in mentoring us and guiding us through that process.”

Mr. Prueitt says connections he made through the incubator have already paid off and he plans on hiring a couple more employees by year-end.

Marina, on the scenic Monterey Bay coastline, is probably better known as the former home of Fort Ord, often overlooked by tourists heading south to Carmel and Monterey. The UC-MBEST Center has about 50 acres of land that it hopes to slowly develop into a research business park.

The incubator, an early tenant in that developing vision, is “supposed to be the little business engine that cranks out businesses that will go into business parks in the region to increase economic development,” says Susan Barich, incubator director. “It is a community of entrepreneurs. They assist and learn from one another in a community of like-minded people. They don’t have to be all alone.”

Incubators target different industries or economic clusters throughout the country including technology, food processing, and telecommunications. San Jose is home to an arts-focused incubator as well as the Software Business Cluster and the Environmental Business Cluster.

“The Marina incubator is an exciting model, a chance to diversify the economy,” says Jim Robbins, a principal of the Business Development Cluster in San Jose who serves as a consultant to the Marina incubator.

“The average company coming out of an incubator is probably a successful small business with 20 or fewer employees,” Mr. Robbins says.

According to a 1997 study by the Athens, Ohio-based National Business Incubator Association (NBIA), 87 percent of incubator graduates remain in business after they “graduate” — usually after two years — a far better survival rate than average startups. In 2001, North American incubators helped more than 35,000 startups that provided full-time employment for nearly 82,000 workers and generated annual earnings of more than $7 billion.

The business incubation movement gathered momentum in the 1970s and is still growing.

For regional governments, the incubation model seemed more effective than offering tax incentives to relocate large companies to a region which moves jobs temporarily rather than creating new ones, says Meredith Erlewine, director of NBIA publications.

“The … idea was to come up with an economic development strategy that would grow entrepreneurs rather than smokestack-chasing,” she says.

There are about 950 business incubators in North America, up from 587 in 1998 and just 12 in 1980, according to the NBIA. About 84 percent are nonprofit and about 16 percent, for profit. Academia is the biggest supporter of incubators, making up about 25 percent of the nation’s incubator sponsors. And that number is increasing, Ms. Erlewine says.

“They’re getting more involved because universities always have a mission that includes giving back to their local communities,” she says.

The Bayh-Dole Act, a landmark bill in 1980 granting universities the right to transfer intellectual property from research to private business, was another incentive linking academia to private business.

“The initial idea of the relationship with UC-MBEST Center and incubator is that we will be fostering high-tech jobs in the area and CSU (California State University) will be training those students for those young businesses,” says Graham Bice, director of physical planning and development at the MBEST Center.

“We feel those things go hand in hand. The research park itself will be a place where students will have opportunities for internships for entry-level jobs.”

JENNIFER PITTMAN is a freelance writer based in Santa Cruz.


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This entry was posted on August 15, 2003 by in Business, Feature Articles, Technology.

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