Is Incubation a Winning Strategy?Evansville Entrepreneurship Sub-committee

December 16, 2015

Craig Kettleson

Craig’s Economic Development and Incubation Experience

• 27 Years in Economic Development

• Specific Incubation Experience– Wisconsin Department of Development – CBED Program– Wisconsin Business Incubation Association– NBIA Certified Incubation Manager– Two Feasibility Studies: Superior and Phillips– Portage Enterprise Center

Entrepreneurship and Economic Development: Some Context

• Economic Development a 3 Legged Stool: Entrepreneurship, BRE, Attraction

• Ewing Marion Kauffman Foundation Study– New businesses account for nearly all net new job creation and almost

20% of gross job creation in the US economy• Entrepreneurship is Becoming and Important Rural ED Strategy• Business Incubation in State and Region

– State: 35 Total Incubation and Kitchen Facilities (WBIA)– Region:

• 17 Total Incubation and Kitchen Facilities (50% of State Total)• 32 I&E Spaces

Is Incubation a Winning Strategy?Key Concepts (Takeaways)

• Capital Costs of Business Incubation– $3.0M for 30,000 sf Facility ($100 psf)– Portage Enterprise Center: $1.8M for 30,000 sf ($60 psf)– Janesville Innovation Center: $3.0M for 22,000 sf ($136 psf)

• Operational Costs– $500,000 Annually

• Incubation is a Process (or Program) vs. Space– “Starting a company is like throwing yourself off a cliff and assembling an

airplane on the way down” Reid Hoffman, LinkedIN co-founder

Is Incubation a Winning Strategy?Key Concepts (Takeaways)

• Incubators are Businesses

• Success is Based Upon Sound Business Planning and Execution– Good Market Research; Facility Responsive to the Market– Provide a Value Proposition to Tenants

• Flexible Space vs. Below Market Rent (Process vs. Space)• Mentorship• Networking• Technical Assistance

– Take Risks Around Plans for Each Tenant– Strong Management and Well Qualified Service Providers– Financial Plan to Break Even (ideally within 2-3 years)

Options for Evansville

• Traditional Incubation• Virtual Incubation (Independent or as an Affiliate)• Satellite Facility (maybe of the JIC)• Co-working Space• Hacker or Makerspace• Other Options??