Business Incubator Series: Fred Hoch And Terry Howerton, TechNexus, Chicago, Illinois (Part 5)

By guest authors Irina Patterson and Candice Arnold

Terry: One of the companies that launched here last week is called Photogram. It is similar to Instagram in the mobile app space, which was very popular. Photogram [which targets new parents] also has been performing just about as well, in terms of getting customers, as Instagram was. Instagram was a big national success in terms of how much people paid attention.

Another company is called Open Kernel Labs, which is actually a commercialization effort out of the Australian government. They’ve got mobile virtualization software, that sits inside a mobile phone and allows [the phone] to have multiple identities. Through their OEMs and distribution relationships, their software is sitting in over a billion cell phones right now around the world. I think they’re going to be quite successful.

We have a company based here called Flower Petal, which has built a really interesting technology to sell. In this particular case, [they sell] flowers online, but doing so as part of a sales process for companies like Open Table and others. They’ve done very well with their technology and selling flowers online as part of the Open Table check-out process.

One other company I would throw out there is a company called Option Monster, which is an options trading platform.

Irina: On average, how long do companies usually stay in your incubator?

Terry: That’s another important distinction. We don’t have a set schedule, so we don’t actually say to a company, “Hey, you can be here for six months. Figure it out or get out.”

We have companies that are here for only a few months. We also have companies that have been here for a couple years. That’s part of that balanced ecosystem we talked about earlier, making sure that what we keep underneath this roof is a carefully selected and carefully balanced ecosystem of different sized companies and different stages of companies.

We’re not necessarily looking to push people out. If they can continue to add value to the community or get value from being in this collaborative environment, they should stay.

Irina: What is the structure of TechNexus? For-profit or nonprofit?

Terry: The incubator is for-profit; however, we’re closely partnered and aligned with not-for-profit organizations like the Illinois Technology Association and Clean Energy Trust and others.

Irina: How does this business model work?

Terry:  We make money from the real estate and the events that are hosted here and those types of things. That is designed to just pay the bills and keep the operations going. We never have seen that as a profit center.

The other real areas that are key parts of our business model are corporate development work. We do a fair amount of consulting work for these growing companies but also for larger corporations here in town that come in and say, “I need you to think in an innovative way,” or “I need you to pull together a group of people who can think in an innovative way about my business problem that I’m trying to solve.”

And then equity is the final piece – the third piece – equity in the companies that are based here, an opportunity to invest in some of the companies that we see up close and personal.

In some cases, we put some of our own money into companies. We’ve also got a good relationship with a number of investors who like the fact that we get to see these companies up close and personal, and they get to participate as a result of that.

Events and real estate, corporate development, and equity are our three revenue sources.

Irina: When entrepreneurs come for full-time incubation, do they pay any fees?

Terry: It depends. That’s another piece to this balanced ecosystem. We have people who are building companies underneath our roof who pay to be here because they can afford to pay to be here.

We also have companies that are growing underneath this roof that pay nothing to be here. It may be because they are not yet at a stage where they can afford to, or it also may be that they’re contributing value in some other way.

This segment is part 5 in the series : Business Incubator Series: Fred Hoch And Terry Howerton, TechNexus, Chicago, Illinois
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