CHICAGO – Ask people who run business incubators what they do, and the strange thing is, a lot of them don’t want their organizations to be referred to as “incubators”. That’s what I found out while researching a story I just did about what it takes to be a successful business incubator. I went to the National Association of Business Incubation to select incubators in the Illinois, Michigan and Ohio to speak with. I spoke to eight of them – and got basically eight different responses as to how they measure success. Here’s what they said:
Where: Evanston, Illinois
The Incubator is one of the Midwest’s oldest business incubators. Since it started, the nonprofit has helped more than 350 companies. It has graduated 23 companies that employ more than 450 people in Evanston, and said a “fair number of graduates” overall is 135. Currently, it has 39 companies in the incubation stage which employ 80 people. Director Tim Lavengood said what they promote is innovation.
“We’ve been in the first 36 months of building a business for 25 years,” he said. “The best thing an incubator can be is the institutional memory of the startup process.”
Where: Chicago, IL
TechNexus is one of those that says it doesn’t like to be called an incubator. Co-founder Terry Howerton said they never liked the term, saying that they “set out to create a colloboration center where a very wide percentage of people would hang out.” According to Howerton, 110 companies have grown inside of TechNexus, with those companies raising more than $60 million in capital and created 380 jobs. About 90 have graduated. Another 20 companies are in the incubator now. Howerton described their approach as a business-minded social collaboration.
“At the end of the day, we have a for-profit motive,” he said. “We’re not subsidized by the government, academia or the Illinois Technology Association.”
University Technology Park at IIT
Where: Chicago, IL
University Technology Park describes itself as an incubator embedded within a technology park at the Illinois Institute of Technology. The nonprofit has helped 39 companies since it started, and graduated 19. Currently, it has 20 tenants.
“We built this to be the sparkplug to try to get companies to grow to bigger spaces but stay in the city,” said David Baker, its executive director.
Southwest Michigan Innovation Center
Where: Kalamazoo, MI
The Southwest Michigan Innovation Center focuses on incubating and accelerating bioscience businesses. It has served 44 companies since it started, graduating five startup companies. Its President and CEO Rob DeWit said the nonprofit thinks of its success holistically – not just in terms of graduates, but in terms of “the scientific churn that we’re able to create”.
The SMIC said its aware of at least 35 patents that have come out of the center, at least eight new investigational drug applications as well four companies that have reached the clinical trial phase of work.
“What we’re interested in, particularly the early startup companies, is how many ideas there are and how much we can help with the service of those ideas,” said DeWit.
Where: Detroit, MI
Techtown, a nonprofit incubator at Wayne State University, was incorporated in 2000 and opened its doors in 2004. It said it does not have a count for the number of businesses that have been there since it first began, but said they have provided training to 2,200 entrepreneurs. There are 250 companies at Techtown now. Marketing Director Allison Guilliom said the organization does not provide graduation rates because it doesn’t graduate companies in the “traditional incubator sense”.
“We have had quite a few companies grow and expand out into other facilities, but we do not require companies to leave after they reach a certain maturation point,” she said in an email.
Cleveland Clinic Innovations
Where: Cleveland, OH
Cleveland Clinic Innovations is the technology commercialization arm of the Cleveland Clinic, and includes the Global Cardiovascular Innovation Center. Each of the 35 companies within the organization are created as its own spinoff the moment it launches, with the Cleveland Clinic diluting its ownership stake as others invest. Of those 35 companies, one has gone public, two have been acquired and three to four are on permanent hold, said Executive Director Chris Coburn, who said the key thing for incubators is to “understand your place”.
“An incubator is typically a nonprofit entity seeking to address a market void,” Coburn said. “Understand what your special place on the spectrum represents and what it doesn’t.”
Where: Shaker Heights, OH
Launched mostly in the past 18 months, the ShakerLaunchHouse considers itself as much a seed capital fund as it does a business incubator and accelerator. “Ideally, we focus on entrepeneurs or technology that can provide proof of concept in 90 to 180 days,” said co-founder Todd Goldstein. So far, ShakerLaunchhouse has 60 companies, 29 of which it has invested in.
“On any given day, to have 60 entrepreneurs working together is a huge boost for Northeastern Ohio,” Goldstein said. “We have truly developed a community around entrepreneurship that didn’t exist prior to starting LaunchHouse.”
Youngstown Business Incubator
Where: Youngstown, OH
“I’m not really a big fan of incubators,” CEO and Chief Evangelist Jim Cossler told me when I called to ask him about the Youngstown Business Incubator. When the nonprofit started, Cossler said it thought of itself a “traditional” incubator, providing free copies, rent and utilities. Then they realized they had to focus on a specific industry, and they choose software companies.
Cossler said they don’t believe in graduating companies but instead keep them around on their campus and transition to paying tenants. YBI has nine companies that pay rent, including Turning Technologies, a $50 million company that employs 200 people. Another 24 to 30 are still in incubation.
“We just felt firmly we would never have the resources, never have the financing, and more importantly, never have the expertise to be good at everything,” Cossler said. “And so rather than being mediocre at doing everything and saying yes to everyone to comes to our door, we decided let’s be world class at one thing and one thing that makes sense for Youngstown, Ohio.”
Correction: An earlier version of this story did not fully elaborate how many companies “graduated” from Evanston’s incubator program, as the original number included only graduates that remained in Evanston. The director says a “fair number” of overall graduates from the incubator is 135.