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Hatching New Business
Area incubators nurture start-up companies into mature businesses.
The goal of all parents is to support, shape and steer their children into adulthood, so their offspring can stand on their own. The concept is the same for business incubators. Within the shelter and warmth of a facility, fledgling companies are nurtured into stand-alone companies.
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Above Left: Bob Calcaterra, president
Nidus Center
Above Right: Cameron Smith, director
St. Louis Enterprise Centers
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Above Left: Greg Prestemon, president
Economic Development Center of St. Charles County
Above Right: Marsha Mellitz, president
Center for Emerging Technologies
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Companies are offered low overhead; support services such as marketing, accounting and legal assistance; and office space, such as a shared conference room, copy center, computer labs and telephone systems; and business advice. Start-up companies can nest in an incubator for several years, then they are supposed to fly the coop. An incubator measures its success by the businesses that “fly” out on their own.
“Incubators provide jobs, encourage business development and have significant economic impact on our region,” notes Dick Fleming, president and CEO of the St. Louis RCGA.
St. Louis Commerce Magazine takes a look at the region’s incubators that are helping to cultivate the next Microsoft or Amgen or Amazon.com.
president and CEO of the St. Louis RCGA. “National studies document the fact that 87 percent of the incubator companies succeed, versus only 25 percent that don’t have the benefit of these facilities.”
St. Louis Commerce Magazine takes a look at the region’s incubators that are helping to cultivate the next Microsoft or Amgen or Amazon.com.
St. Louis Enterprise Centers
Run by St. Louis County’s Economic Council, the St. Louis Enterprise Centers operate one of the oldest incubators in the region. Its first center opened in 1986, but eventually closed. Then the Economic Council refocused its incubator program and opened the Midtown Enterprise Center in 1993. This facility is located within the City of St. Louis, has 22,000 square feet and 17 tenants.
Cameron Smith, came out of retirement after having sold his own business, to serve as director of the Centers. He notes that incubators do a good job of developing entrepreneurial businesses. In addition, incubator companies create jobs and expand the area’s tax base, helping the region’s economy, Smith states.
Incubated companies receive a variety of services while they pay affordable rent. “These companies are nurtured, protected, counseled and mentored,” he states. Smith asked approximately two-dozen business leaders, some retired, to provide guidance to the County’s incubator companies. On a regular basis, the centers hold client seminars featuring one of these business specialists. Topics range from management issues to human resources to production to marketing.
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Above: Rick Lowe, product manager and Lucia Marshall, Ph.D., Trans America Product Technology, Inc., are testing a fermentor that is used to make a product that manages and controls aquatic weeds. The all-natural product doesn’t use chemicals or genetic engineering. The company has been housed at the St. Charles Economic Development Center for three-plus years. They provide technical, marketing and management consulting.
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Smith says business leaders in the region can help start-up companies. “We have something to share with the community and can give back,” he points out. Smith is always recruiting seasoned business experts to help the centers’ incubator companies.
In 1996, the West County Enterprise Center opened. “This center was built as part of the economic redevelopment efforts because of the Flood of ’93,” Smith notes. This center houses 13 companies and is primarily filled with high-tech companies. The 40,000-foot facility is almost full.
Opening this month is the South County Enterprise Center. This 20,000-square-foot facility will be unique in that it offers retail space. By the end of this year, St. Louis County will open its fourth facility in renovated space within the former Wagner Electric building. This incubator, the Cornerstone Enterprise Center, is part of the Cornerstone Partnerships’ broader redevelopment plans. The Economic Council hopes to commission a study on the economic impact of its incubators once all four are up and running. Approximately 150 employees work at the Midtown and West County Enterprise Centers.
St. Louis Enterpise Centers Incubator Businesses
Midtown Enterprise Center
- BRC Distributors, Inc. —Distributor of janitorial and safety supplies.
- Document Imaging Systems of St. Louis, Inc. — Architect, engineering and construction copying services.
- EnviroHealth Technologies, Inc. — Laboratory analyses and consulting for environmental hazards.
- Family Depot, Inc. — Transitional services for homeless families.
- Gateway Gaming—Casino entertainment, training, rentals and parties.
- Jotec, Inc.—Manufacturer of penny press souvenir machines.
- McDermott Enterprises, Inc.—Baker and distributor of Biscotti biscuits.
- M-G Singelton Construction, Inc.—Full-service general contractor.
- MediSkin Technology—Distributor of specialty skin care products.
- Metropolitan Abatement Co.—Environmental sampling, testing and consulting.
- The Millcreek Co.—Producer of BBQ and hot seasoning sauces.
- The Pharos Group, LLC—Environmental and safety consulting.
- T.A.B. Co.—Specialty supplier and video production.
- Ultra Clear Corp.—Filtration systems for wastewater disposal.
- Watson Business Consulting & Development Co.—Small business consulting.
- Webster Associates Holdings, LLC—Technical staffing and telecom engineering.
- Windy’s Professional Home Care, Inc.—Home-care medical services.
West County Enterprise Center
- Accent Fishing Products—Supplier of multi-species fishing products.
- Allegiant Supply—Stress reliever products and logo imprinting services.
- Aurora Systems Group—Contract information services consulting.
- Creative Computer Consultants—Airport management software.
- EFK-Moen LLC—Civil engineering design consulting.
- Integra Group—Custom software design and development.
- Leisure Travel Pros—Vacation/leisure travel planning specialists.
- Pangea, Inc.—Construction, environmental remediation, health & safety.
- PRO Networks—Design and support of data/voice networking.
- Royal Vending—Retail vending, coffee and bottled water.
- Tayman Medical—Medical product development and manufacturer.
- Technology Solutions, Inc.—Sales/service of data collection equipment.
- Young Manufacturing—Manufacturer of lawn and garden products.
Economic Development Center of St. Charles County
Also opened in 1993, the Economic Development Center (formerly known as the Synergy Center) evolved as a response to McDonnell-Douglas layoffs. “St. Charles County’s business leaders were concerned by the effects of the downsizing of McDonnell-Douglas,” notes Greg Prestemon, president. “At that time, almost one-third of McDonnell-Douglas’ employees lived in St. Charles County.”
In six years, the center graduated more than 18 successful companies. “We have companies that grow from an idea to ultimate success,” Prestemon notes. One such company is Neeco-Tron Inc. Starting with just three employees, Neeco-Tron, which assembles circuit boards for medical, marine, fitness, food service, HVAC and small-appliance industries, had 50 employees when it moved into its own facility in 1998. The company also received the 1999 Incubator Graduate of the Year award in the manufacturing category by the National Business Incubation Association.
The center, which includes a Small Business Development Center (SBDC) offers companies a range of professional, technical and financial programs. In addition, the companies receive a reception area, telecommunication service (including local area network), conference rooms, computer resource room, copy facilities, dock area, break room, shipping room service, notary public service, janitorial services and consultation services for little or no charge while paying below-market rent.
“Incubated” companies at the St. Charles center employ 200 full-time employees and 90 part-time employees. The companies produced 150 new products and generated $15 million in sales in 1998. The center provides space for 40-plus businesses including light manufacturing, technology, communications, R&D, business training and service. Currently 30 businesses occupy the 58,000-square-foot facility. For more information, visit their web site, www.stcc-edc.com.
Economic Development Center of St. Charles County Incubator Businesses
- Access & Mobility Solutions—Sells, installs and services equipment for the physically challenged. Products include stair elevators, wheelchair lifts, electric scooters and power wheelchairs.
- Art Technologies, LLC —Electronics design and sales group specializing in RF communications equipment. Line of products includes commercial satellite receivers and wireless transceivers.
- Cardservice – Midwest—Provides service and equipment for processing credit card transactions for any type of business.
- Conversion Processes Corp.—Offers custom configured electric infrared industrial ovens for manufacturers who require or desire to apply heat to their product(s) during the manufacturing process.
- Digital Link, Inc.—Designs, manufactures and sells wide area networking data communications equipment.
- Document Office Products—Offers a complete line of new and previously owned Xerox copiers. Maintains a sales and demo office for Xerox copiers, fax equipment and digital printers.
- Dress For Success Midwest—Assists low-income women transitioning into the work force by providing soft skills training, professional training and apparel.
- Education Technology Consultants, Inc.—Develops custom technical training manuals, videotapes, computer animation and specialized software programs for industrial clients.
- eneGene Genetic Services LLC—Provides human genotyping services for parentage testing; forensics and human identification.
- Frame Guild—Workshop and production facility for custom-designed, framed artwork for commercial customers.
- Gateway Photonics—Manufactures laser diodes and laser diode arrays in off-the-shelf and custom designs, for laser system developers and manufacturers.
- Grid MicroSystems, Inc.—Provides custom microcontroller-based electronic design, manufacturing and software engineering services to clients nationwide.
- Herst & Associates, Inc.—Specializes in environmental regulatory compliance and groundwater consulting services.
- Imaging Solutions Consulting, Inc.—Provides consulting services for document imaging industry.
- ITEX-St. Charles—Offers education and information on the use of barter as a strategic tool to open new markets, conserve cash, and provide alternative financing for the business owner.
- Jack-Mat, Inc.—Manufactures customized patent child protection hearth seat.
- Lodging Concepts, Inc.—Markets hotel guest amenities and toiletries to US hotels and hotel chains; motels; airlines; casinos and cruise lines.
- MAMTC—Helps small and medium-size companies become more competitive, focusing on marketing strategy, job costing and quality improvement such as ISO 9000.
- The Marketing Depot—Provides a complete range of marketing services to companies, with a focus on small and mid-sized businesses.
- Mass Flow Associates—Develops diagnostic aids that allow technicians to test gas flow without having to shut down a production tool.
- Midwest Telcam, Inc.—Provides telecommunications equipment including cellular phones, pagers, long-distance service and long-distance phone cards.
- Parties By Design—Provides special-event decorations including balloon sculptures, balloon decorations and miscellaneous party decorations.
- Premier Design and Manufacturing—Offers rapid, three-dimensional, plastic prototypes using stereolithography and CAD technology.
- Supply Velocity, Inc.—Helps manufacturers reduce inventory, shorten lead time and increase capacity by implementing mathematical methods of manufacturing and materials management.
- Tecnomatix, Inc.—Former Worklink company, temporarily housed at EDC upon Worklink’s closing.
- TelGaAs, Inc.—Designs and manufactures microwave subsystems, components and semiconductors used in commercial and military communications and radar industry.
- Trans America Product Technology, Inc.—Provides technical, marketing and management consulting in North America and Latin America. Offers product development and formulations with natural biological carriers.
- Weber Media Communications—Provides communications consulting services for small to large businesses for bottom-line improvement.
- Web CITI—Internet service provider.
- Westplex Information Network (WIN)—Provides electronic mail and Internet access to St. Charles County residents, local business owners and members of sponsoring organizations.
Center for Emerging Technologies
Unlike the previous two groups of incubators, the Center for Emerging Technologies has a unique niche—medical technology. Of the 10 companies housed in its 42,000-square-foot facility in midtown, eight focus on life sciences and biomedical engineering and two are engineering oriented. “We select companies that are technology creators, not technology users for our facility,” says Marcia Mellitz, president.
A public-private-academic partnership developed the Center, which opened in 1998. The incubator facility was funded by St. Louis Development Corp., Missouri Development Finance Board, U.S. Economic Development Administration and private companies. Services are funded by the Missouri Department of Economic Development, University of Missouri–St. Louis, NASA and Small Business Administration.
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Above: Lingao Zhang, chemical engineer at MicroSense of St. Louis, works with chemicals to develop sensors. The Center for Emerging Technologies has proven to be an ideal starting ground for this up-and-coming lab, according to Eric Raskas, CEO of MicroSense.
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The RCGA played an active role in “placing” state tax credits, which helped build the Center.
Mellitz credits some of the early success of the center to its proximity to Washington University Medical Center and its Genome Sequencing Center. “All of the companies within our facility have a university connection,” she notes. “Some companies have relocated from out of town to start a business here, because of an affiliation with Washington University, particularly the School of Medicine.”
The lab space is what makes the Center unique, Mellitz notes. She knows of few other facilities like it in the United States. Later this year, the center plans to open an additional building next door, adding another 50,000 square feet. The original building will remain lab oriented while the second building will have loft office space and facilities for engineering and software development.
In order to get into the Center, companies must meet five stringent criteria:
- must be developing a new technology,
- have significant market potential,
- have a university connection,
- contribute to the community, and
- can benefit from being in the Center.
Once accepted, companies sign one-year leases, which are renewable. Mellitz says a benefit of having the Center for Emerging Technologies in St. Louis is that once a company starts here, it typically stays in the region.
The Center recently commissioned an economic impact study. Once the new facility next door is open, the study predicts that over the next 20 years, the companies in the expanded Center will add $1.2 billion to Missouri’s gross state product, including $172 million to the economy of the City of St. Louis. Projections also indicate an economic impact of $861 million to the incomes of Missouri households, $91 million in the city of St. Louis alone. In addition, the Center itself will support 240 jobs when full and generate another 410 jobs. For more information, visit their web site, www.emergingtech.org.
Center for Emerging Technologies Incubator Businesses
- AP Materials, Inc. (APM)—Develops and manufactures a broad range of state-of-the-art ceramic and metallic powders used to produce materials for a wide range of applications including electronic materials, catalysts and structural materials.
- BioProfile—Developing an extremely sensitive, accurate method for the detection of cancer at its earliest stages.
- Celox Communications Corp.—Developing intelligent, fast and flexible broadband remote access servers that enable network service providers to provide their home and corporate subscribers high-speed access to the Internet and utilize emerging applications like on-demand television and movies, home videoconferencing, multiplayer interactive games, rich-media advertising, e-commerce and distance learning.
- DNA Polymerase Technology, Inc.—Developing improved technology for detecting, analyzing and manipulating genes.
- Daedalus Technologies Company’s—Objective is to design, produce, manufacture and market electronic monitoring test and measurement devices and instruments for bio-technical, medical and environmental purposes.
- Donald Danforth Plant Science Center Laboratory of Computational Genomics—The overall goal of the Laboratory for Computational Genomics is to develop tools for comparing and interpreting the sea of genomic information arising from genome sequencing projects.
- MicroSense of St. Louis, LLC—Designing diagnostic and monitoring instrumentation for medical and biological use. The device currently under development is being used for diabetics to monitor glucose painlessly and without the need to draw blood.
- Orion Genomics, LLC—Committed to applying the advances brought about by the genomics revolution to discover and commercialize genes and gene networks that regulate important traits in major agricultural species
- Stereotaxis—Makes use of image guided interventional medicine.
- Symbiontics, Inc.—Developing implantable transgenetic unicellular organisms for the delivery of therapeutic enzymes or proteins. They plan to develop, produce and sell novel proprietary therapeutic protein products and delivery systems using genetically engineered symbiotic microorganisms.
- Zassi Medical Evolutions, Inc.—Designing, developing and manufacturing a family of innovations that will restore bowel and urinary continence control back to the millions of people who have been rendered surgically incontinent due to ostomy surgery.
Nidus Center for Scientific Enterprise
The region also is home to another unique incubator—the Nidus Center for Scientific Enterprise. Opened last December and temporarily housing the Donald Danforth Plant Science Center staff, which will take up approximately 30 percent of their space until fall 2001, the incubator focuses on recruiting and supporting companies that conduct plant and life science research.
“The Nidus Center reinforces the fact that St. Louis is the place to bring a life science company,” notes Dr. Robert Calcaterra, president. “It is unique—I’ve never seen this kind of commitment and the consortium that put the Center together is more focused than any I have ever seen.”
Monsanto owns the land and built the $10 million facility. Nidus leases the facility and operates it independently. The 41,000-square-foot nonprofit center hopes to house 13 to 15 companies within two years. Its mission is to: nurture entrepreneurs, protect and grow innovative ideas, commercialize new technologies, attract investment capital and help create a world center for plant science and biotechnology in St. Louis.
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Above: Bill Welsh, Ph.D., founder and CEO of GenChemiCs, LLC, and Salvatore Profeta, Ph.D., scientific director, are reviewing interesting results from an ongoing drug design collaboration with a major pharmaceutical company. GenChemiCs works with pharmaceutical, biotechnology and life sciences companies as an outsourcing partner in early-stage drug discovery.
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Recruited to St. Louis from successfully heading incubators in Tuscon and Boulder, Calcaterra notes that companies must meet four criteria before being accepted to the Nidus Center: 1) have a top-notch management team or the potential to develop such a team, 2) offer a product or service that will sell and is truly a value-added to the customer, 3) have a product that can be protected and patented, and 4) have a company that can be invested in to ensure success.
Calcaterra remarks that he and Dr. Roger Beachy, the head of the Donald Danforth Plant Science Center, hope to have numerous companies incubate at Nidus from the research efforts of the scientists at the Danforth Center. “Once the Plant Science Center is up and running, I think we’ll see 10 or so deals from that organization alone over a two to three year period,” Calcattera states.
An economic impact study of the Nidus Center shows that within 15 years, the center will have an economic output of $1.57 billion, have personal earnings of $776 million and generate $68 million in tax revenues. For more information, visit their web site, www.niduscenter.com.
“These incubators represent a unique asset to our region at a time when St. Louis is competing in a New Economy with larger metropolitan areas,” Fleming notes.
“There is no question that St. Louis ranks with Chicago, greater Los Angeles, and the San Jose/Silicon Valley area in terms of the number of incubators. In fact, St. Louis is one of the top four regions in the country,” states Dinah Adkins, executive director, National Business Incubation Association. “St. Louis has more incubators in operation than New York City and is home to the first incubator in the country funded by a major corporation,” Adkins says, referring to Monsanto’s funding of the Nidus Center.
Nidus Center Incubator Businesses
- Donald Danforth Plant Science Center is a research center devoted to discovery in plant sciences for the benefit of agriculture worldwide.
- GenChemiCs, LLC is a private venture capitalizing on existing and future intellectual property and revenue generating research services currently being conducted.
Incubator Facts
- North American Incubators have created nearly 19,000 companies still in business, and more than 245,000 jobs.
- The size of most incubator facilities (75 percent) is less than 40,000 square feet, with the average being 36,657 square feet.
- Incubators overall each serve an average of 20 entrepreneurial firms.
- Forty-five percent of incubators are in urban settings, with 36 percent located in a rural environment and 19 percent in the suburbs.
- The focus of incubators vary:
- 43 percent are mixed use
- 25 percent are for general technology
- 10 percent are geared toward manufacturing companies
- 9 percent are targeted for a specific industry such as biomedical, arts, etc.
- 5 percent are empowerment or revitalization centers, located in economically challenged areas to help start small business.
- 2 percent are classified as “other”
- Eighty-seven percent of incubator graduates are still in business.
Source: National Business Incubation Association
Primary Sponsors of Incubators
Nonprofit, public or private — Fifty-one percent of all North American facilities fall into this category. These incubators are sponsored by government and nonprofit organizations, and are primarily for economic development. This mission includes job creation, economic diversification and/or expansion of the tax base.
Academic-related — These incubators, which comprise 27 percent of all North American facilities, are affiliated with universities and colleges. The incubators share some of the same objectives of public and private incubators. In addition, they provide faculty with research opportunities, and alumni, faculty and associated groups with start-up business opportunities.
Hybrid — Comprising 16 percent of all facilities, these incubators are joint efforts among government, nonprofit agencies and/or private developers. These partnerships may offer the incubator access to government funding and resources, and private sector expertise and financing.
Private/For Profit — Only eight percent of all facilities, these incubators are run by investment groups or by real estate development partnerships. Their primary interest are economic reward for investment in tenant firms, new technology applications and other technological transfers, and added value through development of commercial and industrial real estate.
Other — Five percent of all North American facilities, these incubators are sponsored by a variety of non-conventional sources such as art organizations, Native American groups, churches, chambers of commerce, port districts, etc.
Source: National Business Incubation Association
Incubators offer a variety of assistance
According to the National Business Incubation Association, incubators around the country provide numerous services for tenant companies:
| Business Assistance Service | Percent Offered |
| Help with business basics | 96 |
| Marketing assistance | 89 |
| Accounting/financial management | 77 |
| General legal services | 47 |
| Help with access to loans/financing | 77 |
| Networking activities | 86 |
| Links to higher education | 76 |
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| General Office Services | Percent Offered |
| Conference room | 92 |
| Custom equipment/custom leasing | 45 |
| Shared administrative services | 88 |
| Video conferencing | 19 |
| Telephone system/phone answering | 65 |
| Internet access | 62 |
| Computer labs | 40 |
Liese L. Hutchison is an assistant professor in the department of communication at Saint Louis University and a free-lance writer.
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