Business Incubator Series: Stephen Fleming, Enterprise Innovation Institute, Georgia Tech – Atlanta (Part 5)

By guest authors Irina Patterson and Candice Arnold

Irina: On average, how long does a company stay in your incubator?

Stephen: It’s all over the map. The life science companies take longer. We actually don’t have a time horizon in mind for our life science companies. They’re so dependent on the underlying science and the regulatory approval process.

If you put those to one side and look at the non-life science companies, on average it’s about three years. Some are a little faster. Some are a little slower.

If they’re tenants in our space – most of our companies are not tenants – at the three-year point, if they’re still tenants, we will have a conversation with them about how “It’s really time for the baby bird to leave the nest.”

We ratchet up the rent over those first three years. It’s heavily subsidized the first year. It’s less subsidized the second year. By the third year, they should be paying market rates.

It’s a nice place here in midtown Atlanta. If they like our space, they can rent it. If they don’t like our space, they don’t have to.

From a financial point of view, after year three, it’s probably time to go find another home. Some of them will take longer. That’s OK. We don’t have a firm clock that’s ticking, saying, “You know, you haven’t made it.” Some of our companies have taken more than 10 years to be successful. We’re patient with them.

Irina: Do you engage with them after they’ve left?

Stephen: We don’t let them go. We track them. What we try to do is to get them to remain engaged with the community.

So, even after they’re no longer tenants and we’ve declared them graduates, which means we shake their hands and give them plaques, we try to keep the individuals involved engaged in our community, to come back and be mentors and to be advisors or to be board members or maybe to be customers of the younger companies.

The startup community here is an ecosystem. Everything is dependent on everything else. What we don’t want is for them to go off and be wildly successful and then disappear. We want to bring their time, their attention, their knowledge and, bluntly, their money back into the community for the benefit of the younger companies.

Irina: How many have come back and invested in other companies?

Stephen: Invested dollars? I’m not sure, although there have been a handful of them. Investing their time, a lot. Dozens of the entrepreneurs who have been through the process come back here and spend time with the younger companies. That’s the real strength of the community here. People see that it’s important to spend time and not to just cash out.

Irina: What is the business model of the incubator?

Stephen: We are funded by Georgia taxpayers. Period, full stop. It’s a line-item in the budget of the state of Georgia.

Irina: Do you have any revenues?

Stephen: If by revenue you mean other than the money we receive from the tax payers, we charge a membership fee. It’s a token. It’s $50 a year. We don’t really make any money off that. It doesn’t even cover our cost of processing the paperwork.

We do have sponsors. We have some significant corporate sponsors who are large companies or, occasionally, small companies. Again, typically, graduates of the incubator have chosen to give us money as a charitable donation. We certainly appreciate that. By far, the bulk of our budget comes from an appropriation from the state legislature.

Irina: I know you manage some funds. Would you tell us about that?

Stephen: One is called the Georgia Tech Edison Fund. It is set up to invest in very early stage companies that have a connection to Georgia Tech. They can be based on Georgia Tech’s intellectual property or they can be founded by Georgia Tech students or recent alumni. It makes small investments, $10,000 to $25,000.

It is available to invest alone. It’s able to put in money before anyone else. If no one else believes in the deal, I can believe in it and put some money in. It’s not going to help a biotech company all that much. It could help a software company quite a bit. We’ve made five investments so far. We’re about to make our sixth.

It is set up unusually in that it does not have investors. It has donors. The money is given as a charitable donation to Georgia Tech by interested parties, be they alumni, companies, or foundations. We take the proceeds of those charitable donations. We give them tax receipts so they can deduct them on their taxes. We use that money to invest in these companies related to Georgia Tech.

This segment is part 5 in the series : Business Incubator Series: Stephen Fleming, Enterprise Innovation Institute, Georgia Tech – Atlanta
1 2 3 4 5 6 7 8