November 14, 2006

Space: The final frontier

Sheila Watson  /  Charleston Regional Business Journal

Incubators provide quick, cost-effective, turnkey solutions for startups

Of all the details occupying the entrepreneurs thoughts, finding work space that is conducive to innovation and productivity usually ranks among the most frustrating. And while the functionality of the work space may not be the sexiest topic to be found at networking events and technology summits, the reality is that space matters a great deal when it comes to getting a business off the ground.

To produce the best research and development possible with limited capital and resources, a startup needs space that is economical and flexible so it can make a stab at evolving into a viable company, a task that's easier said than done. Nevertheless, said local attorney Bobby Pearce, it's a task that's vital to the economic growth of the area.

"Incubator space is critically important to help launch these startup companies," he said. "The best example of that was the old cigar factory (on East Bay Street). That is what we need again: dedicated, shared space where rent is very low and services are shared to keep the cost low."

With the cigar factory redeveloped and no longer available as business incubator space, the tri-county area has a void in its offerings to young companies, Pearce said. Three organizations - the South Carolina Research Authority, the Charleston Metro Chamber of Commerce's ThinkTEC division and the Charleston Digital Corridor-have taken up the cause to fill that need. But even with collaborative mindsets, their approaches vary widely.

Approach 1: The cheap seats; but don't get too comfy

ThinkTEC offers office space and services for knowledge-based startup companies at an unheard of $1 per day for up to 180 days. Space is based upon availability, determination of need and approval of the ThinkTEC steering committee.

"We have dedicated space at the chamber that can accommodate up to four companies each, with a workstation and meeting space," said Pennie Bingham, vice president of the Chamber's ThinkTEC Innovation division. "On occasion a company needs more than one workstation, so depending on space available, we'll let them spread out."

ThinkTEC promotes the incubator to encourage a company to use the space as a tool to get off the ground and avoid using its limited resources for rent, Bingham said "Most importantly, we're happy to give them meeting space," she said. "It's professional space for them to meet with their clients, and we provide receptionist services and office equipment. It enables them to operate professionally."

Companies cannot stay beyond six months, but most leave after three or four months. The program has been in place for a little over a year and is almost always booked to capacity Bingham said. "We see this as filling a particular need," she said. "We're servicing what their needs are, and we feel that we've found just the right balance."

If ThinkTEC cannot meet a company's needs, Bingham recommends checking out the SCRA or the Digital Corridor, she said. "And I know they do the same for us."

Approach 2: Partnering for critical mass

The SCRA's facility at the Trident Research Park is not used as an incubator as a general rule, but space is made available on a company-by-company basis, according to CEO Bill Mahoney, who pointed out two illustrations of permanent and temporary space.

A company SCRA has made space for on a permanent basis is the National Law Enforcement and Corrections Technology Center - Southeast, which focuses on information technology for corrections and school safety and operates a program that includes crime mapping training, spatial information management, geographic profiling and data mining.

Vought Aircraft Industries, the flagship of the state's aviation cluster, and its partner Global Aeronautica are being housed temporarily in the Trident Research Park until their permanent facilities are built. SCRA worked with economic developers to provide solutions that were instrumental in bringing Vought/Global Aeronautica to the area.

The ideal model for an incubator in the Lowcountry, Mahoney said, would be a mixed-use campus environment with companies that can partner together and form a critical mass for economic development. "Picture the entrepreneur getting up in the morning, hitting Starbucks, showering in his loft apartment and walking to work," he said. "We'd love to see that type of concept, although it would have to be built over time."

SCRA has relationships with existing incubators, such as the SC BIO facility in Greenwood and the University of South Carolina incubator in Columbia and is looking for a specific relationship similar to that in Charleston, Mahoney said. "Our strategy is to be closely affiliated and aligned with others who are providing services, like ThinkTEC and the Digital Corridor," he said. "We support what they're doing. But we don't want to look, taste or feel like we're trying to do this on our own."

Each of the entities has some resources, he said, but none has enough to go it alone."We have to work together to get the knowledge economy done."

Approach 3: Find a need and fill it

The Charleston Digital Corridor has what Executive Director Ernest Andrade calls "touchdown space" that consists of a few desks, an Internet connection and phones in its office on Meeting Street. However, the limited space is almost always full, so Andrade typically searches out space for companies through networking.

"My role is not to weigh in with all the answers," he said. "But there are situations when people call me when the wheels are falling off the bus."

The Digital Corridor is in discussion with private parties to develop "an ecosystem that is a critical next step to some of these companies," Andrade said. "For business incubators to work requires a list of priorities, and the physical space is probably at the bottom of the list. Interaction with fellow entrepreneurs and the ability to connect with a no-nonsense network of companies, these are some of the things we've been effective in helping make happen."

The key to forming an incubator, he said, is understanding what people need when they need it and plugging them into where they can get it. "People come to me and say, 'We have this building empty and we could make an incubator,' but if the Digital Corridor's objective is to grow high-paying professional and technical career opportunities for Charleston, my contention is that it isn't the cheap space in an abandoned retail center that we should put them in. It should be prime space where we put them so they can showcase what they're doing."

Finding incubator space is not a competitive venture for any of the organizations, Andrade said. "I know I can pick up the phone and call North Charleston and say, 'These guys are on the way, can you help them?' and they'll do the same with me," he said. "We didn't do any of this unilaterally. If another organization comes along with resources that exceeds our resources, that's great. It's good to have complementary services."

Overall, the role of a public agency, Andrade pointed out, should be to support private development. "My objective is to push more services to the private sector," he said. "I'd love to see a full-scale sustainable business incubator, but it needs to be an incubator that accommodates what we've learned over the past five years about the knowledge economy. And one of those lessons is that if we don't do something to nurture them, it will retard the growth of these companies."