Business Incubator Series: Micah Kotch, NYC ACRE At NYU-Poly, New York (Part 4)

By guest author Irina Patterson and Candice Arnold

Irina: What help do you offer in terms of financing?

Micah: Before a company is going to go out and raise capital, we want to make sure that the founders have a good sense of their market and, if possible, show revenue.

If a business is revenue positive, they could have more leverage with investors than if it is just what we refer to as an “aspirational business.”

We have a deep network of serious providers and connections within the New York venture market. When it’s appropriate, we will make introductions to angels and to venture investors and to other, non-dilutive sources of funding, like NYSERDA or NIH or other organizations that are funding startup companies without taking any equity.

Irina: On average, how long does it take to receive a grant from a government agency?

Micah: That depends on the agency. It can be as short as two months. It can be as long as eight or ten months, depending on the agency and the size of the grant.

Irina: Other financing options?

Micah: There’s the angel community. There’re family offices. There’re also large corporate customers.

Irina: What is your incubator’s business model?

Micah: It’s run by NYU-Poly, the Polytechnic Institute of NYU, which is an educational nonprofit institution. It’s managed and operated by the university with support from the city and the state.

Irina: Does the incubator make any investments?

Micah: No, we do not. But the university also has an initiative called NYC Seed. NYC Seed, along with the New York City Investment Fund as well as the Empire State Development Corporation do make seed investments in digital media companies.

Irina: What’s the range of those investments?

Micah: I think it’s $250,000 to $500,000, depending on the deal. I know it’s no more than $500,000. [NYC Seed invests up to $200,000 depending on the number of founders and the needs of the company.]

Irina: Does the incubator generate any revenues?

Micah: Only from rent.

Irina: Is that a subsidized rent?

Micah: Yes, it is. We charge $300 per seat per month or $1,200 for an office. We have 76 seats and 7 offices. 

It is subsidized, again, because Trinity Real Estate, which owns the building that we’re in, is a partner in this initiative that was created by Mayor Bloomberg and the New York City Economic Development Corporation.

Irina: What are some of your challenges?

Micah: I think it’s a talent issue. I think that technology development, software engineering, human capital – that is the biggest bottleneck for the growth of this community. There is  not enough developers.

Irina: Anything else?

Micah: I think it’s an incredibly exciting time to be an entrepreneur, and I wish we had more space so we could accommodate more people.

The space allows for the serendipitous contact and collaboration, which would not happen unless it was face to face. There are times when companies will introduce contacts to one another. There are times when they share information in meetings and will ask for feedback.

Being an entrepreneur is a challenging, lonely, up-and-down existence. Having someone physically to talk to about that, I think there’s a tremendous amount of value in that. It’s critical; there’s no replacement for it.

Irina: What does virtual incubation include?

Micah: Entrepreneurs get four hours of conference room use a week, as well as all the other services, [such as] access to subsidized interns.

They get invited to the events. They get preferred access to subcontractors. We have attorneys and accountants who do regular office hours here, so they get access to all those kinds of things.

We have lawyers from Lowenstein Sandler, EisnerAmper [accounting], other firms that are doing free office hours. But it’s not everything. The basics are free. The rest of the stuff, which requires a little more horsepower, they get charged at a reduced rate.

Irina: Do you have any special initiatives at the moment?

Micah: We do have a special initiative around the development of an energy infotech cluster here in the city. So, the idea is that New York City’s unique capabilities in IT, Internet applications, media, and finance position it to be a global leader at the intersection of IT and clean tech.

We’re working to bring together technologists, developers, entrepreneurs, and investors to realize value from leveraging information in the energy system.

We’re working with a number of startups. We’re looking at opportunities behind the meter, new energy applications, smart grid to help grow a leading innovation ecosystem in energy infotech centered in New York. We’re working on that with NYSERDA, Con Edison, and IBM.

Irina: Thank you, Micah.

This segment is part 4 in the series : Business Incubator Series: Micah Kotch, NYC ACRE At NYU-Poly, New York
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