Tuesday, July 23, 2002
Interview with Robert Swayze, Los Angeles County Business Technology Center
During the dot com boom, it seemed like everyone was in the incubator business. However, with the bust, only the "true" incubators, like LA County's Business Technology Center remain--the ones which were there all along. To get an idea what services they offer entrpreneurs, I spoke with Robert Swayze, Manager for Economic Develpment for the Los Angeles County Community Development Commission, who manages the Business Technology Center (www.labtc.org) in Altadena.
BK: What's the BTC all about--what's your mission, and what do you do?
RS: The BTC is California's largest technology incubator and, to our knowledge, the only high tech incubator in the nation owned and operated by a County agency. The mission of the BTC is very simple - to assist start-up and early stage high tech companies grow and prosper. What we do is to provide a top-flight facility and services to help high-tech firms succeed. We designed the facility for high-tech firms. The BTC has 63 individual offices ranging from 125 to 590 square feet. These offices can be leased individually or in blocks, depending on the space needs of a company. The BTC is open 24/7 and has a sophisticated telecommunications system, with a current capacity of 54 T1 lines. Each office has multiple telephone and data jacks. Firms have access to conference rooms, a kitchen and an outdoor patio. We have gated parking, a key-pass security system, and, as is typical with incubators, lower-cost office space, shared receptionist, and copier. The BTC offers business consulting services through an on-site Small Business Development Center, a mentoring committee and referrals. An added bonus for tenant firms is that the BTC is in a state Enterprise Zone, which offers significant state tax credits to businesses. Obviously, financing is critical to high tech start-ups. That's why we've attached a seed capital program to the BTC - the County Technology Loan Program. Through this and other County financing programs, we've provided financing to numerous BTC firms. Our philosophy is to provide a place where firms can concentrate on their core business while we take care of the side issues that often distract start-ups - telephones, faxes, copiers, receptionist, conference rooms, space planning, Internet connection, parking, etc. etc.
BK: Who are some of your clients, and how are they using your services?
RS: We have 26 tenant firms and 3 affiliates. Firms have concentrations from software development to commercializing federal lab technology. Several firms have developed proprietary software for specialized wireless applications, such as for medical and inspection industries. We have firms specializing in medical diagnostics and medical imagery. We have firms adapting federal lab technologies, notably in DNA chip applications and fuel cell development. We have a firm using patented technology for increased chip capacity, firms developing simulation software, AI and voice-activated logistical solutions.
BK: It seems like incubators were all the rage a year or two ago--how has the boom/bust of the Internet years changed the model for incubation?
RS: A number of incubators have passed into that good night. There are probably both individual and institutional reasons for their phase-outs. I can't speak to how other incubators may have changed their model, but our model remains exactly the same. We have a single purpose: assist start-up and early stage companies grow and prosper. And because it's a County facility, we're there for the long-term: 10, 20, 30 years. We don't require immediate success to survive and that allows BTC tenants time to develop. We credit the BTC's success to the decision of the Board of Supervisors, and particularly Supervisor Antonovich, to support this program, and to the caliber of the firms in the BTC. Obviously, incubators without successful firms are not successful incubators. A major reason we've attracted such strong start-ups is location. We're 2 miles from JPL and 4 miles from CalTech, and if geography is destiny, we are the beneficiary. Our premise for establishing the BTC was based on some key assumption that we think remain viable: there are extraordinary technologies emerging from universities and federal labs in Los Angeles County, there is going to be a market for those technologies, and invariably there will be very hard-working, very dedicated and very insightful entrepreneurs who will, themselves, find and/or develop the market for those technologies. We don't - and have no desire or ability to even try- to choose what will be the emerging technologies, and which applications will meet a market niche. We do know that technology will have greater and greater impact on the local economy, and so it makes good sense for the County to provide assistance. Our "incubator model" is not supply push or demand pull - but "demand push", where we rely on entrepreneurs to push out new technologies because of their desire - "demand" - for business success.
BK: In what sector do you see the most new business activity nowadays, and how would you compare companies locating or looking to locate in your incubator today to the past?
RS: Many of the BTC firms have emerged from JPL, CalTech or USC. Because of that, they are .hard-science. based. The BTC was never an Internet-driven incubator, and as venture capitalists look more favorably on hard-science enterprises, the BTC and tenant firms are benefiting.
As to what sectors, that is driven in part by our facility. We don.t have wet labs or manufacturing space, and by default that limits the kind of firms the BTC has attracted. Our experience is that firms are increasingly sophisticated and focused. It goes without saying that it has been a very tough environment for technology firms. Start-up firms face that challenge along with the standard start-up challenges; it appears to us that the self-selection process is forging increasingly rigorous and realistic firms.
BK: At what stage do people join your incubator? (i.e. how many people, what kind of funding)
RS: Because admission is competitive and requires a full business plan and profile of a firm's management structure, BTC firms have typically had a pretty solid sense of their technology, marketing and operational plans. These turn out to be more important to us than the number of people or the source of financing - although an indication of financial vitality (bearing in mind the start-up status) is important.
BK: How long do firms typically stay in your incubator, and at what point in a company's development do they transfer out?
RS: We don't have a fixed graduation date; our experience indicates that firms come to a point where they need to graduate out, and then do so. We anticipated the development time to be two to three years, but that cycle seems to have lengthened somewhat.
BK: How to companies qualify to locate in your incubator, and what kind of costs are involved? And finally, what's the process for getting space at the BTC, and where should entrepreneurs go or who should they contact for more information?
RS: There is an admission procedure. The first step is to complete an application - the application can be downloaded from the BTC site at labtc.org or call (626)296-6300 for a mailed copy. The BTC site also has summaries of the other tenant companies, which give a good indication of the direction and quality of the BTC firms. We also offer affiliate status for firms who don't wish to rent offices but would like to take advantage of BTC service. Affiliate status may be of good benefit to firms in the early conceptual stage. For a tour of the facilities or to speak to staff, call the BTC at (626)296-6300.