What do the Utah companies 1-800 CONTACTS and QuicKutz have in common? They both heated up their fledgling operations in a local business incubator (Orem’s Technology Center). Business incubators, also referred to as accelerators, are beginning to play a key role in Utah’s economic future. With over 500,000 jobs created nationally by incubators since 1980 and a tendency for graduates to locate locally, the state clearly has a growing appetite for the corporate home cooking incubators provide. Currently, new incubators are coming to Ogden and Davis counties, and established centers are seeing success up and down the state

What’s Cooking?

In Utah, a trend to assist small businesses in their earliest stages is evident in the variety of centers locating throughout the state. The Miller Business Innovation Center in Sandy opened its doors in 2000. The center is operated and staffed by Salt Lake Community College and currently houses 10 fledgling companies. Orem’s Technology Center has helped about 100 businesses since 1991, and the BTAC (Business Technical Assistance Center) in Price set up shop in 1995. Both are community-run nonprofits and currently have eight businesses in their programs. In Davis County, the 16,000-square-foot Roy W. and Elizabeth E. Simmons Entrepreneurial Center will open this summer on the Davis Applied Technology College campus. The center will enjoy a close relationship with DATC but will be self-sustaining, generating income through rents and private and public contributions. 

Further north, venture capital company Grow Utah Ventures recently opened Ogden’s E Station (the “E” is for “entrepreneur”), a privately funded incubator for select GUV businesses. Its first tenants, Elemental Business and Mobile Optics, arrived in February. In addition, the Station, which will be staffed in part by students from the Weber State Entrepreneurial Association, has room for two or three more companies.

Programs and lengths of stay at these incubators vary from one year to three years—though many companies leave early. One company started at the Miller Center with one person, left after eight months with five employees and now employs 21. Interim director Sterling Francom notes that the center gave the company the boost it needed to get off the ground and attract investors.

Tricks of the Trade

Traditional incubators offer office space and basic business infrastructure—cubicles, conference rooms, IT and computer needs, a receptionist, janitorial services and telephones—at reduced cost and reduced worry. More importantly, they also give access to training and advice. The Miller Center offers networking events, pro bono legal and accounting services, even interns. Tenants at the Simmons Center will have access to services ranging from DATC’s business department and bookstore to catering. The Simmons Center will also house the Davis Chamber of Commerce, another valuable resource for fledgling companies. 

Another incubator advantage Francom sees is the synergy that develops when companies are “right next door … sharing information and ideas for problem solving in a highly charged and synergistic atmosphere.” Orem’s Technology Center holds regular roundtable meetings where clients and board members can brainstorm. T2M (Technology to Market), a local high-tech business accelerator, offers training and networking at forums and conferences as well as business plan mentoring and professional services.

The Secret Sauce

Grow Utah Ventures founder Alan Hall sees ready access to what he calls “the secret sauce” as even more important to Ogden’s E Station than funding provided by GUV.

That sauce is, essentially, success, which comes in the form of mentoring from seasoned chefs who are willing to share their savvy for marketing, sales, financing, strategy, legal matters and more. This is the key ingredient to a successful accelerator. Companies at the E Station will be able to learn from Hall, GUV president/CEO Craig Bott and a virtual “who’s who of Utah business elite.” Tenants at the Miller Center have access to a team of 18 mentors, from legal experts to business managers and bank presidents.

Brad Whitaker, executive director of Orem’s Committee for Economic Development, emphasizes that Technology Center applicants must be coachable. “Otherwise,” he says, “it’s just office space.” The Technology Center provides contact information for willing mentors: marketers, angel investors, attorneys and CEOs. But the entrepreneurs must initiate the contact. Whitaker sees this as practice for the real world. “If they want a resource, they have to go get it,” he says.

Delynn Fielding, Carbon County director of economic development, says BTAC will require mentoring to participate in a new revolving loan program set up for incubator tenants. Elsewhere, participants at the Simmons Center will have their own advisory team built to fit needs in legal, accounting, finance, marketing and general management, according to director of entrepreneurial development Steven Cloward.

Contacts go beyond the educational. Alan Hall notes that start-ups also need access to the channels that can get products to market. According to Dinah Adkins, executive director of the National Business Incubation Association, “about 80 percent of incubator owners and directors provide formal or informal access to seed capital” from bank loans, noncommercial loans or links to angel investors and venture capital groups such as Grow Utah Ventures.

Who’s Invited?

From strictly high tech companies trying to turn Utah into the next Silicon Valley to service oriented start-ups, incubators gear themselves for and attract different sorts of businesses. The E Station will house Weber County technology start-ups that have some sales, a proven concept and need $50,000 to $500,000 in financing.

At Miller, companies range from pre-startup to businesses that have already received two or three rounds of funding. The center hosts a mix of technology- and service-based companies. Orem’s Technology Center looks for nonretail businesses and prefers companies or entrepreneurs with a proprietary product—an idea that will create jobs. BTAC casts an even wider net. The facility has a small commercial kitchen and has housed a catering business, call centers and start-up mining companies.

The new center in Davis County will focus on high tech and aerospace ventures because of its proximity to Hill Air Force Base and the national scope that comes with high tech projects. Cloward speculates that if a particularly lucrative opportunity arises, the center may consider incubating a business designed to meet that specific need.

Dessert

Hall’s goal at Grow Utah Ventures and the E Station is to help create an “economic engine that can keep helping the Utah economy.” The company’s five-year goal is to help 100 new companies from Provo to Logan get on their feet.

Cloward says the Simmons Center wants to see businesses graduate from the incubator and then locate in Davis County. “That’s our goal: jobs, higher income and economic impact.” Francom points to Silicon Valley as an example of the success that can come from the cooperative atmosphere fostered by accelerators that bring energetic, innovative and like-minded people together, which really is the lure behind any business incubator program: local, sustainable, accelerated growth.