02.11.05 —Startups incubate faster by helping each other out
Author Rick Desloge
More companies in business incubators are doing business with each other, and that is helping them graduate faster, said Jan DeYoung, director of the St. Louis Enterprise Centers.
St. Louis Enterprise Centers graduated seven companies last year, the largest number of new businesses spun out in 2004 of any incubators in the region.
It was one of the larger graduating classes from St. Louis Enterprise Centers. The city-county partnership had three incubator sites operating last year -- Chesterfield, south St. Louis County and Midtown St. Louis, which have 52 businesses. A fourth site in Wellston is expected to open in March. The operation is similar to two incubator sites that St. Charles County Economic Development Corp. operates. Those locations had no graduates in 2004, but expect two companies to graduate in early 2005.
Jon Hodgins, president of TOP Marketing, a sports marketing business that graduated from the Chesterfield incubator in May, said working with other companies in the incubator was key to his expansion. Hodgins, who formerly was director of marketing for Rawlings Sporting Goods Co., had never started a business. Then he launched TOP Marketing, which uses sporting goods as premiums. "There was a lot of other stuff to do, and I didn't know how to do any of it," he said of his incubator days, which put him in touch with people in the shipping and technology businesses.
Businesses can make the same connections outside of St. Louis Enterprise Centers, but opportunities do not come as easy, said Mike Zambrana, president of Pangea Group, an environmental cleanup business that moved out of the Chesterfield incubator last year. "We identified seven (incubator) firms that we worked with," he said. That included companies that created Pangea's Web site, provided network security, embroidered shirts and hats, and handled numerous computer issues, he said. Their prices may not have always been the lowest, but you are dealing with a trusted source, and there is a value to having the solution right down the hall, Zambrana said.
Doug and Sandy Nash, owners of The Smashed Chefs in the Chesterfield incubator, plan to spend $10,000 with another incubator firm, E-Data Solutions Inc., to develop a Web site. The site will allow The Smashed Chefs to sell its gourmet serving pieces made from recycled wine bottles via the Internet. Missouri retailers and sales reps now handle distribution for the company, Doug Nash said.
Leslie Decker, president of E-Data Solutions Inc., also landed a Web site design project from her neighbor in the South County enterprise center, P.S. Kids. Meanwhile, Decker hired incubator company Strategic Technology Group to help E-Data add high-speed Internet connections and improve other technology.
"We don't advertise that we rebuild Web sites, but a lot of times that's what it takes," said Decker, who brought E-Data to the incubator two years ago after she and three other employees left Vertis Digital Solutions Group in St. Louis.
John Sagartz, president of Seventh Wave Laboratories, a Chesterfield incubator firm, said his company, which contracts for biomedical services from larger businesses, has preliminary deals with other incubator companies. More important, Sagartz said he and his partners likely would have followed another pharmaceutical company out St. Louis without the incubator here. Seventh Wave takes its name from the company's founders, who were in the seventh wave of layoffs at Pharmacia.
Rent at St. Louis Enterprise Centers ranges from $13 to $24 a square foot, depending on location. The price includes utilities and access to benefits such as business mentors and other resources.
"Some people look at incubators as places where people who lack skills and financing come," DeYoung said. "We look at all of these companies as emerging businesses, where the executives starting them are bringing skills from their previous jobs to a new venture."
Companies that want to locate in an incubator need to go through a review to assure the owners' abilities and finances are realistic, DeYoung said.
Originally published in the February 14, 2005 St. Louis Business Journal.