Area Cooks Up New Incubators

Business incubators and accelerators are old news in tech centers such as Silicon Valley and, closer to home, the so-called Silicon Beach area around Santa Monica. Now, finally, a few of the outfits, which seek to speed the development of startups, are popping up in the greater Valley. In Santa Clarita, the city is in the process of renovating its shuttered mid- century Newhall Library into a new business incubator, while in Sherman Oaks, two veteran entrepreneurs are opening an accelerator aimed at older business people. They join a life sciences accelerator that got off the ground last year in Thousand Oaks. “These industries can create high-paying jobs for our residents and that’s great economically. And these businesses can start with just an idea and grow to be a large company,” said Jason Crawford, economic development manager for Santa Clarita, which is partnering with College of the Canyons to attract tech and creative startups to the north L.A. County incubator. Though both business accelerators and incubators have a similar model and mission, there are distinctions, though sometimes the tags are used interchangeably and the differences are hazy. Incubators tend to work with companies just getting organized and work directly with founders to put a team together. Accelerators take on companies that already exist and nurture them for a fixed length of time. In both cases, the facility might provide some funding or take an equity stake in the business. Matt Crowley, an attorney with Crowley Corporate Legal Strategy in Encino, who works with startups and has authored a book on the subject, said the Valley is populated by graduates of Cal State Northridge and Pepperdine University, among other schools. But the graduates do not get the attention they deserve from the tech industry. “It is about time (for an accelerator); we have been totally neglected,” said Crowley, who serves as the president of the Los Angeles Venture Association, a networking startup organization for entrepreneurs, investors, financial advisors and bankers. Startup options In Sherman Oaks, Ian Sephton and Ginger Zumaeta are opening a business accelerator called Hub 101. The concept is a bit different than the classic business accelerator. Its schedule includes evening and weekend hours, designed to target more experienced business people who have less time to start a business. It will use space provided by OfficeSlice, a collaborative, co-working space at 15165 Ventura Blvd. offering flexible workspace, private offices, a meeting room and a conference room. The accelerator is currently accepting applications for up to six teams for the first 12 to 15 week program. Hub101 takes a 3 percent equity stake in the companies in the program. Zumaeta believes the flexible work hours will offer a much different twist to the classic incubator. “We are trying to attract folks who are more mature but we need to provide a different structure where they can get away from the kids and home responsibilities,” she said. The teams will receive mentoring from business veterans; a classroom curriculum focusing on customer and product development; and the opportunity to work alongside like-minded entrepreneurs facing the same challenges. “It is easier to climb with a partner than climb solo,” said Zumaeta, 46, who has worked at NBCUniversal and is co-founder of Beehive Group, an L.A. boutique marketing firm. Sephton, 36, served in the U.S. Marine Corps and is chief executive of Syncromantics, an L.A. software developer that tracks and coordinates public transit. He also co-founded Branstetter Group, a Santa Monica hospitality industry consultancy. Santa Clarita, by comparison, is creating a business incubator, where the only income will come from modest rents, which Crawford said may fall in the $100 to $200 a month range. The city hasn’t finalized the amount. “This city is doing this to create successful businesses which will then directly benefit the community and indirectly benefit the city,” he said. “We are not looking to make money off the businesses directly.” The city will be dividing the 5,000-square-foot former library at 22704 Ninth St. into two functional offices. One office will house the startups, where Crawford said the space will be mostly open to allow for a collaborative environment. The space will also include a conference room that any of the businesses can use. He said the space can accommodate about six, one- or two-employee businesses at a time. Crawford estimates startups will spend about a year or two at the incubator to reach the point where they could move out to fully rented space. (The other half of the building will provide unrelated offices for the city’s landscape maintenance, tree and forest services department.) The former library, which closed about two years ago when the city opened its new public library, is undergoing some $200,000 in renovations, which will include repainting, upgrades to the restrooms and installation of a high-speed broadband access. The partnership with College of the Canyons will give the startups an opportunity to attend workshops and training seminars on some of the finer points of doing business, including how to properly incorporate and help with social media marketing. “The hope is that these companies can eventually move out and stay in the Santa Clarita Valley as they start thriving,” said Holly Schroeder, chief executive of the Santa Clarita Valley Economic Development Corp. “It’s important to implement new strategies to revitalize the area and this is one of them. Everyone wants to have the next Google or transformative company come out of their area.” Stan Tomsic is co-founder of the Business Incubation Network of Southern California, which provides a forum for managers of incubators and accelerators in the region. Tomsic said there are 33 business incubators and accelerators in Southern California, and the Valley has long lagged behind. “The Valley has been terrible, not having facilities for entrepreneurs,” said Tomsic, also executive director of PortTech Los Angeles, a San Pedro clean tech business incubator dedicated to ports and the maritime industry. “But the accelerator industry itself is challenging. It’s still a lot to ask to get businesses off the ground so quickly.” Biotech starter The challenges are well-known to Greg Cauchon, a former Amgen Inc. scientist who started the Conejo Valley’s first biotech incubator/accelerator last February. The Ventura BioCenter is in Thousand Oaks, less than a mile from the headquarters of Amgen. Cauchon started the program in a building at 1176 Tourmaline Drive with about 11,000 square feet of lab, office and conference space. Rent runs about $500 a month for 250 square feet. “It can be very difficult to start these things,” said Cauchon, who also founded Amethyst Life Sciences Inc. in 2005, a Thousand Oaks firm that does life sciences research for other companies. “Many of the companies that come in don’t have a product or prototype.” Coming up on the one-year anniversary of his business, Cauchon’s client list includes companies working in myriad fields, not just biotech. He is reluctant to give specific details as he considers other incubators competition. Among the handful of firms are a company working on a new medical imaging system and one working on metal manufacturing technology. As for the competition and longevity of incubators and accelerators, Cauchon turns to chemistry for an anology. “To get a chemical reaction, you have a certain amount of energy required. We lower that energy hump for starting a business,” he said. “Instead of having to rent space and fix it up, they can come in and start research immediately.” Brent Reinke, a partner at Westlake Village law firm Musick, Peeler & Garrett LLP, works extensively with entrepreneurial businesses. He said incubators and accelerators are not a slam-dunk, and depend on large scale. “The thought is that if you put a bunch of companies together, one success can make up for a lot of failures,” said Reinke. “Any startup is a challenge, and incubators are startups themselves. And the companies that come in are really early-stage. It’s great to see these things happening here, but the only way to determine if this is going to get bigger locally is whether these facilities succeed.” But Tomsic from PortTech expects the new openings in the greater Valley region to be just the beginning. “The expectation here is that these businesses can find solutions to some of our future questions,” he said. “And anything that helps promote entrepreneurs and creativity and being able to market that commercially is fabulous for everyone.” Staff Reporter Mark R. Madler contributed to this story.