Incubators Stimulate Startups: Centers Offer Space, Assistance To Grow Business

In mid-2009, PeopleMatter was made up of three guys working in less than 200 square feet of a renovated video store on East Bay Street called The Flagship. "I think it was Office 5 if I remember right," co-founder and CEO Nate DaPore said recently, fondly recalling his company's cradle.

Fast forward 21/2 years to last month, and that same software company shut down a block of Charleston's main north-south drag during rush hour so it could announce plans for its new headquarters: connected buildings on King Street that eventually will total 55,000 square feet.

The move is part of PeopleMatter's broader growth plan to go from around 70 employees, among its offices in North Charleston, Atlanta and San Francisco, to more than 300 within five years.

The "stimulate + create = innovate" equation behind PeopleMatter's rise began in the Charleston area's first business incubator.

"The Flagship was a wonderful place for that in our very early days because it was a very supportive resource," DaPore said. "There was a lot of great people there, it was a stimulative environment and it was tech-centered."

PeopleMatter is the sort of success story that city of Charleston Business Development Director Ernest Andrade, a driving force behind The Flagship and its younger sibling FS2 --- or any incubator boss --- likes to trumpet. After spending a few months in both Flagships at different stages of its growth, the company, thanks to local government guidance and tax incentives, will have its own freestanding headquarters on the peninsula, closing what Andrade calls "the virtuous cycle."

"This represents the full circle of what we do," he said.

"No matter what kind of incubator it is, a big part of it is that extra added mentoring and assistance that the clients need," said Linda Knopp, director of policy analysis and research at the National Business Incubator Association.

Not all Flagship companies have enjoyed such success, but the PeopleMatter story highlights the growing role of incubators, innovation centers and co-working spaces in the Charleston area.

Iverson Genetics COO Craig Dellinger (walking toward the camera) said his company, which is based in Washington state, chose the SCRA MUSC Innovation Center for its East Coast drug-testing operation because of the state-of-the-art lab facilities --- and because he and CEO Dean Sproles went to The Citadel.

Following The Flagship, five other such spaces have opened in the past two years, each different, if only slightly, from the next. Their degrees of success have varied, but in large part, local incubators seem to have done pretty well even as the broader economy has faltered.

**Coffee Talk

**The Lowcountry Innovation Center on the former Navy base filled up last month when Agilex, a software contractor for the big local defense agency known as SPAWAR, signed up for the last available space, said Alan St.Clair, who bought the building and founded the center. There is now a waiting list for about twice the square footage of the building, he said.

"We turned down about 250 jobs in the Lowcountry in the last 60 days," St.Clair said. He added: "What we thought would take seven years took 18 months."

St.Clair, a former human resources executive at PepsiCo Inc. and other large companies who retired at 40, bought his 40,000-square-foot building in December 2008 with plans to build out in phases. Instead, he said he has much more demand than he can accommodate and is considering building another center.

St.Clair said the conversations at the building's coffee bar are amazing, so it's "very difficult on a monthly basis turning down technology jobs wanting to move here." He said he has no "graduates" because no one has left the building.

The other full incubator is Charleston's FS2, which opened in May and was at 100 percent capacity by August. Whereas St.Clair's operation is private, the FS2 building, an old television studio, was renovated mostly with city money.

St.Clair claims his rates are 30 percent below the market. Andrade said the rates for space in FS2 start at $625 and disputes the notion that his Flagship buildings are subsidized."The residents, I would maintain, pay a market rate," he said.

One of three such facilities operated by the South Carolina Research Authority, the SCRA MUSC Innovation Center is unusual in Charleston for its wet lab amenities. While its labs are mostly occupied, the SCRA has not been able to land a tenant for the 8,000 square feet of office space in the middle of the Meeting Street building.

Several of FS2's occupants are graduates of The Flagship.The Flagship, which cost the city $120,000 to renovate, has graduated 18 companies since it opened in May 2009. All but one are still in existence, and all but two are operating in the Charleston area, Andrade said.

Start-up space

The SCRA MUSC Innovation Center, which opened in early 2010 and is one of three in the state run by the S.C. Research Authority, has been slower to fill, but most of its 11 labs are occupied.

Focusing on biotech firms licensing technology from the Medical University of South Carolina, the Meeting Street center has a super cold freezer, distilled water, dishwashers especially for lab equipment and bio-waste disposal.

"Here you not only have excellent new labs ... but you also have the shared services," said David A. Dodd, CEO of VaxyGen Assay Services, which moved in this summer. After initially thinking the company would stay for just six months, Dodd is now thinking about doubling his workforce of three and expanding into more space.

Immunologix, one of the MUSC-related companies, was sold to Intrexon last month and will be expanding under that name to three labs in the Innovation Center.

The SCRA has hired a real estate broker to find someone for its 8,000 square feet of vacant office space. In the meantime, it has leased parts of the bigger office space to smaller tenants.

The most recent incubator to open is Biz Inc., which shares space with the Mount Pleasant mayor and town administrator at Houston Northcutt Boulevard and Ann Edwards Lane.

When it opened in August, four of its six offices were leased for $250 a month on a month-to-month basis.The mix of businesses is similar to The Flagship. The town's business development coordinator could not be reached for comment last week.

Back on the peninsula, Spark Charleston opened across the street from the Flagships in June last year as an "altruistic venture" for start-up businesses. Tenants pay just $50 a month. Although the space is often almost empty, Spark's manager, Chris Clark, said recently the project is still an "ongoing experiment."

While some of the start-up or innovation centers seem to have been more successful than others, most are bullish on the prospects for Lowcountry entrepreneurship, and few are more optimistic than St.Clair of the Lowcountry Innovation Center. He believes the former Navy base could become a 10,000-job technology campus.

"You could create the engine for the state of South Carolina right here," he said.