Month: June 2010

STCC/UMass Partnership Created to Take Incubator to
the Next Level

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Marla Michel and Ira Rubenzahl were trying — but not ultimately succeeding — in their efforts to come up with a single word to describe what they’re doing with the Scibelli Enterprise Center in the Technology Park at Springfield Technical Community College.
Both thought ‘reinvent’ was too strong a word and, overall, not accurate, since the basic operating model for the facility won’t change appreciably. Also cast aside were ‘reposition’ and ‘rebrand’ — they don’t really tell the whole story, they said — and while Michel appeared to like ‘rejuvenate,’ the two ultimately decided they would need phrases, not a single word, to convey their intentions.
“We’re going to take things to a much higher level,” said Rubenzahl, STCC’s president, as he talked about the Enterprise Center and the Springfield Incubator it houses, home to a few small businesses (clients) and several business-support agencies, and which will now be operated in partnership with UMass Amherst.
Michel, who works for the university as executive director of Strategic Communications and Outreach, and who also now directs the incubator as a shared executive, went further.
“We want this to be the entrepreneurial hub of Western Mass.,” she said, noting that her broad plan is to take the center, which opened a decade ago but has struggled in recent years with declining occupancy, from being a purely mixed-use facility — meaning that it has incubated ventures across many business sectors — to a ‘modified mixed-use’ center, or home to only IT-enabled companies and different kinds of ‘green’ enterprises.
She’ll start with a venture called Texifter, LLC, a spinoff company based on text-analysis research conducted by Stuart Shulman, a professor of Political Science at UMass Amherst. Describing his business in broad, simple terms, Shulman said they are “power tools for language” that, as the company’s contrived name indicates, allow users to sift through text — large amounts of it.
Texifter software and techniques can help government officials, academic and legal researchers, non-governmental organizations, and corporate employees make searching, sorting, and analyzing large numbers of documents far more manageable, he explained, adding that the company now has a small staff and is moving out of the research-and-development stage and into the contract-procurement stage, said Shulman, who spoke with BusinessWest from Ronald Reagan National Airport in Washington after talking with representatives from several government agencies about how his products can help them.
This makes Texifter exactly the kind of venture with which Michel is hoping to fill the many available suites at the incubator.
To grow the tenant population, Michel intends to aggressively market the incubator, which many small businesses, operating in basements, attics, and garages, probably don’t know about. While making them aware through a variety of vehicles, from social-media outlets to direct communication with area colleges whose students and faculty members have become entrepreneurs, Michel will also work to inform them about the benefits of incubation. And she says there are many.
“Research shows that 67% of companies that are incubated succeed, while for those that are not, it’s less than half,” she said. Thus, a part of her job description will be work to convince entrepreneurs looking for space to grow to look for an incubator and not simply square footage in an office building.
For this issue, BusinessWest looks at how the new partnership between STCC and UMass Amherst evolved, and why officials at both schools believe the collaboration will enable Michel to achieve that goal of making this the entrepreneurial hub of Western Mass.

Schools of Thought
Rubenzahl said there were a number of factors that brought the two schools together several months ago in discussions about the enterprise center. Chief among them was the fact that the facility had hit a wall of sorts in its efforts to attract and effectively incubate clients, and for several reasons.
First, STCC lost its $530,000 state subsidy for the center — which paid for staff and operating costs — in the wake of massive budget cuts across the public college system stemming from the economic downturn and its harsh impact on revenues to the Commonwealth. Meanwhile, the recession also took a toll on entrepreneurs trying to take their companies to the proverbial next level; many were slowed in their development due in large part to difficulties obtaining financing, and thus were not willing to take on the costs of moving into commercial real estate, he continued.
“Companies can’t get started without financing,” he said. “We would have more startups if entrepreneurs could get the money they need to get started.”
There were also some staff changes and turnover in leadership positions at the center, said Rubenzahl, adding that, collectively, these factors provided what he called “an opportunity to revisit” the facility and plan its future.
And as he did so, Rubenzahl recalled reading somewhere that in the original legislation for the technology park at STCC, opened in 1996, there was wording to the effect that UMass Amherst should be considered as a potential partner in that venture. This recollection, reinforced with suggestions from others to initiate a dialogue with the state university, prompted Rubenzahl to commence talks with Tim Milligan, executive vice chancellor for University Relations, and John Mullin, dean of the university’s graduate school, director of the Center for Economic Development, and point person for the so-called Springfield Initiative, the university’s ongoing efforts to increase its visibility and impact in the City of Homes.
Mullin told BusinessWest that the incubator project touches on at least a few of the primary goals for the initiative, including the twin desires to be more visible and to bring more of its spinoff companies to Springfield and its suburbs (see related story, page 9).
He recalls meeting last fall with Paul Stelzer, president of Appleton Corp., which manages the SEC and tech park, about ways to partner on the incubator and create momentum there. “Very gradually, a couple of things morphed,” he said, “including the idea of the university directing startups to the incubator, and the other was providing someone who would be a coordinator or manager.”
Fast-forwarding a little, Rubenzahl and Michel said these initial talks eventually led to the creation of a formal partnership that involves a ‘what,’ a ‘who,’ and a ‘how.’ The ‘who’ would be Michel, who has been part of several economic-development-related initiatives at UMass, including efforts to take research from the laboratories to area communities. She will now split her time between the university and the incubator, with the institutions splitting her salary.
The ‘what’ would be a collaborative effort between the college and the university to make the incubator a bigger economic force in the region. Doing so would serve many different purposes, said Michel, listing everything from potential job growth to giving the university a still-greater role in economic-development efforts in the region.
As for the ‘how,’ as in how to make the facility the entrepreneurial hub of Western Mass., Michel says she plans to utilize all the resources and connections available to her to bring more, and higher-quality, clients to the incubator. Creating this critical mass will achieve many goals, from making the facility far more self-sustainable (more on that later) to making the incubator a desired landing spot for entrepreneurs.
Moving forward, the operating model will remain essentially the same, said Michel, noting that this means attracting clients with sound business plans and growth potential, properly incubating them, or giving them the help they need to get to the next level through the agencies in the SEC and three-person advisory boards assigned to each client, and then ‘graduating’ them into the community in two or three years and using their spaces to assist more small businesses.
“This is the model that (former STCC President) Andrew Scibelli created,” said Michel, “and we don’t have to change it; it works.”

Getting Down to Business
What will change, however, is the makeup of the incubator’s clientele. Indeed,
to make her vision for the incubator become reality, Michel wants to recruit more companies like Texifter, which fits the profile for the preferred client in a number of ways. For starters, it can take advantage of the extensive fiber-optic infrastructure that runs through the technology park. Also, it is technology-enabled, has strong growth potential, is ready to move from R&D into the sales and marketing phase, can clearly benefit from being in the incubator and around business-support agencies, and may soon to be in a position to hire STCC students and graduates.
“This is the kind of company we’re trying to attract, and we believe there are many that fit this profile,” Michel said, noting that UMass Amherst probably has several spinoffs that already meet this description or soon will. Technology-related companies are a prime target, as are certain types of ‘green’ ventures, she said, noting that what are known as ‘green-technology companies’ may not be suitable for this type of incubator because of the long periods of time it takes to move products from the drawing board to reality.
Shulman has spent a number of years in the R&D stage, perhaps 10 by his count, but is now ready to move forward. He has one employee at present, but he hopes to have five within a year and perhaps 15 in two years. The growth rate will largely be determined by how many clients, especially government agencies, the company can add as either a primary contractor or subcontractor with other text-analysis companies. That’s why he was in Washington the day he spoke with BusinessWest.
“I was making presentations to the Environmental Protection Agency, the Department of Transportation, the Department of the Interior, the Bureau of Labor & Statistics, and others,” he said. “They all have one form or another of a common problem: either large piles of small documents or small piles of large documents. We’re trying to build search engines to get around document piles.”
One challenge facing Michel as she sets out to lease up the incubator is finding such companies. There are many out there, but some keep a low profile, she said, adding that UMass spinoffs like Texifter will obviously be among the primary targets.
Another challenge will then be to convince such companies to come to Springfield and the incubator, she continued, noting that it will be her job to sell the entrepreneurs in question on the benefits of incubation. Overall, she doesn’t think it will be a hard sell.
For starters, she said that, while operating out of one’s basement or garage may be cheap, it’s not an effective way to grow a business. The Springfield Incubator provides clients with facilities they simply couldn’t have in their home, such as a shared receptionist and conference rooms, and close access to agencies such as the Small Business Administration, the Mass. Small Business Development Center Network, and SCORE, the Service Corps of Retired Executives.
There are also more far-reaching advantages. Quoting statistics provided by the National Business Incubator Assoc. (NBIA), Michel said that incubation substantially reduces the risk of small-business failure. According to a report called “Incubation Works,” “historically, NBIA-member incubators have reported that 87% of all firms that have graduated from their incubators are still in business.”
There are benefits for the community, as well, she continued, citing more MBIA stats showing that, in 2005 alone, “North American incubators assisted more than 27,000 start-up companies that provided full-time employment for more than 100,000 workers and generated annual revenue of more than $17 billion.” Also, research has shown that 84% of incubator graduates stay in their communities.
The primary goal at the SEC will to make the incubator self-sustainable, or at least much more so than it has been historically, said Michel, noting that most incubators receive some sort of support — be it state, federal, or both — and the Springfield facility will certainly be aggressive in pursuit of such support.
And this is a good time to be doing so, she continued, adding that the federal government is putting additional emphasis on supporting innovation, and is making funds available to incubators and also companies like Texifter.
Indeed, Shulman said his venture will soon receive funding from the federal Small Business Innovation Research (SBIR) program, which he expects will help the company add staff and gain government contracts.
“The way the program manager describes it, the U.S. governments wants to invest in companies it wants to see succeed, but without taking any equity,” he said. “We’ll get $100,000 on July 1, and that could grow to $150,000 by the end of a six-month period. Then we’ll be eligible to get another $50,000 if we can bring in $50,000 from another source between now and Oct. 15. All told, we can get $200,000 from SBIR that will allow us to hire some programmers and pay lawyers to do something other than borrow cash.”
Meanwhile, Rubenzahl said the timing is also right as far as entrepreneurs stepping forward with new concepts, many of them out of sheer necessity, with the recovery taking on a decidedly jobless look and feel.

Room for Growth
At a packed press conference at the SEC to announce the partnership between STCC and UMass, Shulman was one of the final speakers to reach the podium. He talked at some length about what his company does (always a fairly difficult task), and then about what brought him to the incubator, specifically the physical space, but also, more importantly, the support he’ll find inside the facility.
Then, speaking for every entrepreneur who’s ever signed the front of a paycheck, he said that getting a venture off the ground isn’t anywhere near as easy as it might look.
“It is scary being a startup,” he told those assembled. “I have to admit that there was a month or two there when I woke up every morning sick to my stomach. I suppose it’s only going to get worse, but having this resource here has made it possible to forge on.”
In many ways, those last few words can also be used to describe how the STCC/UMass partnership will breathe new life into a facility that has always had vast potential.
One term won’t suffice, but ‘forge on’ does it nicely.

George O’Brien can be reached at [email protected]